Basic freight rate down, but surcharges up

Since mid March 2011, shipping firms have been imposing a lot of new surcharges on enterprises which has burdened Vietnamese import and export companies.

Surcharges in chaos

The fact that shipping firms now collect a CIC (container imbalance charge) has been described by enterprises as “nonsense”, because they believe that “this is the matter of carriers”. However, the carriers have been trying to put the burden on the shoulders of Vietnamese enterprises.

It is really unreasonable when CIC is imposed at both the departure and destination ports, especially to the imports and exports between Vietnam and China. Though exporters have to pay CIC at departure ports already, importers in Vietnam have to pay CIC, once again to shipping firms.

Enterprises have also complained about the lack of transparency in imposing surcharges. In mid 2007, shipping firms unanimously collected THC (Terminal Handling Charge) in Vietnam (68 dollars on average on every 20 foot container and 117 dollars on every 40 foot containers), saying that the surcharge aims to compensate the expenses for the handling. However, a question has been raised that how much the shipping firms actually pay to port developers, while they collected huge sums of money every year from importers and exporters.
Now shipping firms impose new surcharges: Emergency Bunker Surcharge ––fuel premium added to the freight, and CIC.

Why are there so many kinds of surcharges?

To calculate the total freight enterprises have to pay is as follows: ocean freight = basic rate + surcharges. The commonly seen surcharges include: Bunker Adjustment Factor – BAF, Currency Adjustment Factor – CAF, Peak Season Surcharge – PSS, War Risk Charge – WRC and Port Congestion Surcharge – PCS.

Experts comment that in the context of the economic crisis, where the trade among countries has been decreasing, shipping firms should have cut down freight in order to attract more clients. However, in fact, they have “given birth” to many kinds of surcharges, which should be seen as a method or raising freight carried out by shipping firms.

In the past, when the marine transport was not really developed, shipping lines had to register all kinds of fees and surcharges to state management agencies before they applied it in reality. However, it seems now that shipping firms have forgotten the “habit” of registering fees and surcharges.

Shipping firms have explained that they do not impose higher basic freight rates, while they only try to collect surcharges because they need to cover the expenses arisen due to many reasons. However, Vietnamese enterprises have pointed out that in fact, this is a kind of increasing freight, has been burdening enterprises.

It’s necessary to settle problems by laws

It seems that the negotiations between state management agencies, enterprise associations and shipping firms have come to nothing. On March 10, Deputy Prime Minister, Hoang Trung Hai signed a dispatch, requesting ministries and branches to examine and settle the problems on collecting new freight surcharges. However, shipping firms remain unruffled and they continue collecting these kinds of surcharges.

Experts say that in the US, the Federal Marine Commission – FMC is the agency which has the biggest power in monitoring the operation of shipping firms and other activities relating to the import and export, in order to ensure the reasonability and transparency.

The experts believe that such an agency can be established in Vietnam, which is in charge of monitoring the operation of shipping firms. They have also called on state management agencies to check legal documents and release new regulations relating to foreign trade transportation, believing that only by doing so, will Vietnamese enterprises be able to avoid unreasonable fees.- TBKTSG

Tags: freight rates