2003-12-10 20:31

Near-sea trade struggles around rates hikes

Recently there has been a white war on rates hikes between shipping companies and forwarding companies.
The near-sea trades such as Korea-Japan, Korea-China and Southeast Asia routes introduced the AMR (Agreed Minimum Rates) system resulting in 20 ? 30% rates increases per Twenty-Foot Equivalent Container Unit (TEU) as charterage doubled to $18,000 from $9,000 for 1,200 TEU vessels, bunker prices remained high at $30 something, while even worse, the Korean won has gained strength.
Without pre-discussion of the rates hike, actual shippers and forwarding companies resisted the unilateral rates increases as unreasonable. Especially, giant shippers including Samsung and Kolon, insisted that the rates increase caused nullified contracts.
The Korea International Freight Forwarding Association (KIFFA) also made a pressing demand to apply rates incentives such as booking commission or special rates depending on cargo volumes. KIFFA said that it would visit near-sea trade member companies to make their point.
An insider at KIFFA said, ?e could basically understand the rates hike. We know about the bottoming-out freight rates. However, shipping companies could secure cargoes easily as freight forwarders covered collecting cargoes. Therefore, we deserve some rates discounts.?
?s ocean-going trade is short of vessel capacity, rate hikes are inevitable. But, near-sea trades couldn`t find any reason to raise the rates, as there is abundant vessel supply. They are ignoring the market.?
One of forwarding companies said, ? was very sorry not to find a middle-ground for both sides, but they are ignoring everyone and only thinking of themselves. If they don`t withdraw from their current position, we will find foreign shipping companies we can live with a bit better.
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