The British International Freight Association (BIFA) is repeating the calls it has made previously for an end to surcharges imposed by shipping lines.
The latest call follows recent announcements by the world’s leading container shipping companies almost in unison that they would be levying ‘emergency’ bunker surcharges in response to rising fuel costs.
“Forwarders do not like shipping line surcharges of whatever nature and we have been challenging their legitimacy on behalf of our members – and their customers – for many years,” said BIFA director general Robert Keen.
“In the past, we have seen equipment imbalance surcharges, peak season surcharges and currency surcharges, in addition to fuel surcharges.
“The number of surcharges and fees continues to grow – often with no real explanation or justification. For instance, what does an extra ‘administration fee’ or ‘container sealing fee’ cover that is not in the standard service offered?”
Shippers can also be asked to pay surcharges when there is port congestion caused by labour unrest or bad weather, or haulage surcharges when there is a shortage of HGV drivers.
Forwarders do all they can to minimise the effects of the surcharges but in the end at least some of the costs need to be passed on to the customers “and there is sometimes an unfair perception that our members are to blame,” he added.
“If a shipper enters a contract to buy goods they should know exactly what they are paying and that price should not change. If they use Incoterms they can buy ex works or FOB and control the supply chain. If they let their supplier arrange shipping, they have no control over the charges applied. But in either case, additional surcharges imposed by shipping lines should not be allowed,” Mr Keen concluded.
In his opening remarks to the Victorian Transport Association’s (VTA) annual State Conference, CEO Peter Anderson called for the introduction of a Victorian Freight Authority to advise Government on the requirements of the transport and logistics industries.
Anderson noted that the VTA has been advocating for policy that supports operators to be successful in business, whether it be new road, rail and port infrastructure to streamline the freight task, or new ways of operating to create efficiencies for various participants in the supply chain.
“An example of this is our advocacy for a Victorian Freight Authority to provide government with the perspective of the transport industry when it comes to decisions impacting planning and development, roads and infrastructure, user charges, the environment, and other public policy matters,’ he said.
“The requirements of operators need to be factored early on in decisions being made by regulators and legislators, which is why are pushing for the creation of an authority like this to ensure your unique needs are being looked after.”
He added that business cost increases seen across the supply-chain industry over the past 12 months have been felt especially by road transport operators.
“We’ve had infrastructure surcharge increases from all the stevedores in Melbourne and elsewhere around the country, road charges are increasing exponentially whether it be fuel and excises, registration, insurance and tolls, and the threat of industrial action throughout many sectors of the economy is arguably the greatest it’s been for a long time, as we saw over Christmas at Webb Dock,” Anderson said.
“Indeed, the possibility of future super unions like we’ve seen with the merger of the CFMEU (Construction, Forestry, Mining and Energy Union) and MUA (Maritime Union of Australia) could have far-reaching negative impacts on employers and supply chains nationally.
“In year’s gone past, operators would typically wear the increases rather than risk losing business to competitors. We need to shift this attitude and educate not only customers, but consumers as well, that increases in costs are going to be passed on through the supply chain, and ultimately to the end-users of the goods transported by operators.”
Without such action, he noted, operators may not have cost recovery increases accepted and will therefore go under, “which is not good for anyone.”
In his speech, Anderson also shared that the VTA’s community outreach efforts have been well received.
“We are getting closer to a really encouraging outcome with resident groups in the inner west of Melbourne near the port who for some time have been concerned about the impacts of heavy-vehicle movements,” he said.
“We’re working on a solution that will create a range of improvements and set new standards for driver training, instruction and vehicle emissions, and ultimately create better harmony between passenger and commercial road users.”
Stevedore Patrick recently advised road and rail freight operators of plans to increase infrastructure surcharges at its terminals from 12 March.
The new rates are as follow:
Melbourne: $47.50 per box
Sydney: $41.10 per box
Brisbane: $38.25 per box
Fremantle: $7.50 per box
The increases will apply to both road and rail transport operators for full import and export container movements at the terminals, and will be “subject to an annual review,” with any price change to apply from 1 July 2018.
Road operators will continue to be invoiced electronically via 1-Stop.
The Victorian Transport Association (VTA) has written to members to urge them to pass on infrastructure surcharge increases, saying ultimately consumers must bear the brunt of supply-chain cost increases.
“Operators continue to face unprecedented increases to infrastructure and road-user charges in and around the Port of Melbourne,” said VTA CEO, Peter Anderson.
“It is vital these and other cost-of-business increases are absorbed through the supply chain for freight businesses to remain sustainable and viable in a competitive trading environment,” he said.
“The VTA has long argued that consumers need to understand that price increases brought about by higher business and transactional costs will ultimately have to be passed on to them because businesses already operating to tight margins will go out of business if they try and absorb the costs,” said Anderson. “Consumers are the ultimate benefactors from receiving goods delivered by the transport industry, and therefore they need to be subjected to the same price increases operators and other participants in the supply chain are required to take on.”
Road Freight New South Wales CEO Simon O’Hara has responded to the fee hikes, calling for oversight, accountability and transparency to guide the actions of stevedores.
“Patrick’s infrastructure surcharge has gone from zero to $25.45 to $41.10 in less than a year,” he said. “That’s a massive increase with little justification.”
DP World Australia (DPWA) has announced that it will introduce a charge at its Fremantle Terminal as part of the basis for which access to the terminal is granted, for both road and rail operators, from 30 October 2017.
In a media release, Luke Westlake, General Manager – Operations, DP World Fremantle, stated that the charge reflects a “considerable” rise in property costs at Fremantle Terminal in the last five years.
