Asian Shippers’ Council holds 8th Annual Meeting in Hong Kong

• Following is the statement issued by the ASC Secretariat on the eighth annual meeting of the Asian Shippers’ Council (ASC), held on 6 November

The eighth annual meeting of the Asian Shippers’ Council (ASC) was held on 6 November 2012, hosted by the Hong Kong Shippers’ Council. It was attended by 20 delegates from seven countries across Asia – China, Hong Kong, India, Macau, Singapore, Sri Lanka, and South Korea.

At the one-day meeting delegates discussed at length the grave economic challenges facing the world today and their implications for shippers, the incomprehensible freight rate increase imposed by shipping lines and the critical need for maritime regulatory reform in Asia.

Maritime regulatory reform

Maritime regulatory reform in Asia has gained added urgency. Pushed to show profits even in this harsh environment, shipping lines are increasingly setting their sights on Asia, the region with the best growth potential.

The cartels, while not visible, are active throughout the region. With no maritime regulatory oversight, they can operate with impunity, keeping rates and surcharges at unacceptable levels.

Until now our effort at bringing about reform has run into strong headwinds. Even countries with competition act like Australia and Singapore have seen the need to offer special dispensation to shipping lines.

Recent developments in New Zealand have given us reasons to believe that the tide may be changing in our favour. Following a review of the country’s International Freight Transport Services, the New Zealand Productivity Commission in April recommended repeal of current exemptions for shipping companies from the Commerce Act. We understand the government has accepted the recommendation and is now investigating interim proposals to remove antitrust immunity for liner conferences.

Together with the Global Shippers’ Forum, we are extending our fullest support to the New Zealand Shippers’ Council and the New Zealand government to work towards this end. We believe New Zealand’s decision would have far reaching consequences, creating pressure for reform elsewhere in the region

Incomprehensible freight rates

The freight rate situation in container liner shipping has reinforced our need to take decisive action to bring about maritime regulatory reform. At a time of slowing growth in Asia and the US, gross overcapacity and falling fleet utilisation, shipping lines are talking up and trying to force through steep freight increases.

In September, the Transpacific Stabilisation Agreement (TSA) proposed a hefty rate hike of US$800 to US$1,200 per FEU starting in mid-October for all new and renewed contracts.

We, together with our counterparts in the Europe and the US, are monitoring the situation, especially with recurrent talk about capacity management. If the capacity management is undertaken by lines individually, there is little we can do about it. But we have reasons to believe shipping lines are collectively reducing ship supply to push up freight rates, which is in direct contravention of the European Union anti-trust regulations.

The European Union, the only region which has outlawed liner cartels, has an on-going investigation into shipping lines following similar circumstances in 2008-2009.

Incoterms/Rotterdam rules

On trade matters members discussed the new Incoterms 2010 guidelines and their implications for shippers. Members noted that as some of ASC’s recommendations on the term “FOB” was included but not as recommended by the ASC. The new guidelines have improved the cost and liability responsibility better understanding of buyers and sellers.

ASC requested the International Chamber of Commerce to make revisions to include the following: “Under FOB-liner term, within the period of responsibility CY-CY; CFS-CSF: Door to Door), liners or NVOCC (freight forwarders) should be responsible for the cost or expenses and risks from the time of receiving goods to the time of delivering goods.”However instead of this the ICC has recommended not to use the “FOB” in containerised cargo when goods are handed over to a terminal and given the guideline clearly to use FCA. Members welcomed this improvement in the guidelines.

Members also discussed the Rotterdam Rules at length. In its present form, the Rotterdam Rules were perceived as not protecting the legal rights of FOB exporters as per ASC observations.

At present, carriers will automatically issue the original bill of lading (B/L) to the seller, (consignor) without demand. The sellers would then pass the original B/L to the buyer through the bank after the payment is done.

But under the Rotterdam Rules, FOB Consignors (not being shippers in the transport document) can only take receipt of the goods from the carries or performing party upon delivery of their goods to carriers or performing party, while the buyers or their forwarding agents, NVOCC or contractual carriers, can get the negotiable transport documents.

It is impossible to ensure the cargo ownership rights of the FOB exporters or consignors if transport documents (B/L) are issued to buyers or their agents freight forwarders, NVOCC or contractual carriers.  This will certainly destroy the normal procedure and practice of B/L circulation from seller to buyer, and will weaken the function of B/L as proof of the consignors’ cargo ownership rights.

We propose that the B/L, irrespective of whether the transaction is made in on CIF or FOB terms, should be issued to consignors or sellers automatically.

Addressing piracy menace

On piracy, we are delighted with the progress made. After years of steady increases, the number of piracy attacks off the coast of Somalia has reduced sharply following firm and decisive action by the EU Naval Force.

As it is too early to let the guards down, we like to urge governments to continue the good work in battling piracy in Somalia to secure the achievements they have made this year.  We also note the worrying increase in attacks against tankers in West Africa. While West Africa may seem less strategically important, as it is located away from the main trunk routes, we ask the international community to exercise the same resolve lest the situation should deteriorate further.