Despite two meetings held with the stakeholders on 'harmonisation of scale of shipping charges' under the chairmanship of the Secretary, Ministry of Commerce, the issue which has been lingering for the last 15 years, continues to remain unresolved. Early resolution of the issue of exorbitant shipping charges would indeed be an inspiration for the Trade & Transport Facilitation Project of the Ministry.
The Federation of Pakistan Chambers of Commerce and Industry (FPCCI) has in a letter drawn the attention of the Secretary, Ministry of Commerce, to the sufferings of the business community "from the very high cost of doing business and the shipping charges which are not only unjustified but unethical as well and add to the burden on trade and industry."
A presentation has already been given on various charges being collected by ship agents, shipping lines, terminal operators and freight forwarders. In the last meeting, the Secretary had requested the FPCCI to propose solution. The proposals have now been drawn up, after deliberations with the stakeholders, as under:
-- Since the Bill of Lading (B/L) is an evidence of the title of the goods, and the holder of the same is the owner of the consignment, the ship agents/shipping lines should not have the right to stop the delivery of the consignments.
-- All charges by ship agents, freight forwarders, and terminal operators should be part of the freight.
-- For one service of handling containers, trade is paying the cost thrice, ie in the name of 'Terminal Handling Charges' (THC) to the ship agents, 'Terminal Service Charges' (TSC) to the terminal operators, and 'Wharfage' to the port authorities. The FPCCI has suggested that THC, which is being paid to ship agents, should be part of the freight; TSC being paid to terminal operators be paid by the shippers/consignees being full and final payment to handle the cargo by the terminal operators'; and the cost of 'Wharfage' should be withdrawn by the port authorities.
-- Various charges being collected by the ship agents should be part of the freight as ship agent represent the ship owner who pay the agency fee which covers the remuneration of the ship agents.
-- Similarly, charges being collected by the freight forwarders should also be part of the freight as freight forwarders represent the shipping lines who pays the fees which covers the remuneration of the freight forwarders.
-- Various charges collected by terminal operators should be inclusive in the TSC already being paid by the shippers/consignees.
The FPCCI has suggested that, to have proper system in place, it is imperative that:
-- Shipping Rates Advisory Board (SRAB) be re-activated.
-- Office of Director-General, Ports & Shipping, be strengthened and given the mandate to ensure transparency.
-- Give powers to customs to regulate ship agents, where they are registered, and
-- Register freight forwarders with State Bank of Pakistan to regulate all remittances, like in Sri Lanka.
The issue of shipping charges started in mid-90s. Prior to that, the consignees were only paying the freight which included everything. It is the logical demand of trade that "all charges should be part of the freight" and the consignee must know the landed cost of the product he is buying at the time of purchase, according to FPCCI.
What the trade is paying to the various service providers for one service only:
-- To shipping lines through ship agents: Terminal Handling charges (THCs), Rs 8760 per 20 feet container, Rs 12170 per 40 feet container.
-- To terminal operators: Terminal Service charges (TSCs), US $45 per 20' container (KICT/PICT), $57 per 40' container (KICT/PICT), Rs 8700 for 20' and Rs 12945 for 40' container (QICT)).
-- To port authorities: Wharfage (these wharfage charges cannot be levied by Karachi port), Rs 1800 per container (KPT), Rs 620 per container (PQA). Other charges collected by ship agents over and above THC: delivery order (import) Rs 2500-Rs 3000, documentation (export) Rs 2000-Rs 2500, endorsement/splitting (B/L) Rs 1000-Rs 1500, port of discharge release Rs 1500-Rs 2000, security for change of status from CY to CFS Rs 25,000/TEU, security for containers (loss or damage) Rs 200000/20' Rs 350000/40', insurance in lieu thereof Rs 1200/20' & Rs 3000/40', security for containers demurrage Rs 25000/TEU (local) & Rs 75000/TEU (upcountry), master B/L charges Rs 1200, advance manifest system fees Rs 2300, scanning charges Rs 3180, late gate charges Rs 4155, and amendment charges Rs 3324.
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