Leading freight forwarding company,
) has reportedly been charged $16.5 million under a lawsuit for
overcharging business customers. According to a lawsuit filed in
2011 by two law firms, the company FedEx has been overcharging by
approximately $3 dollars per package for thousands of shipments.
The lawsuit involves FedEx customers who did not get their claim
refunded for overcharges on residential deliveries between Aug
28, 2008, and Jul 13, 2011.
Regulatory issues are not new to the parcel industry. Carriers
like FedEx and
United Parcel Service, Inc.
) have previously been under the federal grand jury's scrutiny
for dealing in shipments of illegally operated online pharmacies.
According to reports, the case dates back to 2005, when an
investigation by the U.S. Drug Enforcement Administration exposed
approximately 4,600 online pharmacies that were operated
In Jul 2006, both UPS and FedEx served subpoena from the grand
jury as part of the investigation by the Antitrust Division of
the U.S. Department of Justice. The subpoena required the
companies to furnish records that could provide an insight into
possible antitrust violations in transportation of packages for
Further, UPS and
Expeditors International of Washington Inc.
) faced legal charges for price fixation in 2012. In Mar 2012,
the European Union commission's antitrust regulators charged $225
million as fine to 14 international freight forwarding companies
for perusing price fixing activities for freight transactions in
Overall, we assume that the legal proceeding may not have a
material adverse impact given the mammoth financial strength of
these companies. However, the rising number of litigations does
call for a closer look into the existing regulations that
continue to govern the freight forwarding companies.
FedEx, which operates with freight transportation companies
Radiant Logistics, Inc.
) currently has a Zacks Rank #2 (Buy).
EXPEDITORS INTL (EXPD): Free Stock Analysis
FEDEX CORP (FDX): Free Stock Analysis Report
RADIANT LOGIST (RLGT): Free Stock Analysis
UTD PARCEL SRVC (UPS): Free Stock Analysis
To read this article on Zacks.com click here.