Joint Shippers’ Declaration of Asian Shippers’ Counci

Joint Shippers’ Declaration

of 

Asian Shippers’ Council

Canadian Industrial Transportation Association

European Shippers’ Council

Japan Shippers’ Council

The National Industrial Transportation League

2007 GLOBAL SHIPPERS’ FORUM MEETING

September 16-18, 2007

SINGAPORE

Introduction

The annual gathering of global shippers took place on September 16-18, 2007 in Singapore, the strategic gateway where east meets west and north meets south, with Asia today representing the engine-room of global economic growth.

The Global Shippers’ Forum (GSF) is recognized in the international world of freight transportation and trade as the representative voice of shippers whose respective members are users of transportation services.  GSF today represents numerous shipper groups from North America, Asia, Africa, Oceania and Europe, whose focus centers on policies and industry practices that impact the international movement and handling of freight.

The purpose of the GSF is to share information on regional developments important for shippers, debate common views and establish a united front in the advocacy of strategic freight policies to national and international policy makers.

The scope of the latest GSF’s discussions included:

• Enhancing a more competitive environment in freight transport;
• Developing programs that foster more efficient transport and trade;
• Support for effective government programs; and,
• Greater efficiencies through communication.
  
  

ENHANCING A MORE COMPETITIVE FREIGHT TRANSPORT ENVIRONMENT

Maritime Regulatory Reform

The decision last year by the European Commission to remove the legal instrument giving anti-trust exemption for liner shipping companies grouped into so-called ‘conferences’ continues to send profound signals for change to those regions of the world that have not yet followed suit. Asia is now acknowledged by shippers to be the next target for regulatory reform to take hold. GSF has this year devoted considerable focus to this matter and a separate declaration on this subject has been issued.

Competition policies for the liner shipping sector around the world can be expected to align themselves with those followed in most other industrial and service sectors.  It is the GSF’s objective that these policies embrace competition, free market principles and end any opportunity for collusion among suppliers.

GSF fully supports the development of ‘Guidelines’ by the European Commission that align the treatment of the liner shipping sector with that of other industrial and service sectors in regard to their compliance with European Community competition law.

GSF will prepare a detailed assessment of the recently published draft ‘Guidelines’ from the European Commission and will assist the Commission as it moves into the final stages of its work towards establishing appropriate competition guidelines for the liner shipping sector.

In particular, GSF strongly believes that the ‘Guidelines’ should be general and not prescriptive in nature.  The ‘Guidelines’ should deliberately avoid allowing any specific activities beyond those already defined under EU competition law in the decisions of the European courts and Commission. Such an approach will ensure the necessary degree of caution in the liner shipping sector that self-governance on the application of competition law requires.

The draft ‘Guidelines’ clearly recognize that EC Competition Law does not permit carriers to exchange information which would allow carriers directly or indirectly to identify the competitive strategies of their competitors.

Moreover, GSF members will closely monitor exchanges of information developed by the liner shipping sector for compliance with EU competition law and their impact on liner trades elsewhere.

It is of importance to note the initiatives proposed by India and China to repeal the exemptions from anti-trust immunity to the freight transport industry.

Surcharges/Ancillaries, Terminal Handling Charges

Surcharges and ancillaries should only be used to compensate carriers for unforeseen, unanticipated short term cost increases.  They should be temporary in nature.  Application of such surcharges should also include decreases when a carrier’s costs decline. The GSF recognizes that when applied in this manner, surcharges and ancillaries represent a legitimate practice when made part of a mutual negotiation by the carrier and customer.

The treatment of surcharges and ancillaries remains in contrast to freight rates where terms and service conditions, service parameters and performance are determined by the carrier and its customer through mutual negotiation.  These parties are best suited to arriving at a price to be paid for transport over an agreed period of time.  A contract between the seller and buyer of the freight determines who pays the costs of shipping whether door-to-door, port-to-port or any other method.

Surcharges continue to represent a significant proportion of the total freight bill and GSF believes that normal business practices between buyer and seller should be the best method of determining who pays the surcharges and ancillary costs. The GSF also recognizes that for many shippers, particularly Asian shippers, terminal handling charges (THCs) should be an integral part of the freight. It supports shippers who desire to have all costs included in an “all inclusive” freight rate. Also, with respect to THCs, the GSF believes the best practice is for the buyer of the transport to negotiate such charges, since the buyer of the transport can usually purchase such services most efficiently and cost-effectively.

As in declarations from previous years, the GSF urges shippers to take more control of negotiated service terms. This should include removing surcharges when appropriate and for the parties responsible to negotiate as many costs as possible within the freight rate as well as reaching agreement on who pays which elements.  Any requirement for a temporary surcharge in the face of an unexpectedly large increase in costs should be paid by the appropriate party responsible.

