Friday, 15 January 2010 13:22
The Transpacific Stabilization Agreement (TSA) is imposing an Emergency Revenue Charge (ERC) effective today (15h Jan 2010) to help liners make interim revenue recovery before the next service contract in May. The ERC applies to shippers who have binding service contracts with TSA member lines.
We understand this policy guideline, ranging from US$320 per 20-foot container to US$505 per 45-foot container, has received unanimous votes from all TSA members.
We are astounded by TSA’s planned ERC. “What good are service contracts if shipping lines can just alter them without proper consultation with shippers?” asked ASC Convenor for Greater China, Mr Willy Lin.
Based on ASC’s record, since the beginning of 2009 when the world economy was struggling to recover, TSA members have imposed a string of surcharges, including a General Rate Increase, Bunker Adjustment Factor and Currency Adjustment Factor. This has pushed the all in ocean rate for a 40-foot container from Singapore to the US West Coast from US$1,500 in early 2009 to US$2,500 in 2010 pre ERC. If the ERC of US$400 is factored in, an all in rate for a 40-foot box is US$2,900.
The economic recovery is still in the early stages. A 14% increase over and above all the other surcharges over the past year is clearly unacceptable. “While TSA may be able to exploit its monopolistic position in the Asia-US trade to push through the ERC, what recourse do shippers have?” asked ASC’s Chairman Mr John Y. Lu.
TSA has a near monopoly of the transpacific eastbound trade. Only one major line is not a member. This has allowed the agreement to create a new levy in addition to over a dozen that already exists. Even though TSA is described as a discussion group and the ERC is a voluntary guideline, all 15 members have gone along with its recommendation on the ERC.
The Far East-Europe trade, which is being serviced by almost the same lines, has not had to contend with a TSA like situation as shipping conferences have been outlawed in the European Union since October 2008.
“We have no doubt that the weight of this surcharge will fall on small and medium sized shippers who can least afford it, as major shippers will not pay as they know their rights and they have the capacity to enforce them. It is well recognised that service contracts are legally binding contracts which shipping lines have to fulfil,” said Mr Lee Sun-June, ASC’s North East Asia Convenor.
The ERC has strengthened our resolve to work with our counterparts in the Global Shippers Forum to bring an end to shipping conferences and rate agreements.
“We want to call on Asian governments to take decisive action to remove the anti-trust immunity accorded to shipping lines. By allowing liners to continue to organise, they are jeopardising the viability of millions of shippers across the continent,” said Mr Lu.
