Friday, August 5, 2016

Freight Forwarding Boss Joins Call to End Unjustified Shipping Line Surcharges

Why Should Shippers Pay for Factors Such as Bad Weather and Shortage of Labour?
Shipping News Feature
UK- WORLDWIDE – One of the oldest gripes from shippers has always been the propensity for shipping lines to impose surcharges upon them as soon as it is perceived there might be a reduction of the carrier’s profits. Now the British International Freight Association (BIFA), the trade association for UK freight forwarding and logistics companies, is renewing its efforts to have surcharges done away with after the latest complaints from shippers.

Robert Keen, BIFA Director General is also Chairman of the Multimodal Transport Institute within FIATA, the forwarders’ world body which has been focusing on surcharges for several years and he welcomed the recent resolution passed by the Global Shippers’ Forum to work towards the end of these surcharges within five years, continuing:

“Forwarders do not like shipping line surcharges and we have been challenging their legitimacy on behalf of our members, and their customers, for many years. Our members have become used to shipping lines adding peak season, fuel and currency surcharges, but the number of surcharges and fees continues to grow, often with no real explanation or justification. For instance, what does an extra ‘administration fee’ or ‘container-sealing fee’ cover that is not in the standard service offered?”

“If a shipper enters a contract to buy goods they should know exactly what they are paying and that price should not change. If they use Incoterms they can buy ex works or FOB and control the supply chain. If they let their supplier arrange shipping, they have no control over the charges applied. But in either case, additional surcharges imposed by shipping lines should not be allowed.”

Mr Keen also queried the validity of surcharges in port, levied for various reasons such as port congestion caused by labour unrest or bad weather, or haulage surcharges when there is a shortage of HGV drivers, reasoning that these factors were surely part of the contract with the terminal involved.

The BIFA boss stressed the case that a good relationship between shipper and forwarder can save money as well as time, especially now that many managers involved in the shipping process often have limited experience and knowledge to deal with the complexity of the logistics contracts and changing regulations which forwarding agents have to stay abreast of.

The Global Shippers’ Forum passed its resolution to end the surcharges within five years at its Annual Meeting in Colombo, Sri Lanka last week. Members complained that shipping lines, and therefore forwarders, often threaten to not transport containers if their surcharges have not been paid, putting intolerable pressure on shippers to 'pay-up or get left behind'. Chris Welsh, Secretary General of the Global Shippers Forum said:

"Shippers of goods around the world have had enough of demands made by carriers and forwarders for the payment of charges that are poorly explained or out of proportion for any service provided. GSF is looking to end the imposition of surcharges on shippers by 2020 through a series of actions that will expose the scale and injustice of the practice to world trade bodies and if necessary publicise the worst examples notified to us.

"Surcharges on a shipment can exceed the contracted cost of transport and are disrupting efficient world trade. Our campaign will expose the extent of surcharging and make it an issue in future trading agreements. At times of subdued economic growth this is damaging to world trade and causing distortions in local markets. GSF is determined to end these practices and restore visibility to shipping rates and confidence to shippers. It has set itself the goal of ridding world trade of surcharges by 2020.”

GSF says it will pursue a number of supporting actions to realise its goals including making the World Trade Organisation and UN bodies aware of the scale and impact of the practice; Seeking amendment to the Incoterms compiled by the International Chamber of Commerce to make clear who is responsible for the settlement of certain costs currently recovered through surcharges, and naming and shaming the worst examples of opaque and unjustified surcharges.

Examples of surcharges amounting to $250 per container, were given by GSF members using Asia-Europe trade routes. The cost can sometimes exceed the contracted price for shipments making the management of total shipping costs unpredictable for cargo owners.

Photo: Shippers are aggrieved that they are surcharged for factors such as bad weather.