Unsubstantiated shipping surcharges:

GSF calls for Govt intervention

At its recent annual meeting in Los Angeles, the Global Shippers’ Forum (GSF) agreed to organise a new global campaign to confront the imposition of unsubstantiated shipping surcharges, terminal charges and more than 20 other non-negotiable local charges on shippers worldwide.

The campaign is focused on persuading national competition authorities or other appropriate regulatory bodies to introduce new shipping regulations and laws to prevent these local anti-competitive practices.

Current widespread malpractices include imposing non-negotiated charges on consignors and shippers for a range of local charges over which the consignor or shipper has no control or influence in their freight rate negotiations with the shipping line, terminal operator, shipping agent, or third party logistics provider. Shippers generally are not party to the contracts in which these fees are set, yet they have no choice but to pay the fees if they want their cargo to be transported. At the GSF annual meeting, Vice Chairman of the Sri Lankan Shippers’ Council, Sean Van Dort said, “We are already seeing the benefits of new laws in Sri Lanka that specify that all charges for shipping containerised cargo must be quoted so as to cover the entire cost of the carriage of goods from origin to destination or agreed delivery point.”

“The provision of so-called “all in inclusive freight charges” to be paid by the shipper, including all local add-on charges and surcharges, has resulted in dramatic reductions in the door-to-door freight costs, reductions that benefit the seller and buyer of the goods,” he said.

Van Dort said that in just one real-life case study “we have achieved a saving of US $1,950 on one forty-foot equivalent unit representing a staggering 31% reduction in logistics surcharges and multiple charges on the bills of lading since the new Sri Lankan regulations came into force on January 6, 2014.”“They will take effect from April 30, 2014 for existing contracts. These new arrangements have increased earnings on sales and the competitiveness of our products in world markets,” he said.

“The new arrangements do require close collaboration and cooperation between buyers and sellers, and in particular there will need to be a change in business practices including using the new and more appropriate Incoterm for containerised cargo shipments such as 'free carrier named place' (FCA),” Van Dort said. “But the prize for sellers and buyers is the elimination of illegitimate and inflated charges and surcharges and considerable reductions in freight costs which benefit both parties,” he said.Discussion at the GSF annual meeting noted that the problem of unsubstantiated charges and surcharges imposed on consignors and shippers without bargaining power in Africa, Asia and South America has been a concern for shippers in these regions for many years.

It is only now that the true scale and impact on shippers and trade in these regions is being fully understood and appreciated.

The GSF maintains that non-negotiable surcharges and local charges imposed on non-contracting consignors and shippers effectively act as an indirect trade barrier which inhibits international trade. The GSF agreed to take up the matter with the relevant global trade authorities.

In work undertaken in West and Central Africa by GSF member, the Union of African Shippers’ Councils, shippers’ organisations in the region have identified the additional cost to trade from these anticompetitive practices in the region is likely to represents billions of dollars.