This holiday season we would like to thank you once again for your continued support of MTL and would like to remind you that the quality of people that you do business with matters.
With that in mind, please read the TradeWinds article below and make your own decisions on who you want to do business with in the future.
Enjoy your holidays and may the new year bring you good fortune.
Car shipper denies Baltic cargo ‘scam’
A New York-based shipper of used cars to Russia and other former Soviet countries has been accused of using inside connections with liner giant Mediterranean Shipping Co (MSC) to run a serial shipping scam.
Shippers were allegedly lured into a business relationship through cheap freight rates, only to be faced with unilaterally increased, extra or retroactive charges and having their containers held hostage in Baltic ports with demands for the immediate payment of the new charges in return for the release of fully paid cargo.
The defendant, Coney Island-based Mikhail Hitrinov, tells TradeWinds the accusations against him are “baseless” and suggests that his accuser was manipulated by lawyers into suing and settled the lawsuit after paying all Hitrinov’s charges.
That is not the same story told by the plaintiff, Chicago-based Baltic Auto Shipping and its principal Andrejus Presniakovas, who says that he paid Hitrinov only $8,000 to secure the release of some 167 boxes that were in transit or sitting at discharge ports waiting for release when Hitrinov allegedly held them hostage.
Lithuanian-born Presniakovas claims Hitrinov is a “racketeer”. Presniakovas says Hitrinov has been able to dominate the container-shipping market between the US and the Baltic through connections with liner giant Mediterranean Shipping Co (MSC) in Geneva that allow him to undercut all competitors significantly and take a leading position in shipping containers from the US East Coast to the Baltic.
Baltic’s legal complaint, now dismissed, called Hitrinov and his company Empire United Lines Co “scam artists” and also named MSC as a co-defendant for allegedly co-operating and enabling Hitrinov to deny release of the cargos in the discharge port.
The lawsuit brought by Presniakovas’s Baltic was voluntarily dismissed following the private settlement.
The case was dismissed before MSC had any opportunity to respond to the accusations in the complaint and Presniakovas tells TradeWinds he is now dealing directly with MSC without any intermediary.
In documents filed before the suit was withdrawn, Baltic’s lawyers made the case that their client’s adversary has a business plan with a pattern of fraud and the “holding hostage” of cargo.
They pointed to a series of lawsuits by other parties over recent years against Hitrinov’s company, some alleging that paid shipments were being held against demands for extra charges and disputed debts, others claiming that luxury cars had disappeared unaccountably after being delivered into the shipper’s custody.
Baltic’s business involves buying damaged used cars at US auctions for sale to overseas customers.
The goods, which are not always in good enough condition to be shipped by ro-ro, are booked by an intermediary like Empire on MSC vessels and released to customers at the discharge port upon full payment.
Volumes for both companies are down from the highs of a few years ago but Hitrinov tells TradeWinds Empire is the leading forwarder of boxes from the US to the Baltic and Scandinavia.
Presniakovas agrees with this, and adds that his own company will probably ship around 3,000 boxes this year, down from between 6,000 and 10,000 per year in better times, he says. Presniakovas’s company ships cars three or four to a box, depending on the model.
Starting in November 2007, Empire had been shipping the cars on a flat-fee basis, under US liner shipping rules that involve pricing according to a published tariff.
In June of this year, however, the relationship soured and Presniakovas told Hitrinov he would be discontinuing it.
Baltic then had 167 containers of cars worth over $5m in Empire’s hands, either en route or waiting to be released at discharge ports from Bremerhaven to Umm Qasr but mostly at Klaipedas or other Baltic ports.
Baltic’s lawyers presented documents to the court indicating that their customer had a positive billing balance at that time.
“After defendants were notified of plaintiff’s intention to wind down its business relationship with Empire, defendant Empire unilaterally and retroactively increased its shipping charges,” wrote Baltic’s lawyers.
“Empire demanded that plaintiff pay an additional sum of approximately $175,000 over and above the shipping charges that had been agreed to by and between the parties and that had been dutifully paid throughout the parties’ relationship.”
The lawyers also claim Empire demanded some $78,000 retroactively “for containers that had long since been shipped, paid for and released”.
Presniakovas refused to pay and, according to legal filings by Baltic’s New Jersey lawyers, Empire then seized the 167 containers, whose release Baltic demanded.
“In response to the demand, defendants have taken it upon themselves to contact plaintiff’s customers, the intended recipients of the aforementioned containers, and have offered them the goods shipped by plaintiff at a radical discount, with the expectation that any money paid by the customers will then be seized and applied by the defendants,” the lawyers told the New Jersey federal court.
They describe the shipper, together with MSC, as “unlawfully holding plaintiff’s cargo hostage in exchange for a payment of an artificial and unlawful debt conjured up by defendants only after plaintiff decided to sever its business relationship”.
Pointing to documents from lawsuits by a series of customers with similar complaints, they described Empire as “scam artists who lure customers into a business relationship on purportedly favorable terms”.
“At an appropriate time, generally when defendants notice that the relationship is deteriorating or at some other opportune time, defendants utilise self-help to orchestrate an extrajudicial seizure of goods and demand ransom under the threat that the seized goods will be sold off without regard for value,” claimed Baltic’s lawyers.
“It is believed and therefore averred that defendants have taken this fundamental business model and have applied it over and over again in an effort to obtain unjust and unlawful compensation.
As set forth below, plaintiff seeks an award of damages in an amount sufficient to stop these defendants, once and for all, from violating plaintiff’s rights and from visiting fraud upon anyone else.”
That attempt has been dropped for now but Presniakovas tells TradeWinds this was only because he was unwilling to post the bonds that would have been required for a full-length court action.
Published: 23:01 GMT, 08 Dec 2011