Shippers want regulations for competitive business

Sunday, 17 October 2010 23:55 - - {{hitsCtrl.values.hits}}

By Uditha Jayasinghe

Sri Lanka Shipper’s Council (SLSC) is urging the government to introduce policies that will protect importers and exporters against errant freight forwarders who unfairly delay or charge shipments.

Taking the recent development in the US as an example where six global freight forwarders pleaded guilty and have accepted fines of US$50.27 million from the US Department of Justice (DOJ) for conspiring to fix air cargo fees between 2002 and 2007, Shipper’s Council Chairman G.L. Kuruppu told the Daily FT that the Sri Lankan government must also support traders with similar legislation.

“There are many instances when the shippers are subjected to uncompetitive practices. These include refusing or threatening to refuse cargo space when available, vessels due in Colombo leaving behind our cargo, unreasonable failure to provide transportation services as agreed to in the service contract and imposing unreasonable surcharges for which the importers are not at fault,” he said.

Kuruppu added that these surcharges are often imposed on instances such as slow steaming of vessels and shipping schedule unreliability. He pointed out that if importers and exporters are to increase trade then they must be supported by the policymakers. This would mean that regulations have to be empowered so that freight forwarders would have to treat shippers according to contractible practices.

“What we want is fair treatment,” he insisted adding that what the shippers want is a business enabling environment that would give the chance for competitive opportunities.

In the US instance each freight forwarding company was charged with price fixing in violation of the Sherman Act, which carries a maximum fine of $100 million per offence for corporations. The maximum fine may be increased to twice the gain derived from the crime or twice the loss suffered by the victims of the crime, if either of those amounts is greater than the statutory maximum fine, according to the DOJ release.

These are the first charges filed as a result of an antitrust investigation into the freight forwarding industry, said the DOJ statement.

The six companies were charged separately in US District Court for the District of Columbia are Houston-based EGL Inc, Swiss-based Kuehne + Nagel International, Bermuda-based Geologistics International Management (Bermuda), Swiss-based Panalpina World Transport (Holding), Germany’s Schenker AG, and Ohio’s BAX Global.

All were engaged in one or more separate conspiracies to impose certain charges or fees on customers purchasing international freight forwarding services for cargo freight destined for air shipment to the United States, said the DOJ release.

Under the plea agreements, the six companies will pay the following fines: EGL, $4,486,120; K+N, $9,865,044; Geologistics, $687,960; Panalpina, $11,947,845; Schenker, $3,535,514; and BAX Global, $19,745,927.