A forwarding customer is suing Polar Air Cargo for $6m losses. There are currently eight allegations against Atlas Air and DHL Express subsidiary, including racketeering, fraud, conspiracy and unfair trade practices. Polar could face a payment of over $18m should the case be proved.
Cargo on Demand (COD), a small New York-based forwarder, is accusing Polar of racketeering and fraud. It claims Polar violated the US Racketeer Influenced and Corrupt Organizations Act (RICO) and alleges that other forwarders were subject to the same treatment.
COD and Polar signed a blocked space agreement (BSA) in 2014. However, COD was also required to pay third-party companies “consulting fees”, which went to five companies with Polar’s management as principals. These payments were not included in the quoted rates but added as ‘akin to a hotel resort fee’.
“The consulting fee requirement was articulated to COD by multiple members of Polar management … over the course of seven years. Similarly situated Polar customers known to COD were also required to pay a consulting fee.”
Between 2014 and 2021, COD paid nearly $4m in “consulting fees”
In 2021, Polar told COD to stop paying the consulting fees, and shortly after, Polar sent a 60-day cancellation notice, terminating the agreed BSA pricing. COD claims Polar then “intentionally undermined COD’s relationship with Polar (and COD’s own customers) at every possible opportunity”.
Finally, Polar informed COD on 20 December that it would terminate the relationship on 31 December 2021, despite COD’s commitments for 2022.
Polar has acknowledged that the “consulting fees” were illicit, but claims no obligation to COD. “Polar is under no obligation to do business with COD. Polar terminated its business with COD because COD made illicit payments to members of Polar management in order to obtain favourable treatment from Polar. Polar has not harmed COD.”