News
- CIFFA: Ocean Update
- 2/25/2010
Forwarders Furious at Surcharge Nightmare
IFW reports that forwarders are becoming annoyed with carriers increasing rates by using a variety of surcharges, not just general rate increases (GRIs).
“Zim has recently announced an ‘emergency revenue’ charge – I don’t know what the difference is between that and a normal GRI,” said one forwarder. “There are so many surcharges, all with different names,” she added.
Another said he had found it difficult to understand why one carrier had introduced an ’emergency bunker’ surcharge when it already had a floating bunker adjustment charge in place. “Every month brings a new surcharge – base rates have stayed reasonably stable, but the lines just keep creating new charges,” he said.
“Different lines have done different things, but the bottom line is that rates go up proportionately – one shipping line might call it a ‘peak season’ surcharge, while another will call it an ‘extraordinary’ surcharge, but prices increase by the same amount. It makes the whole thing very messy, and it makes it hard to justify price increases to our customers.”
Traditionally, carriers implement a PSS during the summer, when volumes are at their highest, but this year some lines have introduced them during the winter, and have kept them in place over the Chinese New Year holiday – a time when volumes fall as Chinese factories shut.
“Some carriers are extending a PSS due to expire on 28 February to the end of March, while others are reducing them by 50% and then adding it back in as another GRI," said one. “It is a complete nightmare, trying to keep customers up to date on rates and surcharges and, of course, getting agreement to pass the cost on to them.”Comment: There is certainly nothing wrong with carriers trying to restore freight rates to sustainable levels. Ultimately, it is in the interest of the market place. The customer needs a secure, reliable and well serviced ocean network to operate an efficient supply chain. So let us welcome and support traditional GRI’s, but question this more recent practise of random surcharges. It is in total contradiction to all the preaching of better productivity through harmonization, standardization, rationalization etc. It complicates record keeping, exponentially increases the source of errors and omissions, increases administration costs and negatively impacts on trade facilitation. One would think that an industry reliant on trade growth would be more sensitive to such issues.