Any charges that are made as a result of joint carrier agreements should be opposed as these would fall outside of any terms and conditions agreed in individual discussions between customer and carrier.  Furthermore, there are requirements in certain parts of the world for such surcharges to be filed with the appropriate authorities and shippers to be consulted.  Until joint rate agreements are outlawed, as they are soon to be on European, Indian and other trades, shippers and their representatives should continue to discourage conference or other forms of joint surcharges.

Airline cartels

The GSF strongly disapproves of any moves by airlines to collaborate and jointly fix rates and surcharges on trans-Atlantic routes and other routes.

Shippers have been campaigning in excess of twenty years to rid the liner shipping sector of cartels.  Shippers have campaigned hard to remove immunity for the joint actions of airlines under the IATA umbrella and against any attempts since by IATA or airline groups to establish anti-competitive joint agreements that directly influence the price of air freight to the shipper.  The GSF will actively oppose any new attempts to establish cartels affecting air freight.

DEVELOPING PROGRAMS THAT FOSTER MORE EFFICIENT TRANSPORT AND TRADE

Enhancing Freight Transport Efficiency in the Supply Chain

The GSF supports initiatives from government or industry that seek to address freight transport efficiencies.

Increasing volumes of freight, port congestion, capacity and gauge restrictions on the rail and road networks, limited infrastructure investment, increased security-based controls and growing unreliability of road freight services are all issues that are of concern to the GSF

Insufficient capacity on the major freight corridors is and will continue to be a serious problem given the continuing rise in exports from Asia to the rest of the world.  There is also a continued need for investment in port and freight transportation infrastructure.

To ensure the most effective strategy and plan for tackling congestion, it is first important to identify the criteria by which one measures the impact of congestion and to quantify the benefits of different solutions [see ‘Greater Efficiency Through Communication’ below] .

The GSF believes that industry must work with governments to develop and examine options to improve efficiencies and the productivity of the current transport infrastructure.  Productivity must be maximized so that traffic flows may keep up with demand.

Infrastructure investment

Tackling congestion and its causes has to become a far higher priority for governments and industry alike. Congestion of existing transport infrastructure is becoming an increasingly serious issue for shippers world-over.  Whether on the roads, railways, in ports and airports, at sea, through major sea-ways or on inland navigations, congestion results in delay, and delay results in additional costs and dissatisfied customers.

Identifying areas of future congestion requires more accurate freight demand forecasts and assessments of existing infrastructure capacity limits.  Where demand exceeds capacity investment to expand and enhance capacity is required. Improvements to infrastructure management systems to optimize the productivity of existing infrastructure is also required.

Whether using public or private sources, increased investment should be regarded as essential to sustaining economic growth and part of the economic and social fabric of the global economy.  Any new or enhanced infrastructure should therefore provide equal, fair and open access to all freight users, and should be managed for the benefit of all freight users and not just selected for special interests.

Freight users should not be treated as secondary to other users: access costs should not be unfairly skewed in favour of non-freight users or set beyond the economic means of most freight operators.

Transport infrastructure is critically important to the sustainability of the global economy, the eradication of poverty and in the debate over climate change. The GSF believes strategic international freight transport infrastructure investment and development should become a regular and prominent agenda item for future G8, WTO and other intergovernmental meetings.  

Performance measures

GSF members suggest that the only way to properly identify the freight transport and infrastructure solutions that yield the greatest benefit is to determine appropriate measurements. Shippers believe that the true measurement of efficient transport is that of service performance.  The GSF supports initiatives for the joint-development by all industry stakeholders of service performance indicators (SPIs) and standard performance measurements: this would encompass all door-to door movements of freight. [See ‘Enhancing Freight Transport Efficiency in the Supply Chain’ and ‘Infrastructure Investment’ above]

SUPPORT FOR EFFECTIVE GOVERNMENT PROGRAMS

Freight Transportation Security

The GSF firmly believes in programs and procedures that will safely secure and protect vital trade lanes and ensure uninterrupted flows of commerce.  The GSF has long promoted and supported the introduction of security screening on the basis of risk assessment, and targeting for closer inspection those in the supply chain whose actions and characteristics give genuine cause for concern among the security agencies.  Such an approach gives far greater incentive for industry to reduce the risk of more intrusive security checks and screening on them and their freight that could result in freight delays, added cost and lost customers.

The GSF encourages governments to support mutual recognition of national and regional programmes.

