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South China Shippers Reject Proposed THC Increase

Press Release 17th April 2007

Shippers in the region strongly oppose the increase in THC for container shipping in and out of South China announced by the Intra-Asia Discussion Agreement (IADA), the Informal Rate Agreement (IRA), Informal Red Sea Agreement (IRSA) and the Informal South Asia Agreement (ISAA).

The increases are totally unjustifiable, and they range from two to nearly four times higher than the current levels of THC.

Effective DateExisting THCProposed New THCIncrease
IRA (Far East – Middle East) 15/5/2007 20’ RMB 370
40’ RMB 560
20’ RF RMB 410
40’ RF RMB 610
US$141 (RMB 1,100)
US$269 (RMB 2,098)
US$181 (RMB 1,412)
US$344 (RMB 2,683)
+197%
+275%
+244%
+339%
ISAA (Far East – South Asia) 15/5/2007 20’ RMB 370
40’ RMB 560
20’ RF RMB 410
40’ RF RMB 610
US$141 (RMB 1,100)
US$269 (RMB 2,098)
US$181 (RMB 1,412)
US$344 (RMB 2,683)
+197%
+275%
+244%
+339%
IRSA (Far East – Red Sea) 15/5/2007 20’ RMB 370
40’ RMB 560
20’ RF RMB 410
40’ RF RMB 610
US$141 (RMB 1,100)
US$269 (RMB 2,098)
US$181 (RMB 1,412)
US$344 (RMB 2,683)
+197%
+275%
+244%
+339%
IADA (Intra – Asia) 1/6/2007 20’ RMB 370
40’ RMB 560
20’ RF RMB 410
40’ RF RMB 610
US$136 (RMB 1,061)
US$259 (RMB 2,020)
US$176 (RMB 1,373)
US$334 (RMB 2,605)
+186%
+260%
+234%
+238%

When the carriers first introduced THC in China in 2003, it was already being levied on top of freight rates, and the whole sum became purely additional revenue for the carriers since all the costs at the terminals are covered by all-in freight rates.

Carriers are far too greedy in seeking to raise levels totally without justification. It is clearly a move to exploit shippers for the carriers’ own benefits.

The amount being considered is very substantial. Using Shenzhen ports throughput figures—and only calculating for the particular trade lanes of said carriers--the lines are asking shippers to fork out RMB3.15 billion ( US$ 0.4 billion) more annually.

The increases would cause great burden to shippers in the Pearl River Delta at a time when they are already under tremendous pressure from an adverse trade environment and intense competition from the Yangtze River Delta (YRD) economic zone and other regions.

The carrier conferences state that the increases are proposals only and not binding on their members. Obviously, carrier conferences fear of being accused of practising collective pricing. Consequently, shippers should reject all requirements or requests for THC increases from any or all of the carriers.

The THC is an unjustifiable cost and the recent action of carriers to further increase their levels in South China will cause significant damage to the importing and exporting businesses in the region.

For further inquiries, please contact:

  • Shenzhen Shippers’ Association, Mr. Toland Lam, Executive Chairman
    Tel: 86-755-83643303
    Fax: 86-755-83643240
  • The Hong Kong Shippers’ Council, Mr. Sunny Ho, Executive Director
    Tel: (852) 2834 0010
    Fax: (852) 2891 9787
  • Macau Shipper’s Association, Mr. Frank Tang, Chairman
    Tel: (853) 2835 5433
    Fax: (853) 2835 6437

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