Asian Shippers’ Council rejects congestion surcharges

Asian Shippers’ Council rejects congestion surcharges    The Asian Shippers’ Council (ASC) believes ocean carriers are abusing shippers with an “ever lengthening list of surcharges” to cover their self-inflicted costs arising from U.S. West Coast congestion.
   The ASC is a federation of national shippers councils in Asia that was set up last September.
   John Lu, ASC chairman, commenting on the Transpacific Stabilization Agreement 2005 business plan, said: “TSA seems to have ignored the fact many rail and port terminals are operated by shipping lines through their subsidiaries or associate companies. Shouldn’t these companies be held accountable for failing to anticipate the demand and contributing to the gridlock?”
   “Instead of having to pay higher surcharges for delays, shippers deserve to be compensated. Many shippers have had to resort to air freight at considerable cost because of the West Coast congestion, and some are facing claims from buyers for late delivery,” Lu said.
   According to the ASC the steep cargo growth resulting from China’s entry into the World Trade Organization in 2002 and emergence as the manufacturing center has benefited carriers but not shippers with China’s low production costs squeezing prices.
   “TSA is merely using the present supply situation as an excuse to increase rates without considering how these increases would affect us,” Lu added.
   He alleged shipping lines are “abusing their monopoly situation.”
   “While shipping lines have a free hand to do as they please, there is no legislation in Asia to protect shippers, apart from Japan. This situation will have to be changed,” Lu added.
   Lu also urged carriers to engage in constructive dialogue with shippers to prevent the boom and bust nature of shipping. “Unfortunately the industry has a short memory. Shipping is known to be a cyclical industry, and the shipping cycles are becoming increasingly shorter, and sharper, because of erroneous decisions made by shipping lines,” Lu said. “Bumper profits generated through imposing steep rates only encourage companies to build more ships, which are bigger and faster. Not only does this hasten the downturn, it would also cause the downturn to be deeper and more prolonged.”
   This could be prevented if shipping lines and their representatives could engage in a constructive dialogue with shippers, according to the shipper representative.
   “They would be better placed to determine market supply and demand, resulting in a more even performance for shipping lines and a more stable freight rates for shippers,” Lu said.
   The TSA has announced increases in eastbound transpacific rates, effective May 1, but not specifically port congestion surcharges.