MEL IN THE PRESS

Erasmus report reveal “uncertainty and divided opinions” regarding freight surcharges
November 18, 2005

Ocean carriers’ customers are still uncertain how freight additionals and surcharges are calculated, and there are conflicting positions among stakeholders in the debate on how to treat such charges in future.

These are among the findings of a study released today by the European Liner Affairs Association (ELAA), the organisation representing carriers in their quest to ensure stability for global trade in response to moves by the European Union’s competition directorate (DG Comp) to repeal EU regulation 4056/86.

The research, commissioned by the ELAA and undertaken by the Center for Maritime Economics and Logistics of Erasmus University Rotterdam (MEL), sought to ascertain understanding of and attitudes towards terminal handling charges among both terminal operators and shippers and consignees. It also reviewed with cargo owners the system of adjustment factors for currency and fuel costs.

“This part of the consultation process which we have initiated reveals uncertainty and divided opinions among the transport community,” commented Chris Bourne, ELAA executive director. “People just aren’t clear on how their interests can be best served in the future.”

Terminal handling charges, for long a contentious issue among shipper representatives, are not generally understood by cargo owners, their forwarder intermediaries or the terminal operators themselves, while their future treatment drew mixed views. Terminal operators favoured these charges becoming a part of terminals’ business and instituting direct dealings with cargo owners for recovery, but shippers resisted the idea.

Regarding currency and bunker fuel adjustment factors, the MEL study found “hardly any knowledge of how CAF and BAF surcharges are calculated”. There was not perceived to be much correlation with the underlying costs and shippers in particular felt the surcharges were “meant as an additional money maker for the lines”.

 

Forwarders, on the other hand, had fewer objections to the surcharges, though they were keen to see both surcharges and terminal handling charges included in the ocean freight, on which they traditionally are paid by commission.

Mr Bourne said: “These divisions show there is a need for further consultation with the appropriate bodies. For instance, it will be necessary to reconcile some parties’ fear of carriers adopting a fragmented approach to surcharges with their dislike of a mutually agreed calculation mechanism. It may be that during this consultation the risks of uncertainty and the benefits of stability become more generally accepted.”

 

The Erasmus University report can be found at:

http://www.elaa.net/documents/ErasmusSurveyforELAANovember2005.pdf

 

european Liner affair association