Saturday 22nd Oct 2016 - Logistics Manager

Globalisation has its price

The decision by the Far Eastern Freight Conference to impose a congestion charge of £70 ($145) per TEU on cargo coming into the UK from Asia has, quite understandably, been greeted with outrage by shippers and forwarders alike.

The conference argues that, with 15 per cent year-on-year growth in imports, “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 UK, 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.”

Peter Quantrill, director general of the British International Freight Association, reckons that, based on the FEFC’s additional TEU figures alone, the surcharge would add some £34,000 ($70,300) a day, or £12.4m ($25.7m) a year, to the industry’s costs. And he pointed out that the congestion is nothing like it has been in previous years when they felt there was no need to impose surcharges.

Christopher Snelling, the FTA’s head of global supply chain policy, said that members of the British Shippers’ Council had reported lines being willing to undercut FEFC rates by 25 per cent.

There is a tendency to see globalisation as simply an opportunity to source goods in the low-wage economies of the Far East. The reality is much more complex, of course, and this row over freight rates is just one issue among many.

Former prime minister Margaret Thatcher famously said: “You can’t buck the market.” Whether or not the shipping lines are justified in trying to force through this surcharge is almost irrelevant. The market is rising and they think they can push an increase through. Whether they can make it stick is quite another matter.

This is our last issue of 2007. I wish you a merry Christmas and a prosperous New Year.

Malory Davies FCILT, Editor