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Asian shippers praise THC veto

Cargonews Asia - 07th May 2007 by CNA Staff

The Asian Shippers’ Council (ASC) has said the attempt by four discussion agreements to sharply increase terminal handling charges (THCs) in South China has revealed a “total disregard’ for China’s position on the issue - that THCs were inherently a part of freight cost and cannot be charged separately.

Last week, THC increases proposed by the Intra-Asia Discussion Agreement (IADA), Informal Rate Agreement (IRA), Informal Red Sea Agreement (IRSA) and Informal South Asia Agreement (ISAA) were declared invalid by the mainland Ministry of Communications (MOC).

The MOC said the lines had held insufficient consultation with shippers, a requirement that came into effect earlier this year.

However, the secretary for IADA, IRA and ISAA, Roberto Giannetta, said he had contacted the China Shippers’ Association on the grounds that it represented China’s shippers. He said five letters on the proposed THC hikes went back and forth in early March between his office and the shippers’ association, and various points were addressed.

“That information and the letters was send to the MOC but then the proposal was declared invalid. We need clarification so we can make the necessary amendments,” he said.

Some of the THC increases were more than 300 percent, which was viewed with “deep concern” by the ASC.

“The decision to raise the THC almost four times the current levels was made without prior consultation with shippers, which goes against the norms of good business practices to keep customers engaged over impending changes, and is required by Chinese regulations,” the ASC said in a statement.

“ASC fully supports China Shippers’ Association’s decision to raise the issue with the Ministry of Communication (MOC) and stands behind Shenzhen Shippers’ Association, Hong Kong Shippers’ Council and Macau Shippers’ Association in opposing the steep THC increase for containers in and out of South China. Failure to take action against the unjustified increases would result in a steep THC hike for South China shippers and a loss of their competitive position.”

The spokesman said the ASC had always maintained that the THC was part of the freight rate and any suggestion by the four rate agreements that collecting THC was an international practice was “a blatant lie'.

“As THCs are charged over and above the freight rate, ie., a double charge, it should be abolished. Instead there should be an all-in freight rate, subject to negotiation between the interested parties.

“We recognise that there may be instances when surcharges are justified, in the event of sharp increases in fuel for example. But any surcharge has to be temporary and transparent, based on costs. The THC fails on all three counts."

Copyright © 2007 Times Business Information Limited. All Rights Reserved.

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