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Asian shippers protest liners’ THC hike Formal complaint lodged with Beijing which sees THCs as anti-competitive

BT Singapore 24th April 2007 By Donald Urquhart

(SINGAPORE) Asian shippers are again up in arms over controversial terminal handling charges (THCs) after regional liner groupings more than doubled the surcharges at southern China ports despite the Chinese government deeming such practices as anti-competitive.

Containers on port

Loading up: Impending hike will mean new THCs ranging from US$141 per 20-foot container to as high as US$344 per 40-foot container. Shippers see it as clearly a challenge to the Chinese government’s earlier rulings.

Four liner conference associations covering the intra-Asia, Middle East and Red Sea trades announced recently that from May 15, terminal handling charges at southern Chinese ports would be raised by between two and four times the current values.

This translates to new THCs ranging from US$141 per 20-foot container to as high as US$344 per 40-foot container. The four conferences are the Intra-Asia Discussion Agreement (IADA), Informal Rate Agreement (IRA), Informal Red Sea Agreement (IRSA), and Informal South Asia Agreement (ISAA) .

‘Carriers are far too greedy in seeking to raise levels totally without justification,’ said shippers in a joint statement from the Hong Kong Shippers’ Council, Shenzhen Shippers' Association and Macau Shippers’ Association.

‘It is clearly a move to exploit shippers for the carriers’ own benefits,’ they said, adding that the hikes were announced without any prior consultation.

The added cost would be a ‘great burden’ to shippers in the Pearl River Delta, 'at a time when they are already under tremendous pressure from an adverse trading environment and intense competition from the Yangtze River Delta economic zone and other regions’, they said.

The very existence of THCs has been a long running thorn in the side of shippers who say the charges are nothing more than an extra source of revenue for the shipping lines charged over and above the freight rate which, they argue, already includes terminal handling costs.

‘When the carriers first introduced THCs 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,’ the shippers said.

A two-year-long investigation by three Chinese central government departments into the practice of charging THCs over and above the freight charges, determined that THCs are inherently a part of the freight cost and cannot be charged separately. They went on to say that collectively applied surcharge limited the right of shippers to choose their carriers freely.

The Chinese authorities also called for consultation between carriers and shippers before the implementing of any rate alterations and said that penalties would be imposed on liner companies that fail to adhere to the rulings.

John Lu, chairman of the Asian Shippers’ Council (ASC), said that shippers are now waiting to see how the Chinese government would respond to what is clearly a challenge to its earlier rulings.

A formal complaint has been lodged by the China Shippers’ Association with the relevant bodies, including China’s Ministry of Commerce, State Development and Reform Commission, and the central government’s Fair Trade Bureau.

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