Exporters look for meeting over soaring freight costs

Following a meeting last week, the Association's subgroup – the British Shippers' Council – has hit out at the extra costs now being imposed on exporters in terms of inland freight charges. Now it is hoping to bring all sides together for talks.

The recycling sector has already voiced its concerns – last week many UK paper recyclers expressed worries about the freight charges which in particular are hitting operators in northern parts of England and those based a long way from the ports (see letsrecycle.com story).

Now the FTA's shippers' council has said: “The Far Eastern Freight Conference has announced the introduction of a surcharge on deliveries to the UK due to the levels of congestion in Britain's ports. This comes on top of recent rate hikes for goods going from Europe to the Far East.”

Outdated

Christopher Snelling, FTA's head of global supply chain policy, said, “There are huge problems with congestion at Britain's ports, but introducing a charge does nothing to address this. This is a very outdated and inappropriate response by the Conference to a complex problem.

“One of the causes of congestion at the ports is lines missing their berth slots for delivery, so to some extent the lines are surcharging customers for their own failings. Instead of imposing a charge, the lines, not the Conference, should have come to their customers and to the ports to discuss their problems and to work together for a solution,” he said.

Congestion

The Far Eastern Freight Conference has pointed to a shortage of containers and the congestion in UK ports and congestion charges loom on top of other price rises. A recent statement from the Conference said: “Together with substantial growth seen in other trades, this level of increase has created congestion not only at the major UK terminals, but has also caused congestion of the inland transport and delivery systems.

“On occasions, lines have found it necessary to by-pass UK ports and feed cargo to the United Kingdom, and in some cases divert their vessels to non-scheduled ports and equalise the costs from these ports. This has created even more congestion for an infrastructure that is already overloaded. The infrastructure congestion has also made it very difficult to repatriate much needed empty containers to Asia.”

And, the Conference detailed extra charges to come in from December. “In meeting these, and other operational problems, FEFC members have incurred substantial extra costs in supplying their liner services to customers. The study undertaken by the lines has identified major cost increases in vessel operations, transhipment of cargo and port equalisation.

“The aggregated increased costs identified by the study amount to an extra cost of US$ 145.00 tonne and in order to recover this amount the FEFC will announce a UK Congestion Charge of USD 145/TEU applicable to the westbound trade for all containers is charged on or after 1st December 2007. The costs will be reviewed after 60 days and adjusted as necessary.”

Empties

Rod Riseborough, for the Conference, told letsrecycle.com that shipping lines “need containers back in Asia urgently and in some cases would rather take empties straight back than carry cargo.”

And, in response to some concerns that the sector was potentially working in in inappropriate way in terms of all shipping lines raising prices at the same time, he said: “The Conference is governed by the rules as laid out by the EU, both from legislation and legal precedent – the Conference has no power to sanction lines, and all lines have the right to charge whatever rates they wish.

“I think that there is another factor here which is that lines are looking at a number of ways to optimise their containers/fuel costs etc. and, in this process they are not always seeking to carry the maximum amount of cargo, or containers, which can end up spending weeks before being available at destination, at rates that are actually negative.”

Best practice

Now the Freight Transport Association is looking to bring the parties involved together – in 2005 it was involved in developing a best practice guide, Beating Port Congestion.

The FTA said today: “In response to the FEFC's unilateral surcharge, FTA wishes to re-launch this initiative to try to bring the industry together in a more constructive and collaborative manner. FTA will be approaching the previous participants to take this forward.

A spokesman added: “At the BSC meeting members reported lines being willing to undercut FEFC rates by 25 per cent, showing that their levels are artificially high. Hopefully this will be seen across industry and the FEFC rates will fail to gain credibility. Concern remains that smaller shippers may not be in such a good position to bargain.”