Shipping cos impose war risk surcharge

KARACHI, March 31: In a major move, the shipping companies have imposed with immediate effect war risk surcharge (WRS) on vessels operating in the Gulf ports.

They have also announced raise in freight rates from May on containerized cargo destined for the US, Canada and Mexico ports.

Leading shipping companies through a notice informed the exporters that all cargoes destined for the Gulf ports, including two Kuwaiti ports of Shuwaikh and Shuaiba, would be subject to WRS at a rate of $130 for 20 feet container and $260 for 40 feet container. Similarly, they have also announced that any inland cargo for the Gulf region would be proportionately charged with the WRS rates.

Ever since the outbreak of Iraq war on March 20, the shipping companies have been closely monitoring the developments, and now on getting firm reports that war would not be short as was earlier anticipated by the US forces have decided to impose WRS, shipping sources said.

The sources said the normal charges on account of WRS were usually an in-built part of freight rates, but now the shipping companies had increased the surcharge to $130 for 20' TEU and $260 for 40' TEU.

The member shipping lines in the Transpacific Stabilization Agreement (TSA) have agreed on the need to raise freight rates on containerized cargo destined to ports and points to the US, Canada and Mexico. These rates would be effective from May 1, 2003.

In support of their decision of freight hike, the member shipping lines in the TSA, which also includes A P Moller-Maersk, Sealand, APL, Hyundai, P&O Nedlloyd and Hapag Lloyd, have stated that fundamental economies of the trade heading into 2003, space shortages from Asia to the US, Canada and Mexico trades, negative cargo growth from the US to Asia, resulting into equipment repositioning continue to drive carrier's pricing decisions.

“This means that most of the member shipping companies in the TSA find their vessels to have lesser load from the US to strike a balance with their load (containers) carried from Asia,” Ali Raza of Maersk Pakistan told Dawn. This also means that the quantum of export from the Asian countries, including Pakistan, to the US, Canada and Mexico is higher compared to imports from these countries, he added.

According to the revised freight rates of the TSA, which are going to be effective from May 1, 2003, the increase would be as follow: For all-water shipments to the US (coast to coast) $525 per 20 feet container, $700 for 40 feet container, $790 40' (high cube), and $890 for 45 feet container.

For all intermediate cargo (to inland points in the US) the rate hike would be $675 for 20' TEU, $900 for 40' TEU, $1015 for 40' (high cube) and $1,140 for 45' TEU.

The General Rate Increase (GRI) for Canada would be $600 per 20' TEU, $800 for 40' TEU, $900 for 40' (high cube) and $1,015 for 45' TEU. For Mexico the GRI would be $300 per 20' TEU, $400 for 40' TEU, $400 for 40' (high cube) and $400 for 45' TEU.

The impact of Iraq war could well be judged from the fact that almost all sorts of rates relating to transportation, including marine freights, have suddenly gone up. This is going to have direct impact on trade and industry but ultimately the end consumer.

The shipping lines have already announced raise in bunker charges to $95 per 20 feet container and $190 for 40 feet container from April 1, 2003.

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