However, the GSF has concerns and reservations over 100 percent scanning of cargo which will result in enormous costs to users, suppliers and ultimately consumers without accomplishing greater safety and security which we strongly agree is necessary and essential in protecting our national and international supply chains.

As outlined in a recent statement, the GSF believes that the U.S. scan-all container requirement contradicts many of the goals and objectives of the 9/11 Commission and would divert vital funding from other programs that in combination with ‘screening’ and ‘scanning’ have proven effective in thwarting attacks on seaborne commerce.

Ocean Cargo Liability

The GSF supports completion of the deliberations of the UNCITRAL Working Group that is seeking to develop a new international instrument governing liability for the loss and damage of ocean cargoes provided that the rights and interests of shippers are properly protected under the proposals;

The GSF supports at a minimum the following elements for inclusion in a new instrument providing for:

• elimination of the “error of navigation” defense;
• necessary protections for smaller shippers in their contractual negotiations over liability terms with carriers;
• appropriate limits for losses as well as  a procedure to amend such limits which reflect modern cargo practices;
• jurisdiction - the shipper should have the authority and choice to make this determination within reasonable limits regardless of the provisions of the bill of lading;
• seaworthiness to extend throughout the voyage; and,
• a maritime performing party to be covered by the convention

The GSF will continue to monitor these and other issues as work continues on this convention.

Emissions Trading Scheme (ETS)

The importance of reducing greenhouse emissions is taking on added significance across the globe.  The GSF is mindful of this concern and supports effective measures which balance the commercial needs of the transport industry along with the importance of preserving and protecting the quality of life for the earth’s citizens.

As one step, the GSF supports a voluntary approach to address the emission challenge, whereby industry and the transport sector develop technologies and operational measures to reduce their emissions.  The GSF believes that fuel and CO₂ emission taxes or charges are not cost-effective measures for addressing climate change. Neither does it support the use of taxes and charges that will merely add an extra cost on the industry.

However, the GSF believes the use of emissions trading schemes (as being advocated in Europe and by ICAO for the aviation sector) is deserving of closer scrutiny. The GSF intends to examine this matter further and will provide recommendations and future steps that may be considered in addressing this most important challenge.

Liberalization of Air Transport

The GSF supports liberalization efforts that promote and enhance air transport services for air freight shippers.  In this regard GSF members have long advocated the exemption of air freight carriers from the restrictions placed on all airlines under international agreements over the access rights to different countries, their air space and their airports designed to protect national and incumbent operators.

Where there is dispute over the benefits from such open access agreements with regard to passenger air services, the GSF endorses separation of air freight from the inter-governmental negotiations. There would be a benefit to all economies concerned from an immediate agreement to allow air freight carriers the freedom to fly, land and take-off where market-based demand determined, rather than where politics dictated

The GSF encourages national governments to consult regularly with industry professionals (most importantly shipper groups) to ensure that the progressive move towards the liberalization of air freight and air freight services becomes the focus of policy makers everywhere.

Review of INCOTERMS

It is becoming increasingly evident that international trade and transport is becoming more dependant on understanding and correctly applying INCOTERMS.  With supply chains requiring greater management and control (due to their complexity in a globally based market), the GSF believes a review of the latest version of the INCOTERMS (INCOTERMS 2000) is necessary.

Through the International Chamber of Commerce (ICC), which is currently examining this issue, the GSF will press for a review.

It is also the GSF’s intention to educate shippers around the world through the new Global Shippers’ Forum web-site on the latest INCOTERMS, changes and what their significance is for shippers.  (See ‘Launch of GSF Website’ below)

Regulating Wood Packing Materials

The GSF fully supports efforts to regulate solid wood packaging materials that are associated with the spread of undesirable pests and insects via international trade.

However, there are concerns with certain aspects of the implementation of the ISPM 15 Wood Packaging regulations for dunnage which is usually used to secure cargo inside containers. Wooden dunnage has to be custom-cut to size at the very last moment when a container is loaded.

The GSF calls for mitigating rules to be applied, in the interests of efficient and safe transport of goods. These include allowing IPPC Markings on container dunnage at places visible around the container doors. Alternatively a statement from the shipper could be made on the shipping documents saying that the dunnage materials have been treated in accordance with the rules.

GREATER EFFICIENCIES THROUGH COMMUNICATION

Launch of GSF website

In the interests of closer communication over the development of policies on the range of issues covered by GSF members, the GSF will be launching its website shortly.

The GSF is transforming into a truly global force representing the freight transport interests of the world’s trading businesses; it is acquiring the means to sustain and build this elevated position by harnessing the power of the internet remain in touch and in tune with those it represents the shippers.

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