Increased freight rates affect shippers

Container traffic and trade volumes have increased in the China region due to East and West bound vessels. There is a shortage of containers due to the demand increase in imports, Asian Shippers' Council Secretary General Rohan Masakorala told Daily News Business.

The global shipping lines have increase freight rates imposing anticompetitive mechanisms to earn more revenue he said.

World trade volumes have not reached the same level as it was previously and this unfair practice is due to the trade imbalances. "The shipping lines attempt to over recover, Masakorala said.

Many shipping lines laid off ships as the full capacity was not utilized. Therefore, it has created an opportunistic situation for freight rates to increase and this has affected shippers.

A dialogue is necessary as this is a one sided decision and the shippers are the victims.

The high rates also affect the interest of manufacturers and producers, he said. The shippers comprising importers and exporters need further support and the high rates have a negative effect on the economy.

Shippers accuse liners of arbitrarily increasing freight rates, even when demand was low during the height of the global financial crisis.

With the advent of containerization it became necessary for container terminals worldwide to compute and recover costs they incurred in handling containers through their terminals and loading them on and off ships.

"These costs are commonly referred to as Terminal Handling Charges THC and although the shippers try to imply that THC levied by shipping lines is peculiar to Sri Lanka, it is not the case.

Almost all ports around the world charge this and shipping lines recover these costs from the shippers," shipping sources said. In Sri Lanka, the THC comprises container handling costs of the Sri Lanka Ports Authority and private sector port operator South Asia Gateway Terminal.

The THC is paid to the port by the shipping lines and recovered from the shippers.

THC in Sri Lanka comprises port terminals' domestic tariff charges and the container depot cost of either receiving in or releasing out empty containers from the designated inland depot.

"THC is a recoverable land based cost paid by the shipping line on behalf of the trade to the port terminal and the inland depot for handling containers.

THCs so recovered by the shipping lines are not repatriated out of the country, but has been paid locally to the port terminal and the inland depot which handles the container," ship agents, said.

SJ