Chairman's Message
Shippers, carriers and their service providers are partners in the sense that shippers need good carriers and service providers to provide transportation and logistics services; and carriers and service providers need the freight revenue and cargo shipments from the shippers. However, there is the basic business tenet that carriers and service providers must always strive to get more revenue from shippers, while shippers need to always find the best services for the least cost to be more competitive. The Council represents and defends shippers’interests in dealings with carriers and service providers. Some of the more common issues arising include the question of sufficient competition in the cargo transportation market; the justification and transparency of charges and surcharges; proper payment mechanisms that are convenient and cost effective to shippers; and whether service standards that are in place are properly set and reviewed.		Mr. Willy S M Lin Chairman

The past year has given rise to two major incidents in Hong Kong’s cargo transportation industry that necessitated the Council’s intervention. The first involved shipping lines running the Taiwan – Hong Kong/South China trade. These eight lines announced that from 1 July 2008, they would levy a new Emergency Bunker Surcharge (EBS) of HK$440/RMB400 per TEU to be collected only from consignees in Hong Kong and South China, regardless of whether freight had already been prepaid in Taiwan or not. These lines comprised almost all shipping lines providing services in the trade, which we looked upon as monopolistic. This prompted us to write a letter to the Competition Committee of the EC, as well as put pressure on the lines by writing to them, to government bodies including the Transport & Housing Bureau and the Commerce and Economic Development Bureau which is overseeing the preparation of Hong Kong’s own Competition Laws, and to Legislative Councillors overseeing commerce and cargo transportation in Hong Kong. The Council had united with the China Shippers’ Association, Macau Shippers’ Association and Shenzhen Shippers’ Association and together lodged complaints to the Chinese authorities overseeing maritime matters, and appealing directly to the shipping public.

Following our initial protests, the charge was suspended but the lines announced that they were reinstating it by mid-July. But by that time, not all of the original eight liners plying the trade were charging EBS. Some lines went back to the normal practice of charging the EBS against the party that paid for freight.

The Council would involve the Government as and when needed during its dealing with the carriers and other freight forwarders. Recent examples include THC, e-TR, cross-boundary trucking cost, etc.

At the beginning of 2008, it came to shippers’attention via notices outside the depots which receive our containers that a new “Handling Charge of HK$10.00 per container” was to be implemented from 17 March 2008. The same notice was posted also in all the depots used by shipping lines in Hong Kong that receive shippers’ containers.

Shippers pay the shipping lines Terminal Handling Charges and Documentation Fees. There is no direct business relationship between shippers and depots, since the depots are simply contractors of the shipping lines that handle container storage, receipt and release. Shippers were told that the charge would be used for setting up new handling zones meant to speed up container handling at the depots. We noted that there was no evidence of ‘special zones’ or any explanation as to how this was to be executed. There were no notable changes in operations except for the additional $10 charge per box.

We therefore strongly objected to the charge, and lodged complaints to major regulatory authorities. In the spirit of free competition, shipping lines should not be allowed to collectively impose charges that are unjustified and unsubstantiated, starting with the new HK$10 charge.

The issue of lowering Terminal Handling Charges has been an ongoing drive by us, particularly with the differential of approximately US$100 between the Shenzhen ports and the Hong Kong port. The shipping lines insist that the premium charged for Hong Kong is what continues to attract the most number of ship calls to our port but container terminal operators have said in the media that in the past six years, they have lowered the handling charges by as much as 25% already. We believe that should have been passed on to shippers by the shipping lines.

And, finally, there is the end of the cartels and shipping line monopolies in Europe. On October 18, the anti-trust law of the EU kicked-in and spelt the end of conferences and agreements in Europe. This has been several years in the offing so the lines have already had time to set up other types of grouping and organisations. But, most importantly, they have already stopped setting collective charges and fees.

We are now in the last quarter of 2008, a quarter characterized by one of the stormiest financial periods in history, with economies on the brink of recession or even collapse and last minute resuscitation measures. We are fortunate to be in a healthier state, along with China’s economy.

In air cargo, the Competition Law has been particularly harsh with carriers and freight forwarders in Europe and the US. The US Department of Justice has imposed steep penalties in the form of millions of dollars of fines on carriers that were charged with colluding on air cargo rates, and the same penalty has been imposed on carriers and freight forwarders in Europe that were said to be conspiring on cargo rates or fuel surcharges. The Hongkong Association of Freight Forwarding and Logistics (HAFFA) has ceased publication of their guideline of charges which was often referred to by the industry.

We continue to look for ways and means to assist shippers operating in this more challenging, post-conference era. We continuously update shippers through circulars and through our website on the movements of the fuel surcharge levels for both seafreight and airfreight. There has been much activity of late. In air cargo, the indexes devised by airlines to gauge fuel surcharge levels have all been tied to world crude oil prices that have been decreasing rapidly.

In seafreight, with the demise of conferences and agreements in Europe, most shipping lines have decided to go it alone and issue their own bunker charge. We therefore have strongly urged shippers to shop around for the best rates. And in this erratic environment, it is best to keep abreast of market rates to be well-equipped during negotiations. We believe there might be an upside to the situation, such as heightened competition among the lines, thereby resulting in better services at more competitive rates.

Shippers are facing a much more volatile market following the end of shipping conferences and discussion agreements. We urge them to remember that all charges and rates are negotiable. And to the carriers, shippers want basic, simple tariffs and there will be more requests for ‘all-in rates’.

And, finally, we support the removal of the anti-trust immunity given to carriers in the European arena as this will enhance competition in the market. In these days of open markets, the anti-trust immunity is no longer viable as shipping is not just as simple as port to port, but a part of the whole supply chain in logistics.