THE Hong Kong Shippers' Council (HKSC) has lodged a strong objection to the proposed 20 per cent increase in terminal handling charge (THC) by the Intra-Asia Discussion Agreement (IADA). In a letter to the IADA secretariat in Hong Kong, HKSC executive director Clement Yeung said the proposed 'hefty increase' was not justified and also was not in accordance with the undertaking given by the IADA to the council in July last year. The THC was revised to $1,000 per TEU (20 ft equivalent unit) and $1,500 per FEU (40 ft equivalent unit) on August 1 last year. According to the HKSC, before implementing those revisions, the IADA had agreed 'in the interest of trade stability' that the Hong Kong CPI (consumer price index) and GDP (gross domestic product) deflator 'will serve as inflationary guides for future THC increases', which would be subject to talks with the HKSC. With the proposed THC levels taking effect in January, the HKSC is looking at a reference period of 17 months. According to HKSC calculations, the estimated CPI A index inflation rate for the period was 11.76 per cent. Calculations on how this figure was arrived at also have been sent to the IADA secretariat. The HKSC also is against the proposed introduction of a uniform IADA surcharge for all ports in China's Guangdong and Fujian provinces. The HKSC has argued that the Chinese ports are in different stages of development and provide different services at different costs. According to the HKSC, if shipping lines operating from these ports require additional revenue they should adjust their tariffs according to their costs and services provided at specific locations. 'We believe this method is equitable and provides the flexibility needed by both shipping lines and shippers,' Mr Yeung said. According to Mr Yeung, another reason for objecting to the surcharge was that it was discriminatory and excluded cargo to and from Japan and Taiwan. The IADA had said that it had delayed applying the surcharge on Japan and Taiwan until the implementation problems had been sorted out. But, according to Mr Yeung, this had left the HKSC with the impression that the IADA had deliberately slapped the surcharge on those regions where shippers had weaker bargaining power. Mr Yeung also pointed out that the levels of surcharges proposed to be levied in China - at the rate of US$130 per TEU and $195 per FEU were equal to the THC being collected in Hong Kong, which are 'the highest in Asia, outside Japan'. It is an acknowledged fact that costs in China are generally lower than in Hong Kong, he said.