Regulate freight forwarding industry

The Federation of Malaysia Freight Forwarders wants the registration of freight forwarders be made mandatory to weed out fly-by-night operators

THE Federation of Malaysia Freight Forwarders (FMFF) has proposed that the Transport Ministry control the number of players in the market and make the registration of freight forwarders mandatory in order to weed out fly-by-night operators.

Selangor Freight Forwarders & Logistics Association (SFFLA) vice-president Chan Kong Yew said the freight forwarding industry is currently not regulated by any government body.

"The government should recognise the linkage between regulation, accreditation regimes, industry performances and quality standards," he told Business Times in an interview.

"On our part, FMFF is developing a framework where local freight forwarders can be regulated and benchmarked against international standards in terms of paid-up capital, operational capability, financial strength, ethical conduct, professional capacity and experience," he added.

FMFF also plans to upgrade the professionalism of the logistics industry through education and training.

"We recognise the importance of training and upgrading the skills of our members and employees, and have divided them into three focus groups," said FMFF president Alvin Chua Seng Wah.

Chua is also the newly-appointed president of SFFLA, following the demise of former president Abel Tan Ah Beng last month.

"The first group will comprise operational staff, who will undergo practical and vocational training, while the second group will focus on enhancing the knowledge of clerical and supervisory employees through a series of short courses.

"The third group will encompass executive staff, who can participate in the federation's foundation and certificate courses," he said.

In this regard, FMFF is working closely with the United Nations Economic and Social Commission for Asia and the Pacific and the International Federation of Freight Forwarders Associations (Fiata) in developing a series of logistics courses from foundation level to certificate, and eventually leading to a diploma in accordance with Fiata's syllabus, which is recognised by the world logistics industry.

"We are planning to introduce the diploma programme in Multimodal Transport Operation by the end of this year," Chua said, adding that FMFF is in discussions with Universiti Tunku Abdul Rahman to enter into a collaboration to offer the diploma course.

In another development, FMFF wants the government to lower the Bumiputera equity requirement for locally-registered licensed Customs brokers to 30 per cent from the current 51 per cent, to help them compete on a level playing field against their foreign counterparts.

"In 1976, the Customs Authority had imposed a requirement of 51 per cent Bumiputera equity share for all new and renew Customs brokerage licence. As a result, there is now a big percentage of Bumiputera portion that are normally decorative rather than actual contribution," said SFFLA deputy president Yeoh Kean Jin.

It is understood that the current 51 per cent Bumiputera equity requirement has prevented many non-Bumiputera Customs brokers from reinvesting their profits into growing their company over concerns that they do not have control over the company's operations.

To reduce their risk, the non-Bumiputera Customs brokers have spread their investments among many different companies.

"As the Customs brokers start to expand and diversify their businesses to offer integrated logistics services like warehousing and distribution, transportation, and value added services, they would normally form new companies and have different partners," said Yeoh.

This has resulted in many of them not being eligible for the Malaysian Industrial Development Authority (Mida) incentive for integrated logistics services (ILS), which requires the company or the group of companies to have the same shareholding structure.

"This problem is reflected in the number of local freight forwarders who have qualified for the ILS incentive. Of the 12,000-odd freight forwarders in the country, only 21 have qualified so far.

"As such, we call on the government to liberalise the Bumiputera equity requirement in the Customs brokerage business so that we can consolidate all our companies into one integrated logistics service provider and compete with the likes of Nippon Express, Geologistics and BAX Global," said Yeoh.

"This is also in line with the full liberalisation of freight services in Asean by 2010," he added.

Source: BTimes

Truck drivers protest at Northport over depot charges, delays

PORT KLANG: Container truck drivers who are unhappy with depot operators for allegedly exorbitant charges and causing delays, have taken their grouses to the streets.

Thousands protested at Bandar Sultan Sulaiman, outside Northport here Wednesday, from 10am, urging the Transport Ministry and Port Klang Authority (PKA) to help resolve this matter.

Several demonstrators were also seen hurling stones and empty bottles at trailers that refused to stop. The protest lasted for almost two hours. The drivers claimed they were acting on their own and were not from any group.

R. Pandian, 52, a container lorry driver for 30 years, said they resorted to a protest after depot operators raised handling fees.

"They used to charge RM5 and now it is between RM15 and RM20. We would not mind paying a standardised fee of RM20 if their services improved.

"But their services got from bad to worse and this has resulted in an average of one trip a day for all of us," he said, adding that drivers could previously make at least four trips, back and forth from the depots.

Meanwhile, PKA chairman Datuk Teh Kim Poo, when contacted, said the problem was beyond the authority's jurisdiction.

