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SINGAPORE: Executives of some of the largest shipping container manufacturers in the world allegedly tried to conceal a price-fixing conspiracy that saw some of their profits increase about a hundredfold during the COVID-19 pandemic and global supply chain crisis, according to United States court documents seen by CNA.
Seven shipping container executives, including industry veteran and Singamas Container Holdings CEO Teo Siong Seng, have been accused in the US of a conspiracy to restrict the output and fix the prices of dry containers, which are non-refrigerated shipping containers. The indictment was unsealed on Tuesday (May 19) by a US court.
An indictment is a document issued by a US court that lists formal charges against defendants.
In a filing on the Hong Kong exchange on Wednesday, Singamas said neither the company nor Mr Teo had been served with "any legal process or other legal documentation" by the US Justice Department. The company added that it has engaged external legal advisers.
The alleged conspiracy went on for over four years, from November 2019 to at least January 2024.
Court documents showed that days after a December 2019 meeting between the alleged conspirators, a Singamas executive reported to Mr Teo that during the meeting, he had reminded the others “not to be high profile since it might violate the monopoly law or being accused of price manipulation by our customers”.
Mr Teo had purportedly written in response to the executive’s report on the meeting that “we also need to keep low key”.
Another Singamas board member allegedly said in an email that “the discussion appeared to be anti-competition to me … I feel very uneasy reading your report. May be we should delete this string of emails after reading?”
Mr Teo allegedly wrote back: “Yes I feel the same, told (Singamas executive 1) and (Singamas executive 2) at am call.”
Mr Teo is also the chairman of the Singapore Business Federation (SBF). As SBF chairman, he is part of the Singapore Economic Resilience Taskforce.
Who have been charged in the US indictment?
Singamas Container Holdings, which is in the business of manufacturing dry shipping containers and selling them to customers in the US and elsewhere.
China International Marine Containers (Group), which is engaged in the business of manufacturing dry shipping containers and selling them to customers in the US and elsewhere.
Shanghai Universal Logistics Equipment Co, which owned, managed, and did business as a brand of shipping containers called Dong Fang International Containers, also known as “DF”, “DFIC”, or Dong Fang. Dong Fang was engaged in the business of manufacturing dry shipping containers and selling them to customers in the US and elsewhere.
CXIC Group Containers Co, which is engaged in the business of manufacturing dry shipping containers and selling them to customers in the United States and elsewhere.
Teo Siong Seng, 71, employed by Singamas as chief executive officer and chairman.
Vick Ma Nam Hing, 54, employed by Singamas as marketing director.
Mai Boliang, 67, employed by CIMC in various senior roles. From August 2015 through July 2020, Mai served as president and chief executive officer of CIMC. From August 2020 through the rest of the period covered by the indictment, he served as chairman and CEO of CIMC.
Huang Tianhua, 62, employed by CIMC as vice president.
Wan Yongbo, 47, employed by CIMC as general manager of CIMC’s operation management centre.
Li Qianmin, 62, employed by Dong Fang as general manager.
Zhang Yuqiang, 49, employed by CXIC as CEO.
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ALLEGED TIMELINE OF EVENTS
US prosecutors said in an unsealed indictment that several of the alleged conspirators had begun discussing the scheme as early as March 2019.
On or about Nov 14 that year, CIMC, Dong Fang, CXIC and another unnamed co-conspirator had met at CIMC’s headquarters in China to restrict their output of standard dry shipping containers.
The goal of this was to raise the price of standard dry shipping containers, said the prosecution.
A week later, an executive of Singamas emailed Mr Teo stating that Dong Fang’s general manager, Mr Li, had called for all six factories to meet.
On Dec 5 that year, the Singamas executive updated Mr Teo that he had gone for the meeting two days earlier.
He stated that the companies discussed limiting the number of shifts and hours that each production line for standard dry containers could run per day, building no additional new production line, installing closed-circuit television (CCTV), and having each factory submit a deposit that would be deducted if anyone broke the agreement.
He also told Mr Teo that he had reminded the others “not to be high profile”.
