KSA calls to repeal CFS charge increase in Japanese trade

The Korea Shippers’ Council (KSC) under the Korea International Trade Association (KITA) has called for the rescinding of the Korea NearSea Freight Corporation (KNFC) decision to raise the CFS charge to 6,000 won from the current 4,500 won per CBM (cubic meters) as of March 1.

A KSC official asserted that the KNFC wouldn’t present any reasonable data justifying rates increases during the negotiation. It should have tried to unilaterally increase based on providers’ positions, said the association. It pointed out that though the CFS charge in Korea/Japan trade is low in southeast Asian trade when compared to other ocean-going trades, its Terminal Handling Charge (THC) is unreasonably high at 6,000 won per CBM.

In the case of European trades where the THC was first introduced, the THC per CBM was charged at 4,300 won, calculated from 100,000 won per TEU at 23 CBM. In light of that, the THC in Korea/Japan and southeast Asian trades can be as high as 5,500 won. That considered, many view shipping liners in Korea and Japan trade as covering expenses by over-charging on LCL cargo THC instead of increasing the CFS charge.

There are worries that a CFS charge increase in the trade may cascade into surcharge increases in other trades. This could seriously affect small and mid sized shippers that have suffered from an export recession and worsening profitability due to weak competitiveness, said the council.

Accordingly, the KSC asked the KNFC for the cancellation of the CFS charge increase planned for March 1. It said that the CFS charge increase has to consider the overall Japanese export market situation, cargo expectations, and other trade CFS and THC charges.

In the meantime, an official at the KNFC said that the CFS charge does not involve shipping companies, only container yard companies. He said that LCL cargoes in Korea and Japan trade only amounted to 10,000 tons each month, giving 1 million won to each shipping company for handling LCL cargoes. He said the increase was not a big deal.