Argos sues Maersk for £8m over price rise on goods from Asia
High-street chain accuses shipping giant of reneging on contract and boosting container costs threefold
Sunday 29 August 2010
Argos is suing A P Moller-Maersk, the world's largest container shipping company, for more than $13m (£8m).
The high street chain, owned by the FTSE-100 Home Retail Group, accuses the Danish logistics group of reneging on a contract to ship 5,000, 40ft containers from the Far East to the UK in each of 2010 and 2011, as well as attempting to impose a "unilateral" three-fold price increase in January.
Documents filed by Argos with the High Court claim Maersk "wrongfully repudiated and/or renounced the contract.... [Argos] had to find another shipping line in order to ship containers from the Far East to the UK. [Argos] duly obtained alternative space protection for a period of two years from Kuehne & Nagel. Accordingly, aggregate losses are $13,877,660."
Maersk announced in January that it was increasing its prices on cargo shipped between South Asia and Europe, and in a statement claimed: "The trading conditions for the carriers operating in these markets are still subject to unacceptable rate levels and the situation is unsustainable in the longer term. The rate increase is necessary to continue to operate our services with the high level of reliability our customers have come to expect from Maersk Line."
The company has since increased rates between the Far East and West Africa, West Central Asia and Europe, and on transatlantic routes.
The legal documents add: "On 15 January 2010, [Maersk said it] would no longer provide any space protection for [Argos] at the agreed rate [$930 per container] and was instead unilaterally imposing an increased rate of $2,730 per container."
It is not clear what goods Argos employed Maersk to import from the Far East or if the row over the contract caused any shortages in its stores. However, many of the products the retailer sells are manufactured in the region.
Both companies declined to comment on the case.
A P Moller-Maersk is one of Europe's largest companies and last year made a pre-tax profit of $2.8bn on revenues of $48.5bn, although that represented a drop from $10.4bn and $61.2bn in the previous period. The company says it handles more than four million container movements to the UK each year.
Argos has revenues of just over £4bn a year, by far the largest contributor of sales to Home Retail Group, which also includes the DIY chain Homebase. Home Retail Group reported pre-tax profits of £293m on sales of £6.02bn last year.
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