However, he said, he would see how he could handle this issue as Klang Barisan Nasional chief, by speaking to depot operators and truckers.

Source: BizStar

Klang ports facing a standstill

PORT KLANG: Trouble is looming at the ports here following a planned move by over 1,000 container truck drivers to stop transporting goods on Wednesday to protest against depot operators.

The drivers plan to hold a three-hour gathering from 9am outside Northport to express their frustrations over long-standing issues on delays and increases in depot gate charges, which they claim are affecting their earnings.

The planned demonstration is worrying Northport and West Port as their action may affect operations.

According to a driver who declined to be named, the service level at the depots had resulted in them having to wait for three to four hours to pick a box and transport it to the customer’s premises.

“We are only able to do one or two trips a day and this has reduced our earnings. Some of us are paid monthly wages of RM300 and our main income is from our daily trips. Some drivers are not paid monthly wages.

“We will be able to do six or more trips if the depot operators are more efficient,” he said, adding that previously it would only take them 45 minutes to pick a container.

A haulage company executive said the depot operators had introduced gate charges of between RM10 and RM16 per container so that they could invest in new equipment to improve service. Previously, it was RM5.

“But, until now, nothing has changed and it has severely impacted the livelihood of these much needed professional drivers,” he said, adding that attempts to resolve the issue had been unsuccessful.

Depot operators are paid by shipping lines to store their containers while haulage operators work on behalf of the shippers to move the containers.

An Association of Malaysian Hauliers official said he hoped that the drivers would not go ahead with the stop-work action because this would adversely affect the ports.

In an interview with StarBiz on Feb 20, association president Datuk Che Azizuddin Che Ismail had admitted that haulage operators were still having problems with container depot operators, suggesting that depots should be placed inside port areas rather than outside.

“It’s easier and cheaper if all containers go back to the port. It’s not productive to have a container 10km away from the port,” he said, adding that although some ports in Malaysia had on-dock depots, it was still not efficient as there was only one gate for trucks to collect and send the boxes.

Source: BizStar

Freight forwarders cry foul over exorbitant port charges

Thursday, 10 November 2011

Ten trade associations from various industries have collectively submitted a memorandum to the government, raising concern over exorbitant port charges that they claim are affecting profits and incurring unnecessary higher costs to their operations.

The associations collectively seek the urgent intervention of the Special Taskforce to Facilitate Business (Pemudah), Ministry of International Trade and Industry (MITI), Ministry of Transport, Ministry of Domestic Trade, Cooperatives & Consumerism, Port Klang Authority, Malaysian National Shippers Council and the relevant government agencies to issue clear, enforceable guidelines on the landside charges that shipping lines are allowed to charge.

As of press time yesterday, they had yet to get a response or reply to their memorandum from the government. "Since 2009, new bloated charges are being implemented and now such charges are becoming standard charges for all the ports in Malaysia, and this seriously affects freight forwarders businesses," Federation of Malaysian Freight Forwarders (FMFF) president Alvin Chua Seng Wah told The Malaysian Reserve in an interview.

The FMFF — together with the Malaysia Hardware, Machinery & Building Material Dealers’ Association, Associated Chinese Chambers of Commerce and Industry of Malaysia, Steel Wire Association of Malaysia, Building Materials Distributors Association of Malaysia, Malaysia Mould & Die Association, Federation of Malaysian Foundry & Engineering Industries Associations, Machinery and Equipment Manufacturers Association, Malaysian Indian Metal Traders and Recyclers Association, Malaysia Hardware Wholesaler Association and Metal Dealers’ Association Selangor & Kuala Lumpur — jointly submitted the memorandum to MITI and Pemudah, together with various other related agencies last month. The memorandum stressed that the situation has led to significant increase in shipping costs over the last few years and, if left unchecked, will severely affect the competitive edge of the local industries.

"Our main concerns are that over the recent years, shipping lines have been increasing and creating new landside charges which are dubious in nature and do not reflect the services they provide," said the memorandum.

"They are increasing our cost of doing business by merely creating charges without any input and we are perturbed with the fact that they are permitted to enforce all these charges based on what they deemed to be 'commercial arrangements'," it added.

According to Alvin, the charges are related to the services at the port terminals and are not connected to the freight charges which shippers pay directly to shipping lines or non-vessel operating common carrier operators.

"When Port Klang adjusted its container port charges in 2001, the actual container tariff of the port operator charges the shipping lines RM230 for a 20ft container (twenty-foot equivalent units or TEU), but the shipping lines in turn charge the shipper/consignee RM335 under the name of 'Terminal Handling Charges'. They explained that the difference of RM105 is to cover respositioning of empty containers after un-stuffing and cleaning of containers," said the memorandum.

