Shippers protest against increased handling fees, surcharges

by Elmo Leonard

The Sri Lanka Shippers' Council (SLSC) is up in arms against shipping lines, NVOs - non-vessel operators and freight forwarders for arbitrarily increasing handling fees and surcharges in the aftermath of last month's port strike. Such increases, are anti-competitive, and outside the factor of supply and demand, SLSC president, Jayanath Perera told the media.

Increased import prices, will, down the line, be borne by the masses. Exports will become uncompetitive, and jobs will be lost. In the long term, this "high-handed" act will paralyse the nation's economy, Perera said.

It was the failure of successive governments to act in the manner of developed nations, among them being, Singapore, a competitor port and developing nation such as India, Pakistan and Bangladesh. These nations had clamped down, a code of regulations, that has prevented the type of dilemma, Sri Lanka, now faces.

Such a code, termed, `National ports and shipping policy of Sri Lanka', drafted by government and private sectors, lies idle since 1997, Perera said. If that document becomes law, it will necessitate arbitration in the event of intended increases of surcharges, handling fees, and the like, SLSC past president, Rohan Masakorala said.

As long as the Port of Colombo is active, shipping lines will not pull out, the duo said. The United States, the most open economy in the world, has a law enforced, called the `Federal Maritime Commission', to ensure fair practices for shipping lines with US importers and exporters.

In the aftermath, of the strike, some NVOs were trying to recover $148.20 as against the earlier, $115.20 from import consignments. Perera described this as a gross violation of the accepted norms of trade and consultative procedures adopted so far by the council, and an arbitrary and illegal way of collecting revenue.

The outcome of the increase would mean Rs 3 billion or $30 million, borne by hapless Sri Lankan consumers, per year, Masakorala said.

On the side of exports, it will make Sri Lanka's shipments uncompetitive overseas, drowning the balance of payment of the island's economy. Thus, the council called for the authorities to take firm steps against "parties with vested interest to jeopardise government's efforts" to economic growth.

While port congestion had eased, some carriers continued to charge $40 per TEU congestion charge. While it added "insult to injury", a shipping line was proposing to increase BL fees to $5, and charge $25 late BL fees from shippers.

By itself, a $5 increase is seen as a small amount, but, multiplied by 1000 BLs per month, it adds revenue of $5000 (Rs 500,000) to the carrier.

Yet, the shipper had nothing to gain by way of value addition? This sort of passing down costs to the customer through arbitrary surcharges is against accepted norms of trade, instead of adhering to the factor of supply and demand, Perera said.

The SLSC called for the South Port Project, which had delayed for over a year to be started immediately. With the announcement of the commencement of work, on the South Port Project, a year ago, some shipping lines had projected calling over here, as the Indian subcontinent has a very vital strategic advantage. If delayed longer, some shipping lines will not come here, Perera said.