BLOG: LEADING GLOBAL SUPPLY CHAIN MANAGEMENT / LOGISTICS: CONTAINER LINE SURCHARGES

From American Shipper -- Global Shippers Forum wants an end to all the surcharges--

Shippers call for campaign against surcharges

Wednesday, April 16, 2014

The Global Shippers’ Forum said it will organize a new global campaign “to confront the imposition of unsubstantiated shipping surcharges, terminal charges and more than 20 other non-negotiable local charges on shippers worldwide.”
GSF said it will focus on “persuading national competition authorities or other appropriate regulatory bodies to introduce new shipping regulations and laws to prevent these local anti-competitive practices. Current widespread malpractices include imposing non-negotiated charges on consignors and shippers for a range of local charges over which the consignor or shipper has no control or influence in their freight rate negotiations with the shipping line, terminal operator, shipping agent, or third party logistics provider. Shippers generally are not party to the contracts in which these fees are set, yet they have no choice but to pay the fees if they want their cargo to be transported.”
“Shippers in Africa, Asia and South America have now called time on these unacceptable shipping practices which long ago disappeared in European, North American and liner shipping trades in other more developed economies. As part of a coordinated global campaign, the GSF will take the matter up with the main political, United Nations and other international agencies,” said Chris Welsh, secretary general of the GSF. “In addition, we will support the implementation of the kind of national legislation introduced in Sri Lanka to deal with this widespread problem.”
GSF said it decided to take up the campaign at its annual meeting in March.
Addressing the GSF annual meeting, Sean Van Dort, vice chairman of the Sri Lankan Shippers’ Council, said, “We are already seeing the benefits of new laws in Sri Lanka that specify that all charges for shipping containerized cargo must be quoted so as to cover the entire cost of the carriage of goods from origin to destination or agreed delivery point. The provision of so-called “all inclusive freight charges” to be paid by the shipper, including all local add-on charges and surcharges, has resulted in dramatic reductions in the door-to-door freight costs, reductions that benefit both the seller and buyer of the goods.”
Van Dort said the new rules will take effect from April 30 for existing contracts and that "the new arrangements do require close collaboration and cooperation between buyers and sellers, and in particular, there will need to be a change in business practices, including using the new and more appropriate Incoterm for containezised cargo shipments such as “free carrier named place” (FCA). But, the prize for both sellers and buyers is the elimination of illegitimate and inflated charges and surcharges and considerable reductions in freight costs which benefit both parties."
GSF said, “unsubstantiated charges and surcharges imposed on consignors and shippers without bargaining power in Africa, Asia and South America has been a concern for shippers in these regions for many years. It is only now that the true scale and impact on shippers and trade in these regions is being fully understood and appreciated. The GSF maintains that non-negotiable surcharges and local charges imposed on non-contracting consignors and shippers effectively act as an indirect trade barrier which inhibits international trade.”
The Union of African Shippers’ Councils, a member of GSF, said shippers’ organizations in the region have found the additional cost to trade from anti-competitive practices in the region is likely to represents billions of dollars. It estimated the cost to the economies of Ghana, Cameroun and Nigeria alone to be in the region of €437 million ($604 million) per year.
“These unsubstantiated and unjustified local charges and carrier surcharges not only increase the cost of doing business in Africa, but impose unacceptable burdens on the economies of West and Central Africa whose goods and commodities often struggle to compete in the modern global economy,” said Adamou Saley Abdourahamane, secretary general of the Union of African Shippers’ Councils. “Wider regulatory measures are necessary to curb the power of shipping lines in the African region.”
He said his group, and other shippers’ organizations in the region will, with the support of the GSF, “campaign for Sri Lankan style legislation to tackle the problem of local charges and surcharges."
GSF provided the following list of typical surcharges that it said are imposed on non-contracting parties on top of known terminal handling charges in Africa, Asia and South America: