Rolling back shipping fees

Update: September, 06/2014 - 09:49

Nguyen Nhat, director of the Vietnamese Maritime Administration, spoke to Thoi Bao Kinh Te Viet Nam (Viet Nam Economic Times) about plans to cut unnecessary and burdensome fees imposed on cargo clients

In your opinion, what causes are behind congestion at Cat Lai port and the new fees imposed on the owners of shipped cargo?

The issue of unnecessary fees levied on cargo shipping clients has existed for quite some time but it recently reached a climax on May 1, 2014 when Cat Lai's management and operations were transferred to Tan Cang Sai Gon (Sai Gon Newport).

There are three different factors that led to the recent problems. First, bad weather in other countries delayed ship arrivals. Secondly, the recent introduction of new management measures, especially strict regulations against overloading trucks, proved burdensome.

Finally, the eventual arrival of so many foreign ships at the port at the same time created congestion. Because of these three factors, many foreign ships asked Vietnamese port authorities to collect congestion supplement fees in addition to other fees which are then eventually shifted onto their clients.

Starting July 15, the Cat Lai port imposed a series of fees in order to encourage ships to release their cargo as soon as possible and to temporarily stop receiving certain types of containers. Two weeks later, Transport Minister Dinh La Thang led a delegation of officers from his ministry and Ministry of Finance to Cai Lai port in hopes of finding ways to solve the traffic problem.

During their inspection visit, a representative from the Thanh Hao Company, which specialises in importing plastic grains, said that in this past July his company had to pay hundreds of millions of Viet Nam dong to extract 74 containers from the port. For another example, a representative from the Viet Nam Leather Association said that union members collectively pay up to an exorbitant US$110 million in port fees annually.

The Maritime Administration then held a meeting to discuss port fees paid by foreign cargo companies on August 8th in Ho Chi Minh City. Those in attendance expressed anxiety as to the mounting and numerous types of fees exacted which ultimately hurt Vietnamese businesses who need cargo shipped.

After the meeting, the administration sent an official document to cargo companies and agents to ask them to stop imposing congestion fees on cargo owners at the Cat Lai port as operations had already returned to normal.

Can you further elaborate on these problematic fees?

According to international practices, some types of fees are allowed to be charged to clients, including congestion fees, fees for unbalanced containers, container cleaning fees, and others. In short, there are about 10 types of unnecessary and burdensome fees levied on cargo owners.

Why do Vietnamese cargo owners have to pay so many types of fees. Does it mean that there is a loophole in the contract development?

As a matter of fact, Vietnamese cargo owners often buy goods based on the CIF (Cost, Insurance and Freight) method or sell goods using the FOB (Free on Board) method. That's why the right to determine the means of transport is on the side of their partners and the foreign cargo fleet.

In reality, all these fees are already included in the transport cost. However, many cargo transport companies lowered their transport fee to lure in more customers. Then to compensate for the lower price, they levy an array of fees on the clients. There is a clause in the standard contract which enables and supports this negative phenomena, "in addition to transport fees, goods owners must bear other additional fees if incurred in transport." Therefore, clients who want to have their goods as soon as possible are willing to pay the additional fees for their cargoes.

What will the Maritime Administration do to solve this problem?

Following the meeting with Minister Thang, Tan Cang Sai Gon stopped collecting ‘lifting-fees' on containers. As of August 28th, 36 cargo shipping companies also agreed to voluntarily lift the port congestion fee. We also ordered all trucks to carry the right load and agreed not to place a weight bridge at the port so as to avoid overweight fees. Additionally, the Ministry of Finance sent an official letter to the Department of Customs to lift their cargo customs check.

Down the road, Viet Nam plans to ask all cargo transport companies to make public all the types of fees that they will impose on their cargo owners before transactions occur.

In the long run, do you think, the Maritime Administration will impose a seaport floor price?

At present, the National Assembly Standing Committee has agreed to launch a two year pilot program using a seaport floor price ($46 per 20ft cargo container) at the Cai Mep-Thi Vai deep sea port. If the pilot program is successful it will be implemented at seaports nationwide. — VNS