Breakbulk tariff could result in double charges

Importers and exporters could easily be paying a shipping charge twice unless their shipping terms are exactly right. This charge is a result of the Transnet Port Terminals (TPT) having recently implemented its controversial new breakbulk tariff structure, which is in conflict with the internationally accepted trading terms (Incoterms), and is believed to be the only such structure in the global ports system, according to FTW trading and forwarding contacts. Brought into play on January 1, the change is in the billing process for charges known as ships gear and labour (SGL) and/or port cranes and labour (PCL) for breakbulk cargo, said Dave Watts, maritime adviser to the SA Association of Freight Forwarders (Saaff). “These are now billed with the other terminal handling charges (THC) direct to the cargo owner, and not, as is a standard procedure worldwide, back to the shipping line,” he added. “An ‘all in’ THC – inclusive of SGL or PCL and normal landing or shipping charges – is raised against the party presenting the landing or shipping order regardless of the charter terms under which the cargo is carried.” And, according to Watts, this effectively means that, when breakbulk cargo is carried under liner terms, the previous procedure – where SGL or PCL were separate from landing and shipping charges and billed direct to the carrier – will no longer apply at SA ports. Doron Friedman, consultant to Clyde Steel, told FTW that, to the best of his knowledge, the SA ports were the only ports in the world that placed the responsibility on the shipper – but the costs on the receiver. “The conflict lies in the transfer of responsibilities,” he said. “Under Incoterms CFR – LO (cost and freight – liner out) the responsibility for the cargo lies in the shippers’ hands to discharge the material on to the quayside, and the cost thereto. “As a matter of logic, one cannot transfer costs and responsibilities away from each other. This is for the obvious reason that they are inextricably linked, and you lose your leverage over the executing party if you do not control the financial flow – which, in turn, controls the actual work.” His second objection is the fact that Incoterms already allows for this type of transaction – that is, the receiver being responsible for the charges as well as the responsibility of the discharge of the cargo. This, he noted, falls under the incoterm CFR – FO (cost and freight – free out). This shifts the responsibility and the accountability to the receiver, as opposed to the CFR LO term where it applies to the shipper. But the conflict exists, and for those importers and exporters who are not alert, there is a danger of them paying these new charges twice – once in the cost of freight and again to TPT. And to ensure that they don’t, Watts recommended that, when placing orders, importers or exporters of breakbulk cargo consider utilising the term ‘liner terms hook/hook’. “Another option for traders is to utilise free in and out stowed (FIOS) terms. However, it should then be understood that all cargo handling costs including onboard stevedoring along with various other responsibilities including time on quay, discharge/ loading rates, demurrage etc. may fall to the trader’s account. “This is a retrograde step that will result in an overall increase in breakbulk ocean supply chain costs,” says Watts.