17 July 2019

    On June 17, the container ship “MSC Gayane”, owned by the Swiss-based Mediterranean Shipping Company, was boarded by U.S. Customs and Border Patrol (CBP) agents in the Philadelphia area for routine inspection. After detecting anomalies, the vessel was brought to berth for further inspection. Authorities then discovered the largest intercepted shipment of cocaine in U.S. CBP history in containers aboard the vessel. In total, 15,582 bricks of cocaine were found, weighing between 16.5 and 17.5 tons and valued at an estimated USD 1.3 billion. Authorities stated the cocaine was meant to pass through Philadelphia and later be offloaded in the Netherlands and France. Reports indicate that agents continued searching the vessel until at least June 24, while MSC informed customers that cargo not involved in the investigation had been successfully transferred to other MSC vessels.

    MSC Gayane at risk of forfeiture

    A U.S. judge authorized the seizure of the vessel on June 26, and agents formally executed the seizure on July 9. On July 12, U.S. authorities announced that they had received a USD 50 million bond in exchange for the temporary release of the vessel while the case is processed. The vessel departed Philadelphia on July 13 for Rotterdam, where it will resume commercial service.

    The MSC Gayane is valued at USD 90 million and is under the operation of MSC, but owned by J.P. Morgan Asset Management. Although MSC itself is cooperating with authorities and is not the target of the investigation, U.S. federal authorities are still considering an exceptionally-rare additional measure of pursuing forfeiture proceedings for the vessel.

    Crew involvement introduces new risks to maritime shipping

    Historically, drug traffickers have managed to utilize legitimate maritime cargo transportation services and infrastructure without detection by crew members or port authorities by hiding small-volume drug shipments inside containers and making false cargo declarations. If drugs were discovered aboard a vessel, impacts to the vessel, crew, shipment schedule, and the operating company would be limited. Testimony from detained crew members of the MSC Gayane suggests a noteworthy departure from this trend. According to media coverage and crew member testimony, a group of crew members aboard the MSC Gayane accepted cocaine and replacement container seals from small vessels offshore, then stowed it in containers below deck.

    The possibility of active participation by groups of container ship crew members in drug trafficking activities significantly reconfigures risk profiles for international maritime shipping companies and their customers. In the case of MSC, the United States government announced that the company will temporarily lose their C-TPAT certification, a widely-utilized program that allows for expedited customs processing in the country. Globally, MSC (and potentially the industry at large) will now confront a negative reputational impact that may also lead to increased customs inspections and scheduling delays. This is not helped by the fact that in 2019, MSC alone already faced two smaller cocaine busts in Newark, New Jersey and Philadelphia.

    Finally, the recent case with the MSC Gayane in Philadelphia highlights the possibility that vessels can be seized or even forfeited in cases where shipping company employees are directly under investigation, casting delivery routes and times for legitimate cargo on board into uncertainty. While the overall risk for customers to be significantly affected by drug trafficking activity in maritime shipping remains minor, supply chain managers should take note of this important development.

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