Freight Forwarders Raided In Pricing Probe

A slew of freight forwarders including Switzerland's Kuehne & Nagel International AG (KNIN.VX) and Panalpina Welttransport Holding AG (PWTN.EB) were raided Wednesday as part of a U.S. and European probe into alleged price-fixing. The European Commission late Wednesday said it carried out unannounced inspections at the offices of several international freight forwarding companies without naming them, saying it has reason to believe that the companies concerned may have violated EC Treaty rules that outlaw restrictive business practices. The raids were sparked by information received from an unidentified whistleblower, who tipped off European, U.S. and Swiss authorities to alleged cartel behavior, said Patrik Ducrey, deputy director of Switzerland's competition authority.

Kuehne & Nagel and Panalpina separately acknowledged that authorities raided their offices in Switzerland and in the U.S. on Wednesday. Kuehne & Nagel's offices in the U.K. also were searched. German railway operator Deutsche Bahn said the offices of its Zurich-based Schenker transport unit were searched in South Africa, Switzerland and the U.S.

DHL, an international shipping unit of Deutsche Post AG (DPW.XE), also said European authorities had contacted the company, but didn't provide further detail.

The investigation centers on whether the freight forwarders fixed prices for fuel and other surcharges, Kuehne & Nagel Chief Financial Officer Gerard van Kesteren told Dow Jones Newswires late Wednesday.

Fuel surcharges are fees added to transportation contracts to help cover increasing fuel costs.

Kuehne & Nagel and Panalpina said they were unaware of any such violations at their companies, but would cooperate with authorities. Deutsche Bahn's Schenker also pledged to cooperate fully.

Kuehne & Nagel's CFO van Kesteren said that the investigation is a spill-over from an earlier probe into price fixing of fuel charges by the airline industry. Earlier this year, British Airways (BAY.LN) and Korean Airlines (003490.SE) pleaded guilty to charges of price fixing.

Thursday, Switzerland's competition body confirmed the raids on several freight forwarders, saying it was searching for evidence after being tipped off to alleged price-fixing. A spokesman for Amsterdam-based TNT NV (TNTTY) said the company hadn't been raided as part of any EU investigation. TNT only has a small freight forwarding operation, having sold off its logistics business last year.

"We are the victim, not the perpetrator," the spokesman said.

The probe includes the Swiss logistics trade body, the competition authority said. Dora Naumann, a spokeswoman for Spedswisslog, confirmed the raids on its Basel office, but said the trade body is unaware of any violations.

In the U.S., international freight forwarding and logistics company Expeditors International of Washington, Inc. (NASDAQ:EXPD), late Wednesday said it received a subpoena from the Department of Justice ordering the company to produce information and records relating to an investigation of air-cargo freight forwarders. The company said it intends to work with the DOJ.

A spokesman for the DOJ wasn't immediately available for comment.

For Switzerland's Panalpina, the probe comes at an inopportune time, as it is also facing questions from the U.S. Department of Justice amid an investigation into alleged improper payments in Nigeria and other countries, leading Panalpina last month to suspend some services there.