Tuesday, August 19, 2008

Shipping Lines Told to Stop Fixing Unfair Surcharges

Shipping lines need to work with shippers on fair arrangements for freight charges under the higher fuel cost environment, according to shipper Alami group of companies. "They (shippers) would like to ask the shipping lines not to use the high prices as an excuse for unilaterally imposing hefty increases in the freight charges and surcharges," said its chief executive officer Mohamad Radwan Alami.

He said this in his paper entitled "A Shippers Perspective on Rising Transportation Cost of Goods" at a seminar themed "High Oil Price and its Impact on the Shipping Industry: Staying Afloat in A Sea of Challenge", organised by the Maritime Institute of Malaysia (MIMA) here Wednesday.

In the past, shipping lines, working as a cartel, arbitrarily fixed high rates and unilaterally imposed unfair surcharges, Mohamad Radwan said. "The shippers have long suffered from these practices, which were protected by immunity to the European Community competition law, which was enacted to prevent anti-competitive practices," he said.

However, Mohamad Radwan told the seminar participants that the European Union Commission has since revoked this immunity and given shipping lines until October this year to scrap such practices.

I believe the shipping lines should relook their strategies and build a relationship with shippers that are more fair and just-in a scenario where both parties work as partners," he said.

"Shippers will not benefit from a decline in the growth of the shipping industry as they need the services to move their products," he added. Mohamad Radwan, who is also the logistics committee chairman of the Federation of Malaysian Manufacturers (FMM), said with higher operating costs and expected slowdown in world trade, the available capacity could surpass demand. "Shippers, being traders, will generally offer fair deals to shipping lines when they find them reliable and holding on their commitments and thus enable shippers to execute shipments to their customers according to plan and to avoid disruptions," he said.

On the basis of cooperation and mutual understanding, shippers and shipping lines had in the past worked out arrangements that was fair to both parties and sustained a mutually beneficial relationship, Mohamad Radwan said.

"We feel that this attitude of working closely to structure deals that is mutually beneficial is needed now more than ever before and we urge shipping lines to work along these lines," he said.

Mohamad Radwan, the founder of Alami, initiated the group's move in 2003 to establish a state-of-the-art factory for the manufacture of palm oil-based products, with a rated capacity of 20,000 metric tonnes per month.-Bernama

Source : Daily Express, 7 August 2008