Enterprises and agencies slow to react to shipping surcharges

Vietnamese enterprises and government agencies have voiced their complaints about the unreasonable collection of surcharges applied by foreign shipping firms. However, they have not done the necessary things to settle the problem.
Surcharges – the versatile tool of shipping firms

In principle, goods owners rarely have to pay CIC (container imbalance charge). However, when the container imbalance becomes serious, shipping firms would impose this kind of surcharge to offset its expenses, especially the firms which use their own containers, not chartered containers (in general, the proportion of chartered containers of shipping firms is 40 percent).

It would be unreasonable to collect CIC if the container imbalance is not serious, and it is unacceptable if shipping firms collect CIC from both imports and exporters.

It is unclear if the container imbalance in Vietnam is serious enough for shipping firms to collect CIC, but it is clear that the CIC collection from both importers and exports is a kind of raising charges.

At first, shipping firms announced different kinds of charges and surcharges in order to make the freight rates transparent and help them get more flexible in recovering costs, which tended to increase due to economic changes. After that, surcharges have been used by shipping firms in a more flexible way, which can be used as a marketing tool (some shipping firms keep basic freight rates stable and collect low surcharges on some routes to encourage clients to use more services, or they offer charge reductions for big owners), or the effective method for them to earn more profits.

A survey released in 2009 on BAF (bunker adjustment factor) collection of some shipping firms, pointed out that BAF imposed on every 40 feet container was higher by 9-147 percent than the average fuel expenses. Therefore, the authors of the survey affirmed that BAF collection serves not only as the method to recover expenses, but as a tool to bring more profits to shipping firms.

The reactions of Vietnamese enterprises and agencies

In Vietnam, in late March 2011, the Vietnam Port Association VPA sent an official document to management agencies reporting the surcharge collection of shipping firms in reality. VPA said that there was a big gap in the THC (terminal handling charge) collected by shipping firms from goods owner and the money the firms paid to the ports (67 dollars and 117 dollars for 20-feet and 40-feet containers, respectively at 40 and 60 dollars). As such, the big gap alone allowed shipping firms in Vietnam to earn hundreds of millions of dollars a year.

The document also pointed out that in Vietnam, shipping firms not only excessively collected charges and surcharges from goods owners, but also put pressure on the ports in some cases in order to reduce expenses.

The document was recognized as a necessary move by VPA to raise voice to defend Vietnamese goods owners. In this case, VPA tried to make the information public and showed its viewpoint that shipping firms used their power to put pressure on partners.

However, the reactions by Vietnamese enterprises to the unreasonable surcharge collection by foreign shipping firms remain weak. The statements that the surcharges are unreasonable, shows the immaturity of the enterprises in experience and knowledge.

Enterprises and goods owners should be calm and find the right reasons to take reactions. They should also find the right channels to lodge complaints about the unreasonable charge collection.

Analysts comment that Vietnamese enterprises now have to go out to the sea in a dangerous situation: they lack radar, lack sailing experience and lifebuoys as well.

A question has been raised that what the government agencies have done to protect enterprises. Deputy Minister of Industry and Trade, Nguyen Thanh Bien said that the unreasonable charge collections have been carried out in the last many years. Then why hasn’t the ministry’s Competition Administration Department done anything to intervene? Meanwhile, the Ministry of Finance has only set up an inter-ministerial inspection team, after a small enterprise officially lodged complaints about the charge collections. What role the Vietnam Goods Owners’ Association is playing?- TBKTSG

Tags: shipping surcharges, Vietnam shipping surcharges