High time shipping charges were regulated, says FMM

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PETALING JAYA: The Federation of Malaysian Manufacturers (FMM) has suggested that a regulatory body oversee fees imposed by shipping companies at Port Klang to increase competitiveness.

This comes amid concerns from industry players of a decline in business at the port.

In an email interview with FMT, FMM said it wanted Putrajaya to study the regulation of the fees, known as ancillary transportation charges, through a maritime port commission.

FMM represents more than 3,000 companies.

Ancillary transportation charges are imposed by shipping companies and include terminal handling and container sealing charges, general rate increases and container imbalance charges. These charges are borne by manufacturers.

FMM, in responding to FMT’s query on the link between ports and manufacturers, said a maritime commission would play a similar role as the United States’ Federal Maritime Commission (FMC), which regulates logistics industry players and the rates charged.

FMM said there was an uptrend in the cost of doing business, with contributing factors such as government policies and unregulated services, particularly in the logistics sector which affected the competitiveness of Malaysia’s exports and ports.

“FMM has at numerous forums highlighted its concerns about the increase in various ancillary transportation charges by service providers, currently not regulated by the government.

“The increases which have been effected without any prior consultation or justification are of great concern to exporters,” said FMM, adding some of the charges levied were even higher in comparison with those imposed by neighbouring countries.

FMM said Putrajaya needed to undertake a holistic review of all parties involved in the logistics chain and inland logistic charges that have increased the cost of doing business.

“This review should be aimed at removing inefficiencies and cartel-like activities among players.”

With a maritime commission in place, FMM said any price increase and introduction of new types of charges would have to be justified and approved by the commission.

It said in the US, the FMC protected shippers and traders from financial harm, and contributed to the integrity and security of the US supply chain and transportation system.

The FMC, it noted, would investigate and act on complaints pertaining to rates, charges, classifications and practices which violated the nation’s laws.

FMM said based on feedback from its members, many multinational companies had signed global fulfilment shipping contracts with international logistics service providers, but these contracts did not cover ancillary port charges.

“A failure to pay these ancillary charges on time often leads to shippers being held at ransom by shipping lines as delivery orders could be withheld, leading to importers incurring additional storage charges.”

Last week, Singapore’s The Straits Times reported a drop in business at Port Klang in recent months, after major shipping firms moved to Singapore.

They included the Ocean Alliance, which comprises four shipping giants, namely China’s Cosco, France’s CMA CGM, Taiwan’s Evergreen and Hong Kong’s OOCL.

The Ocean Alliance oversees more than 323 ships covering 40 destinations worldwide.

The shift made by some shipping companies to Singapore could result in Port Klang potentially losing up to two million TEUs annually.

TEU is a shipping term to measure a ship’s cargo carrying capacity, where one TEU is equal to that of a standard 20-foot shipping container.

Analysts have attributed the shift to factors such as port alliances, as well as Singapore’s more advanced technology, infrastructure and port services. This helped in terms of efficiency in support services, such as customs clearance, a critical part of the port industry.

FMM said Malaysia should develop a national port management system, incorporating the latest technologies to make it easier for all stakeholders.