Chinese rebates continue to challenge industry

The biggest challenge facing consolidators remains the issue of rebates, especially on Chinese and other Eastern imports, according to Colin Atkins, managing director of World Cargo Services (WCS). “Many NVOCCs claim to be fighting the system, but actually ride on its back for their own convenience,” he says. “Consider a poor consignee who imports his Chinese cargo CFR (cost and freight) Durban, only to be charged a second time for not only the Chineseorigin charges, but the freight already included in his CFR terms. It is not unusual to see a consignee charged $20 w/m for Chinese-origin charges and $80 rebate hidden in SA unpack charges,” he says. Atkins says the SA freight forwarder “cries wolf” but happily collects these charges from the consignee with a collection fee added, then sits on these funds for up to 45 days before paying across to the agent. “Do the maths and you will see the monthly collection is so significant you can finance a medium business on the cash flow of the rebate collections. I am also not sure freight forwarders really go out of their way to educate importers who at the end of the day are paying these now exorbitant rebates,” he adds. Atkins says import volumes have picked up and have been closer to 2008 levels since around October last year. “We expect groupage volumes to stabilise at current volumes for a while, but they may again drop off when the effects of fuel price hikes and inevitable interest hikes come into play.” Atkins believes the economy is holding steady but remains in a tenuous state. “The USA remains slightly down on 2008 levels, more so when one includes time growth. WCS entered the China and Australian routes last year and has seen steady growth on the groupage and FCL fronts. We now have a weekly service from major ports to Johannesburg, Durban and Cape Town. Market share from China is anticipated to continue going forward. “East and West Africa also remain major growth routes for us, while we are getting more requests to start a service from India and Pakistan. “CaroTrans, our global partner, is increasing its presence throughout the world under own brand and tested philosophy and we will continue to grow with them.” Along with its partner, WCS has also launched a global airfreight product which has boosted growth prospects significantly.