Shippers run out of patience

PUBLISHED : Thursday, 29 September, 2005, 12:00am
UPDATED : Thursday, 29 September, 2005, 12:00am

Asian exporters to lobby for WTO action to end 10-year dispute over handling fees

Asian exporters plan to take their long-running dispute on terminal handling charges to the World Trade Organisation to seek relief from billions of dollars in fees levied by shipping lines each year, according to the Federation of Asean Shippers' Councils (FASC).

Frustrated by a decade of fruitless dialogue with shipping lines, delegates from the region's 12 shippers' councils voted unanimously in Jakarta yesterday to lobby their governments to take their grievance to the WTO in a bid to eliminate a levy they say contradicts the basic rules of a free market.

'We have disputed this with the shipping cartels for more than 10 years now and have yet to receive a positive response,' said John Lu, chairman of the Asian Shippers' Council.

'We believe the [levy] is against the WTO's regulations governing free trade.'

The WTO requires all trade disputes to be brought to it through official state channels.

The FASC says members paid US$3.6 billion in terminal handling fees in 2002, or about 10 per cent of the cost of shipping their goods by sea to mostly western markets.

Based on a conservative compound annual growth rate for trade over the three years since 2002, members will pay more than US$5 billion in handling fees this year.

The fees are collected from shippers by shipping lines ostensibly to recover the cost of paying container terminals or midstream operators for loading and unloading containers and other related costs borne by the lines.

Levies vary from port to port across Asia. In Hong Kong, for example, the fee for sending a 20-foot box of cargo across the Pacific is US$274. To Europe, it is US$265.

Shipping lines that apply the levy on Asia's export cargo say the handling fees were a 'cost recovery' mechanism allowing them to pass on costs incurred while picking up freight, chief among which is the container handling charges they pay to terminal operators.

FASC members have long suspected the terminal handling charges are a profit centre for carriers. They say there is evidence that while fee levels have not changed since their inception more than a decade ago, container handling charges, which form 80 per cent of terminal fees in most ports, have fallen as much as 25 per cent at some ports in the past five years.

Repeated requests for the cost elements of the charges to be itemised have been consistently rebutted by shipping lines, which cite the 'commercial sensitivity' of their contracts with the terminals.

In China, where the exporters' handling fee burden grows proportionate each year to its export growth, the matter was sent more than two years ago for the Ministry of Communications to adjudicate. But the ministry, which owns the nation's two biggest shipping lines, has remained silent on the matter.

Trade between China and the United States alone has grown an average of 34 per cent a year since 2002, according to carriers plying the Pacific trade lanes.

The FASC, whose members hail from Bangladesh to South Korea, has lobbied for years for the fees to be included in the freight rate, making its level susceptible to the forces of supply and demand.

'The shipping lines use their antitrust immunity to protect themselves,' Mr Lu said. 'But there is nothing to protect the shippers.'