"Floating" surcharges, shipping lines can increase freely?

Surcharges become the main source of revenue for shipping lines

Speaking at the meeting, General Secretary of the Vietnam Shippers Association Phan Thong said that the surcharges that shipping lines collect from import-export cargo owners such as THC (seaport handling surcharge) changed quite suddenly, causing great impact on cargo owners.

Director of Vietnam Maritime Administration Le Do Muoi said that currently, the fees and surcharges of shipping lines are being "floated", shipping lines decide their own prices.

Emphasizing that import and export activities have encountered many difficulties due to world political fluctuations that have obstructed transportation routes and cut off many international shipping routes, Mr. Thong said that costs and shipping times have both increased sharply.

Difficulties piled up when in February, shipping lines increased THC prices after Circular 39/2023 of the Ministry of Transport took effect and container handling service prices increased by about 10%.

It is worth noting that while the port's increase is not much compared to the port's costs, the THC fee has increased very sharply.

"The shipping line's fee increase announcement has many shortcomings. In some places, the information is not updated, leading to a situation where the shipping line and the cargo owner are not connected. The cargo owners are almost under pressure because Vietnamese cargo owners are small and have no voice," said the General Secretary of the Vietnam Shippers Association, adding that the shipping line needs to offer appropriate prices so that all parties can make a profit while still supporting each other.

In addition to freight rates and surcharges, Mr. Thong said that shipping lines also have unreasonable increases. Some surcharges are usually only collected based on fluctuations such as container imbalance fees, emission surcharges... but are now included in freight rates.

General Secretary of the Vietnam Shippers Association Phan Thong affirmed that the shipping line's increase in THC surcharge has many unreasonable points.

"I think the state needs to review and adjust related legal regulations, including including surcharges in the list of items that must be declared," Mr. Thong emphasized.

Sharing the same view, Vice President of the Vietnam Ship Owners Association Pham Quoc Long informed: According to international practice, THC fee will be used to pay 80% of loading and unloading fees for the port, but in Vietnam, only about 40% is paid.

"Surcharges are a source of revenue for shipping lines, sometimes the main source of revenue because there are some large competitive shipping routes, the freight rate can be negative, then surcharges such as THC, imbalance fee, fuel fee... will be a source of revenue in fluctuations in freight rates", Mr. Long said and said that when Circular 39 was passed with an adjustment of about 10%, shipping lines also increased surcharges.

However, shipping lines increased the adjusted loading and unloading prices about 3 times, causing many disadvantages for cargo owners.

Mr. Le Quang Trung, Deputy General Director of Vietnam National Shipping Lines (VIMC) informed that nearly 100% of Vietnam's import and export goods are transported by foreign shipping lines, mainly 10 large shipping lines.

According to Mr. Trung, there are many reasons for shipping lines to increase surcharges, including the fact that some shipping lines have to try to maintain and ensure delivery time under the condition that ships cannot pass through the Suez Canal, affecting trade commitments.

However, there is still a situation of "the fence falls and the ivy climbs". The price increase seems to have no clear and transparent mechanism. From here, Mr. Trung agrees that it is necessary to consider the legal corridor to have a mechanism to manage the surcharge levels of shipping lines appropriately.

For more information, Mr. Trung said: According to current regulations, shipping lines only need to post prices 15 days in advance when adjusting. If they only post and declare prices, it will be difficult to have a basis for actual calculations.

"It is necessary to consider fairly and transparently, compare Vietnam's legal mechanism with international ones, note the subjects that need to be considered, and how to manage appropriately. At the same time, it is necessary to increase the competitiveness of the shippers themselves, businesses participating in the logistics chain to come up with comprehensive solutions, as well as develop the international shipping fleet, ensuring self-reliance, not being dependent on foreign shipping lines," Mr. Trung emphasized.

Tight control over shipping line surcharge increases

The meeting was attended by many domestic and international businesses and shipping lines to find solutions to reduce logistics costs.

As a shipping line with a THC fee increase of about 15%, Mr. Nguyen Trung Dung, representative of Yangming Shipping Company in Hanoi, explained: Recently, shipping lines have encountered many difficulties, operating below the break-even point. Meanwhile, the world has many fluctuations causing difficulties for shipping lines. Vietnam is also a country with a trade surplus, so there is always a shortage of containers.

Financial difficulties are the reason why shipping lines increase surcharges to balance things out. However, Mr. Dung said the fee increase factor needs to be viewed objectively, because on some routes customers have to pay full surcharges, and on some routes, they don't have to pay any fees.

Meanwhile, a representative of MSC shipping company explained that shipping companies have been losing money for many years, so when the market increases, shipping companies also increase prices.

"Shipping lines are also under a lot of pressure on costs due to the market situation. The price increase follows the increase in port service prices and this is completely fair. Of course, there are still some agents taking advantage of the increase when shipping lines have not increased to that level yet," said an MSC representative.

Ms. Hoang Thi Hong, manager of the Hai Phong office of CU Lines, confirmed that each shipping line will have a different surcharge adjustment mechanism. CU Line has recently increased the THC surcharge by about 10%.

The increase is based on the services provided by the shipping line and the price increase is decided by the overseas head office after considering and studying market factors.

According to Ms. Hong, CU Lines has never intended to exploit Vietnam. "The company always identifies Vietnam as a top priority market. We are committed to always accompanying businesses, monitoring and implementing State regulations," Ms. Hong emphasized, and committed to reviewing issues of fees and surcharges to always have reasonable adjustments.

As a rare shipping line that has not increased THC fees in recent times, a representative of Maersk Lines in Vietnam informed that the company is still reviewing and researching the market, customer needs and supply and demand. The company's surcharges are all decided at the regional level.

Maersk Lines representatives expressed their desire to stabilize the market, but affirmed that if there is a plan to increase THC fees, the company will ensure compliance with legal regulations, send notifications to the Vietnam Maritime Administration and relevant agencies and units.

According to Mr. Le Do Muoi, Director of the Vietnam Maritime Administration, the fees and surcharges of shipping lines are currently floating according to the market. The prices and fees depend on the business level of the shipping lines to determine the surcharges.

From here, Mr. Muoi suggested that shipping lines need to review and make adjustments to balance, suit, and support Vietnamese businesses.

At the same time, the leaders of the Vietnam Maritime Administration called on shipping lines to unanimously reduce surcharges to support Vietnamese businesses, and encouraged shipping lines to find solutions to reduce surcharges to the maximum, or collect them at a moderate level to ensure the shipping lines' profits.

In addition, Mr. Muoi said that shipping lines, businesses, and cargo owners need to discuss and negotiate to come up with the most harmonious solutions when the management agency does not have sanctions and a legal corridor for management. The posting of shipping line surcharges also needs to be transparent and public.

"Most of the shipping lines that increase surcharges are small and individual shipping lines. Large shipping lines are better able to balance their cost sources, so they may not increase or increase THC surcharges less," Mr. Muoi commented, emphasizing that in the coming time, the Vietnam Maritime Administration can organize inspection teams to strictly control brokerage and agent companies using Vietnam's legal mechanisms and corridors. Where there are mistakes, they will be handled accordingly.

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