"Based on our investigation, the repositioning cost is paid for by the shippers/consignees who are paying the local hauliers to undertake the haulage job," the memorandum specified.

The memorandum said shipping lines have also enforced the collection of "container deposits" of RM300 to RM1,000 per container and would deduct any charges incurred for washing and repairing of those containers.

Other grievences include a RM30 charge for "Electronic Data Interchange" on shippers and consignees for their mandatory submission of the shipping manifest, which the memorandum said was the shipping lines' responsibility to do so under the requirements of the Customs Act 1967.

Furthermore, it said the "Container Seal" charge was increased from RM10 to RM15 per unit when the norminal market cost is just RM1.20 per seal while depot gate charges, which are currently set at RM5 per container, are expected to be increased to RM30 per box soon.

The memorandum also stated that some shipping lines have recently introduced a new charge, "Container Yard Shifting", with a RM150 fee per container, which is "highly dubious" as the shipping lines are not involved in any container handling and movement at the terminal.

It said another new dubious charge is the "Container Maintenance" charge of RM30 per TEU that is being unfairly charged under the "Container Deposits" scheme currently being collected by shipping lines, in which there is no explanation and justification for this charge.

"About five million TEUs go through Port Klang every year, of which about 2.5 million TEUs are import containers.

"One such frivolous charge alone like the 'Container Shifting Charge' of RM150 per box, if left unregulated, will cost our domestic industries about RM375 million annually and the overall cost to our domestic industry is huge and it must be regulated before it gets out of control," the memorandum stressed.

Source: Malaysian Reserve

Slower haulage growth

SHAH ALAM: The haulage industry expects to register a 5% volume growth this year – which is lower than last year – largely due to the eurozone crisis and the slowdown of the US economy.

Association of Malaysian Hauliers (AMH) president Datuk Che Azizuddin Che Ismail said this year was anticipated to be a challenging year as the situation in the West might show little improvement.

“But, things are a lot rosier in Asia, especially Asean. Countries like Malaysia and Singapore with good infrastructure are poised to take advantage of the situation,” he told StarBiz, adding that the industry’s volume was very much attached to the performance of the ports in the country.

Last year, according to Che Azizuddin, the haulage volume in Port Klang alone, the country’s biggest maritime gateway, increased by 8% compared with the same period in 2010.

Although the industry recorded growth last year, he said the current state of the industry could be better as it was still plagued by pockets of over-capacity and problems with container depot operators. “There are still too many players. A lot of forwarding agents now are also interested to operate smaller scale fleet of between five and 10 prime movers.

“Many of the new players also use reconstructed trucks, which are not reliable. People do not use these anymore, not even in Jakarta,” he said.

He added that it was difficult to act in a concerted effort when the industry was too fragmented.

“Many of these smaller players are not members of AMH and this has been a hurdle for the industry to tackle issues particularly with the Government,” he said.

In terms of capacity, members of AMH represent about 60% to 70% of the industry.

Che Azizuddin said the haulage business was not that easy due to high cost of entry. “First, it is capital intensive. A new good brand prime mover cost about RM300,000 each. It is not profitable to operate a fleet of five to 10 trucks as you need the economy of scale to sustain the business.”

“If a company has a large fleet with a good management system, it can easily enjoy a 5% to 10% margin,” he said.

Che Azizuddin said since the global economic crisis in 2008, the number of new players had reduced.

“Looking at the situation now in terms of capacity and demand – the water will find its level eventually,” he said.

On the depot issue, Che Azizuddin suggested that rather than having depots away from the port, the container depot should be placed inside the port area.

“It’s easier and cheaper if all containers go back to the port. It’s not productive to have container like 10km away from the port,” he said.

Although some of the ports in Malaysia, have on-dock-depot at the port, he said it was still not efficient as there was only one gate for the trucks to collect and send the containers.

Besides the location, Che Azizuddin said some container depot operators should improve on their efficiency.

“It is higher cost for us if we have to wait half a day to collect a container,” he said, adding that the matter had been brought up to the relevant authority but it had yet to react to the issue.

He said this inefficiency would take a toll on the country’s competitiveness to attract more multinationals into the country.

Going forward, Che Azizuddin said the association wanted to help its members in terms of business.

“We are planning to have a central purchasing centre where we can team up to buy spare parts such as tyres and lubricants at competitive prices.

AMH has also implemented a consolidated Puspakom and located it at Konsortium Logistik Bhd.

“These will save smaller players time and cost for their vehicle inspection as opposed to qeueing at centralised Puspakom centres,” Che Azizuddin said.

Source: BizStar