Fee stalemate hits China /16 Jan 2002/

Shipping lines and shippers are locked in stalemate over yesterday’s implementation of a $43 China terminal handling charge, writes Matthew Flynn.

This is the first time that a country-wide charge of this type has been introduced and shipper groups are protesting loudly. Shipping lines have officially linked the move to a 15% hike in government container terminal charges, but shippers point out that the fee is excessively high and far from transparent. Representatives are scheduled to meet with the China Shipper Association again on Friday to discuss the issue further.

“Shipping lines should consider the shipper’s opinion and seek consensus on the THCs, but although there have been meetings, this was an announcement, rather than a negotiation,” said Sunny Ho, who heads the Hong Kong Shippers’ Council. The dry cargo terminal handling charge has been set at Yuan370 ($43) per teu and Yuan560 per feu. Reefers will cost the shippers Yuan410 and Yuan610 extra.

The hardest hit among mainland shippers will be those in northern ports of Qingdao, Tianjin and Dalian, which have been free of such charges.

There are some charges similar to the proposed increase in other parts of China. Ports in Guangdong, Shanghai, Guangxi, Yunnan and Hainan already have an origin receiving charge in place, which already have the equivalent of a terminal handling charge, but this applies to exports only. Shanghai shippers are already paying a port surcharge.

The Chinese government’s trade and maritime ministries have decided to treat the issue as purely a commercial matter, but have encouraged the lines to consult as much as possible. Buyers have preferred to buy China goods on a free on board basis, which means that the new charges land squarely on the Asian manufacturers.

In the long-run, the makers will probably recoup some of the extra cost from the buyer, who in turn might just put more pressure on carriers to drop rates. Privately, an official at one carrier said that Chinese ports were getting more expensive, but he acknowledged that the scale of the surcharge goes beyond the extra costs. “We are simply losing too much money to not consider asking the shipper to pay for the services to get the cargo onto the ships.”

Carriers will start imposing the fees immediately, but they acknowledge that it will be difficult to get 100% compliance. The transpacific cargoes are governed mostly by service contracts, so the new THCs will not go into effect until after the next season’s contracts.

Source: Lloyds' List, 16/01/02, M. Flynn