Hutchison's Rotterdam arm will apply security surcharge

PUBLISHED : Tuesday, 15 July, 2003, 12:00am
UPDATED : Tuesday, 15 July, 2003, 12:00am

ECT follows other ports in Europe as the levy is imposed worldwide, but costs will depend on measures needed

European Combined Terminals (ECT), the Rotterdam-based subsidiary of Hutchison Port Holdings (HPH), will follow other ports on the continent and next month ask carriers to pay a security surcharge in moves being seen as the first steps towards a global rollout of the levy.

HPH sources in Hong Kong confirmed at the weekend ECT would apply a four euros (HK$35.26) per box security surcharge from August 1, after similar moves made this month by the port of Hamburg's HHLA and port of Bremerhaven operator NTB.

But unlike Bremerhaven and Hamburg, where first-phase security charges are marginally higher, ECT had not finalised its decision to double the levy to nine euros per box at the end of the year, an HPH spokeswoman said.

HPH sources in Europe said the cost would be assessed on a port-by-port basis.

'Each port has its own security measures and its own associated security costs, so there is no plan for a global rollout, per se,' said Clemence Cheng, finance director for Hutchison Westports, the management company for its British facilities.

'While ECT may have made its initial decision on security charges, in Britain it is still under consideration. 'I'm sure each port [in the HPH global portfolio] will have additional costs, but it will be up to each management whether they are prepared to absorb the costs, or how they plan to recover them,' Mr Cheng said.

Europe was seen as a key battleground for the rollout of terminal security charges because a universal application of the fee could fall afoul of the European Commission's anti-competition laws, whereas Asia had no such regional legislation.

At four euros per box the levy might seem small but, if applied locally, it would cost exporters and importers using the port of Hong Kong more than HK$680 million each year based on last year's throughput and provided carriers passed the cost on to the shippers, as is usually the case.

The levy is being driven by the costs of recent maritime initiatives aimed at securing the global maritime supply chain, particularly goods transiting the United States, against acts of terrorism.

The London-based International Maritime Organisation is the instigator of one such initiative, the basic framework of which includes risk assessment and prevention measures known as the International Ship and Port Facility Security (ISPS) code.

The ISPS code, global compliance to which by next July had been estimated in some circles to cost the maritime trade industry a one-off US$80 billion, was introduced in December.

It requires every port to hire a security officer, undertake a threat and vulnerability assessment and create a port security plan. Infrastructure-based requirements include securing and monitoring perimeters and working areas for the world's 20,000 ports around the clock.

P&O Ports, the world's No2 container terminal handling company, had yet to decide how it would apply the levy.

P&O chief operating officer Alisdair Baillie said: '[A security charge] is certainly under consideration, not just in the EU [European Union], but internationally. The ISPS code is raising our costs, and what terminal operators are applying is not dissimilar to the fees carriers charge in connection with the new 24-hour pre-submission of cargo manifest regulations.

'Whether we roll this out internationally is under consideration. Right now, however, we are looking at it on a national basis.'

Carriers in Europe initially stated opposition to the fee, signalling they would pass it on. They complained about a lack of consultation and transparency in how the fee level was set.

Hong Kong Shippers Council executive director Sunny Ho Lap-kee said: 'They've stolen all our arguments.' The council's members had long said the same things about the way carriers set terminal handling charges.