Should Ocean Shipping Surcharges Be Eliminated?

“Shippers of goods around the world have had enough of demands made by carriers and forwarders for the payment of charges that are poorly explained or out of proportion for any service provided,” according to the Secretary General of the Global Shippers Forum (GSF).

As such, the group, formed by the American Association of Exporters and Importers (AAEI), the Asian Shippers’ Association (ASA) and the European Shippers’ Council (ESC), is calling for container shipping surcharges to be eliminated by 2020. 

Survey Respondents Say ‘No’ to Surcharges

Our latest survey seems to agree with the GSF with 100% surveyed agreeing that ocean shipping surcharges should be eliminated.

Unjustified Surcharges

The mandatory container weight verification that went into effect on July 1 seemed to be the last straw. GSF received reports of what it described as unjustified surcharges particularly in Africa, Asia and other developing regions. GSF noted that the levying of surcharges amounts to a non-tariff trade barrier and can be damaging to the development of international trade. 

Not All Agree with Eliminating Surcharges

However, not all agree with the elimination of surcharges. According to Martyn Benson an industry expert active in the ocean freight business, some surcharges are justifiable as cost recoveries of variable elements.

For example, market-driven surcharges, such as congestion or peak season were introduced to respond to specific delays to such ports as Long Beach, Lagos and Jeddah. “Because shipping containers has become a commoditized business, there is no room for mistakes and the basic seafreight is usually the bare bones charge for renting a space on the vessel- everything else is extra,” says Martyn Benson.

Accounting for Surcharge Payments

According to The Loadstar, one of the key planks of the GSF’s proposed reforms is getting responsibility for payment of any surcharges specifically accounted for in the 2020 revision of Incoterms by the International Chamber of Commerce.  Indeed, Robert Keen, director general of the British International Freight Association (BIFA), told the publication, “If shippers enter a contract to buy goods they should know exactly what they are paying. 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”.

What do you think? Should ocean shipping surcharges be eliminated? Continue the conversation on LinkedIn.