Wednesday, May 2, 2012

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.

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