By February 2020, a draft contract titled Shenzhen Moon Gazing Equity Investment Fund was circulated to the companies. They held a ceremony to sign the final version of the contract the following month.
“Throughout their conspiracy, the conspirators refined the operation of the output-restriction agreement,” said the US prosecution.
“By September 2020, the conspirators agreed to restrict how many standard dry shipping containers the company conspirators would manufacture for particular customers, whom the conspirators referred to as ‘mainstream customers’ or ‘mainstream clients’.”
These customers included major US-based container lessors, shipping lines, and logistics companies, in addition to container lessors, shipping lines, and logistics companies based in Europe, China and elsewhere.
In or around October 2021, while preparing a presentation for Singamas’ board of directors, one executive sent another executive a draft slide deck for the meeting.
The draft slides mentioned a “manufacturing sector official and unofficial association/alliance”. The receiving executive told the sender: “I am generally fine with your ppt except on page 3, please delete ‘alliance’ as it is quite sensitive under anti-trust law.”
In March 2022, a CIMC executive circulated to other alleged co-conspirators a report by a then-US federal maritime commissioner and an excerpt from an interview by the commissioner, in which it allegedly said that Chinese container manufacturers “clearly took steps together to suppress the market prior to the pandemic”.
Mr Mai told Mr Huang and Mr Wan to pay close attention, but to neither respond nor discuss.
In the same month, a Singamas executive commented on a draft slide deck for Mr Teo’s upcoming presentation to investors about the 2021 annual results.
The executive suggested to Mr Teo and other executives that, for the topic of “market discipline, it is better not to put on the slide due to anti-trust issue”.
Mr Teo allegedly replied: “Appreciate, I will make some amendments to the slide (take out come [sic] words) and revert tomorrow am.”
The US prosecution cited these as steps the conspirators took to conceal the scheme.
According to court documents, Singamas executives, including Mr Teo, allegedly met in July 2022 to discuss the output-restriction measures.
From as early as September 2022 until at least as late as November 2023, the alleged conspirators agreed to cap the total cargo volume of containers that they produced.
The prosecution said the alleged conspirators preferred to discuss these restrictions in person “so as to avoid the suspicion of industry monopoly”.
Two meetings allegedly took place in February 2023 and March 2024, and both meetings involved executives of Singamas.
The prosecution said the group also allegedly worked to “halt the growth of smaller standard dry container manufacturers who were not part of the conspiracy”.
They allegedly talked about waging “war” against the smaller manufacturers, and said the aim was to signal to the small factories not to grab orders at a low price.
In or around February 2023, a Singamas executive allegedly said that the “specific content of the agreement was kept confidential at a very high level and could not be found out”, and that it should be "kept at the head office".
About a month later, Mr Ma allegedly prepared minutes of a meeting between himself, Mr Teo and other executives. At that meeting, an executive “raised the concern about anti-trust violations”, and was concerned that “there may be a risk of being sued by clients”.
PROFITS
From 2019 to 2021, the price of a standard dry 20-foot container more than doubled from roughly US$1,600 to over US$3,500, said the prosecution.
During this same period, the price of a standard dry 40-foot container more than doubled from roughly US$2,800 to over US$5,900; and the price of a standard dry 40-foot high cube container doubled from roughly US$3,000 to over US$6,000.
The profits of CIMC's manufacturing business segment increased nearly one hundredfold - from about US$19.8 million in 2019 to about US$288 million in 2020 and US$1.75 billion in 2021.
Singamas' net income increased from a loss of about US$110 million in 2019, to profits of about US$4.6 million in 2020 and about US$186.8 million in 2021.
"The defendants held hostage the world’s supply of ocean shipping containers during the COVID-19 pandemic when our supply chains needed it the most. They stole from everyday Americans who paid more and waited longer for vital goods as a result,” said acting assistant attorney general Omeed A Assefi of the Justice Department’s antitrust division.
If found guilty, the defendants face up to 10 years in prison and a US$1 million fine for individuals and a US$100 million fine for corporations.
The fines may be raised to twice the gains from the crime or losses suffered by victims if those amounts exceed the statutory maximum.
