Looking forward to sincerity The meeting between the Federation of ASEAN Shippers' Councils and the Transpacific Stabilization Agreement (TSA) last April 26 was cancelled at the last minute. We are still looking forward to the willingness and sincerity of both parties to continue discussions on the pressing issues of the region. We appreciate the TSA's provision of the component list of THC (Terminal Handling Charges) to the Hong Kong Shippers' Council last March, as a first move towards transparency on a charge that the shipping companies have been collecting for 15 years now.

WILLY LIN

Shippers have had long-standing objections to the THC. The heat has certainly been turned on for the lines, with the case of shippers in China filing an appeal to Government to review the legality of carriers collecting THC; the Asia-Australia Discussion Agreement (AADA) facing the loss of its authorised price-fixing powers and ability to set surcharges; and the OECD report that advocates the reversal of the immunity powers given to conferences and shipping groups on price-fixing. In Hong Kong, the Government-commissioned Master Plan 2020 squarely cites the high THC here as the other culprit in the loss of the port's competitiveness, right alongside trucking costs to and from the Pearl River Delta.
Carriers should draw their main revenue from freight established on the open market principle. Surcharges, like THC, should be temporary in nature and imposed only after consultation with their customers and cargo consignees. When the circumstances that justify the surcharge cease to exist, then the surcharge should be removed.

We have raised several points regarding the component list presented to us. In the first place, it's a much expanded list than that of the Far Eastern Freight Conference (FEFC) which initially set THCs. Furthermore, some costs are directly related to management, such as the handling of empty containers, which we believe is part and parcel of a shipping company's service and it is illogical for the customer to be paying for finding an empty container. Likewise, they have included administrative charges, which again is part of the service element that a shipper is entitled to when paying the freight rate.

A body of experts commissioned to study the issue of THC in China had concluded that terminal handling charges are anti-competitive and recommended that market forces should influence THC. The group, composed of academics and legal experts, were said to have found the levy illegal under Chinese law.

In fact, the current practise of withholding the bill of lading until the shipper pays the THC is not right. The shipping line should collect the THC from the consignee if the shipper clearly marks "Freight Collect" on the booking form and the shipping line had accepted the booking. And the most logical way to do this is to incorporate THC into the freight rate.

Shippers would most willingly pay for services they see and get. If THC is a cost recovery exercise as carriers have been claiming all along, then maybe we could explore the possibility of the shipper paying the cost for the use of the terminals, directly to the terminals. Then, shippers would have the freedom to choose the carrier that uses the terminal with the lower charges.

With all these arguments and judgements against THC, it's about time that conferences and agreements realise that merely paying lip-service to shippers is no longer an option these days. With logistics service providers competing fiercely in a crowded global market, the shipping lines are beginning to lose their grip on monopoly and must see that they are answerable to customers. Dialogue and discussion is a benign move that provides them a forum to make themselves a little bit more credible.