Saturday, January 23, 2010

Asian Shippers Rebel Against Shipping Container Rate Increases

Council are “astounded” at Surcharges
Shipping News Feature

ASIA – The Asian Shippers Council (ASC), an integration of national shipper’s Councils from around the region and based in Singapore is a body who rarely issue press releases. This week however the normally peaceable body has expressed its incandescent rage with the members of the Transpacific Stabilization Agreement (TSA) who, as announced here just before Christmas, have introduced an emergency revenue programme to boost their members’ finances after record losses. Details of the individual levies proposed can be seen our previous article.

The press release was timed to coincide with the imposition of the Emergency Revenue Charge (ERC) last week and the shippers representatives have probably been shocked by the apparent unanimity of the fifteen TSA members in imposing the surcharge. Such rate changes have to be voluntarily made by each TSA associate company to avoid accusations they are a cartel and are acting against anti trust legislation. It seems on this occasion the container lines are holding firm to the $320 per TEU to $505 per 45 foot box increases they unanimously agreed to adopt.

The ASC complain that in the past twelve months the TSA has seen fit to impose increases which mean the cost of a standard forty foot container moving from Singapore to a West Coast US port up by $1400 to $2900. ASC say the latest move is monopolistic despite the “voluntary” tag with Mr Willy Lin, ASC Convenor for Greater China, adding “What good are service contracts if shipping lines can just alter them without proper consultation with shippers?”

All ten of the largest container shipping companies in the world are members of the TSA and the ASC comments that the more robust anti trust regulations of the European Commission prevent such swingeing increases for Far East – European trade. The ASC is promising to work alongside the Global Shippers Forum in lobbying Asian leaders to redefine anti trust legislation and remove the immunity it perceives is in place. Mr Lee Sun-June, North East Asia ASC representative commented that Asian governments, by allowing the lines to confer and organise were” jeopardising the viability of millions of shippers across the continent.”

Despite the protestations ship owners will point out that they cannot allow the situation to continue and still maintain the services their customers demand. With shipping company debt worldwide reported to be as high as $550 billion it might just be time that the shipping lines hold fast and try and recoup some of the billions of dollars which they have been bleeding out in the past months. If they wish to retain business however they must demonstrate that they are economising wherever possible to try and pacify anguished exporters and importers.