“DPWA has incurred material increases in the costs of occupancy of more than 25 per cent, covering the cost of council rates, land tax and rent,” Westlake said. “DPWA avoided passing these costs onto the supply chain over this period, attempting to offset them through efficiency improvements. Despite, DPWA’s continued efforts, these material step changes in costs cannot be offset.”
He also cited investment DPWA has made in infrastructure to “keep pace” with industry expectations, and to handle greater peaks and troughs in cargo arrival patterns.
The surcharge will be $8.22 (excluding GST) per container and will apply to all full containers received or delivered to/from landside operators at Fremantle Terminal.
Full containers received or delivered via road will be charged to the road carrier through the 1-Stop Vehicle Booking System, while full containers received or delivered to rail will be charged to the rail operator as a separate item on the invoices produced.
“Ongoing access to Fremantle Terminal will be conditional on payment of the charges as per our conditions,” Westlake added.
DPWA noted in an additional statement that the surcharge is necessary to maintain productivity levels at the Terminal.
“This is a modest charge, which takes into consideration not only rising costs but the investment required to ensure our terminals continue to provide the highest levels of productivity,” the statement said. “This comes amidst the greatest levels of competition in Australian stevedoring history.”
Paul Zalai, Director of the Freight Trade Alliance (FTA) and Secretariat at the Australian Peak Shippers Association (APSA) advised that representatives of both the FTA and APSA will meet Federal Minister for Infrastructure and Transport Darren Chester MP in Canberra on 19 September in a bid for his help in stemming the tide of surcharges.
The ACCC is urging small business owners to start preparing now for the ban on excessive payment surcharges that will apply to all businesses across Australia from 1 September 2017.
The new law limits the amount that a business can charge customers for use of payment methods such as EFTPOS (debit and prepaid), MasterCard (credit, debit and prepaid), Visa (credit, debit and prepaid) and American Express cards issued by Australian banks. It came into effect for large businesses last year.
“Small businesses that choose to impose payment surcharges should review their surcharge levels to ensure they are compliant when the ban starts applying to them in under two months,” ACCC Deputy Chair Dr Michael Schaper said.
“Businesses can only pass on to customers what it costs them to process a payment such as bank fees and terminal costs. For example, if your cost of acceptance for Visa Credit is one per cent you can only surcharge one per cent on Visa credit card payments onto your customers.”
Small businesses will shortly be receiving information from their bank, which will help them to calculate appropriate surcharges when accepting debit and credit cards. The ACCC has also published a fact sheet so business owners can better understand their obligations.
“Banks are required to send businesses merchant statements that clearly set out the business’ costs of acceptance for each payment method. The ACCC urges businesses to follow up with their bank if they have not yet received these statements,” Dr Schaper said.
Passing on the cost of processing debit and credit card payments is not mandatory for businesses and the ban has no effect on those that do not impose a payment surcharge.
“In the lead-up to last year’s excessive surcharging ban on large businesses, many reviewed and amended their surcharging practices to reflect the costs to the business and we hope small businesses will do the same,” Dr Schaper said.
The ACCC has published guidance material for consumers and businesses. Background
The ACCC has been given new powers to enforce the ban.
A surcharge will be considered excessive where it exceeds the permitted cost of acceptance, as defined by the Reserve Bank of Australia.
The RBA’s website also provides detailed information for businesses about the Standard, including how businesses can identify and quantify those costs that can be passed on to a consumer as a surcharge.
Payment types that are not covered by the ban include BPAY, PayPal, Diners Club cards, American Express cards issued directly by American Express, cash and cheques.
The Victorian Transport Association (VTA) has advised members to pass on in full increases to infrastructure surcharges announced on 9 June by stevedore Patrick.
Patrick will introduce a new surcharge at its Sydney and Fremantle terminals, $25.45 per box and $4.76 per box, respectively.
The surcharge at its Fisherman Islands and East Swanson Dock terminals will increase by $32.55 per box and $32 per box, respectively. It will also increase its ancillary charges due to increased labour and energy costs. The new rates will take effect on 19 July.
Peter Anderson, CEO, VTA, said operators had no choice but to pass on the higher surcharge.
“At a time when operators are facing unprecedented increases to infrastructure and road user charges in and around the Port of Melbourne, it is important to ensure the increases are passed on through the supply chain for freight businesses to remain sustainable and viable in a competitive trading environment,” he said.
“Customers need to understand that the costs of doing business for transport operators are increasing rapidly, and that transactional costs such as this surcharge ultimately must be worn by consumers of goods and services.”
Anderson commended Patrick for extending one-stop trading terms from seven to 30 days, which will help operators transition and adjust for the changes to the surcharge.
After consultation with the Victorian Transport Association (VTA), DP World Australia has agreed to push back the introduction of its new fee for containers at its Sydney and Melbourne terminals by two weeks, to Monday 17 April.
“There is no doubt that the new infrastructure surcharge rates to be applied to full containers delivered via road or rail at DP World Australia’s Melbourne and Sydney terminals will impact significantly on the transport industry in terms of cost, profit margin and other economic variables,” VTA CEO Peter Anderson told Logistics & Materials Handling. “The VTA has been in close consultation with many operators that have expressed concern about the increases to the surcharge, and our advice is to quickly enter into discussions with customers to negotiate passing on the full financial impact of the increase as soon practicable.”
DP World has agreed to postpone the commencement date of the new surcharge to give operators and industry additional time to negotiate with their customers, and to alleviate short-term cash flow issues that could be experienced from the fee taking effect.
“The increase is indeed dramatic, and must be passed on by operators directly to their customers in order to mitigate its impact,” Anderson said. “It is important that customers understand that the costs of doing business for transport operators are increasing rapidly, and that transactional costs such as this surcharge, and similar increases to tolls and levies, ultimately must be worn by customers and the end user.