Wednesday 26th Oct 2016 - Logistics Manager

Anger at congestion surcharge by shipping lines

The British International Freight Association has reacted angrily to the decision by the the Far Eastern Freight Conference (FEFC) to impose a congestion charge of USD145 per TEU on westbound cargo from Asia to the UK next month. The surcharge has also been condemned by the Freight Transport Association.

BIFA director general, Peter Quantrill said: “This industry anachronism is making the most of its current exemptions from aspects of competition law, hitting UK importers in the pocket at this, their busiest time, and doing nothing to remove the issues that the FEFC claims to want to resolve.

“This charge is nothing more than a ‘tax’ on success. Our members and their clients are immensely successful in serving the needs of UK consumers and businesses. This cartel-type throwback to a bygone age is determined to wring yet more money out of our members’ pockets, while it still has the chance, ahead of abolition next autumn.

“According to the FEFC’s own figures, cargo carried into the UK by FEFC lines has increased by more than 15 per cent year-on-year after eight months of 2007, averaging 485 teu per day. Based on those additional teu figures alone, the surcharge will add costs of just over US$70,300 per day, or US$25.7 million per annum, that someone is going to have to pay.”

Mr Quantrill dismissed FEFC’s claims that the congestion charge was required to recover costs incurred by lines from chronic congestion at the UK’s major terminals and inland terminals.

“They have imposed this charge yet have offered no solution to the problem. They claim their members have been forced to bypass UK ports and feed cargo to and from the UK, in some cases being forced to divert to non-scheduled ports. This is a problem all over Europe yet the FEFC has singled out the UK. Why? The congestion is nothing like it has been in previous years when they felt there was no need to impose surcharges,” Mr Quantrill said.

“If nothing else, next year’s ending of the conferences’ cartel-like arrangements holds out the best prospect in decades of a real shift in the balance of commercial power from carrier to customer,” he said.

The FEFC, which represents 16 major shipping lines, reckons cargo carried by its members into the UK for the first eight months of 2007 has increased by almost 15 per cent over the same period in 2006, and has averaged 485 teus per day for the year to date.

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.

“The aggregated increased costs identified by the study amount to an extra cost of USD 145.00 per teu and to recover this amount the FEFC will announce a UK congestion charge of $145 per teu applicable to the westbound trade for all containers discharged on or after 1 December 2007. The costs will be reviewed after 60 days and adjusted as necessary,” it said.