Monday, April 20, 2020

Cargo Handling Groups Break Ranks and Levy Surcharges Which Upsets Freight Forwarders

Will Questionable Morality of Multilateral Action Prompt Competition Authority Action?
Shipping News Feature

UK – The situation the entire world finds itself in is without doubt unique, and while the general mien so far has been one of all pulling together, the change to where the situation more resembles a fight to be the one that gets the last place in the only lifeboat is never very far away.

Many businesses in many industries are facing a potentially horrendous future and the natural temptation is to therefore seize any potential for profit as it arises. This of course has the unfortunate effect of making it someone else’s problem, and there is no better example of this than the logistics sector, if rates go up, they get passed on.

So what does one do then if one link in the supply chain breaks ranks, is this profiteering or self-preservation? Now the potential for a disagreement has arisen after certain ground handling companies have started to impose surcharges because of the difficulties they face during the lockdown. The cost of personal protection against infection, the need to revise working practices, all mean an increase in costs for the handling companies. Are they justified however in passing these charges on to businesses already facing exactly the same type of pressures and financial woes?

The British International Freight Association (BIFA) represents the bulk of the UK freight forwarding industry, with BIFA terms and conditions the standard contracts under which these companies operate. Agents trading under these terms have the right to pass on such surcharges, however the morality involved is questionable and BIFA has been quick to point this out. BIFA Director General Robert Keen comments:

“Every participant in international supply chains is suffering from the same financial and operational issues that ground handlers face, as they attempt to mitigate the effects of Covid-19. Circumstances like shelter-in-place regulations are causing strain on all companies in those supply chains, which are all having to implement painful measures to cope with the pandemic, with a huge financial impact on their businesses.

“BIFA members are now faced with the task of explaining the surcharges to their customers, which are also struggling, without understanding, nor necessarily agreeing with, the rationale behind them. They deserve a full explanation of why and how the surcharges were decided upon, and evidence that ground handlers are not just using the opportunities presented by the difficulties to increase charges for services already provided.

“As the ground handling companies made their announcements, which are remarkably similar in content and value, around the same date, BIFA is left wondering whether the proposed surcharges might be of interest to the relevant competition authorities.”