Europe conference scraps ‘illegal’ CAF

ALAN PEAT The proposed re-introduction of a currency adjustment factor (CAF) of 8.02% by the Europe Southern Africa Conference (ESAC) has been scrapped for now. As a pre-emptive move, a group of a dozen Cape executives arranged a meeting with the ESAC chairman, Johannes Graf Strachwitz, MD of shipping Line DAL, and five other conference members in Cape Town the week before the dropping of the $100 port congestion surcharge. The gist of what the exporter team wanted from the meeting was an end to all the various surcharges that lines have been imposing in recent times – and a return to an all-in basic freight rate, free of surcharges, a leading member of the team told FTW. According to legal advice offered the export team, the proposed move by the lines in the conference was against the law. “Act 89/1998 is very clear,” FTW was told. “Abuse of dominance, and agreement between or a concerted practice by firms, or a decision by an association of firms, is prohibited if it is between parties in a horizontal relationship. “This is the case here.” But in case the postponement is shorter lived than hoped for, the exporter team are keeping their guard up. The legal team – which was ready to take court action on April 14 if the CAF imposition had stood and the charge was introduced on April 15 – have been retained in case the lines change their minds and decide to bring in the CAF. The lines may however go for an all-in freight rate, and do away with these contentious surcharges, which – because of their ad hoc nature – can throw an export company's forward cost planning out of the window. A situation where most exporters would have to absorb the extra cost thenselves, as most major export contracts are over a medium- or long-term period at agreed prices and rates. Also on the agenda was the fuel cost factor, where the lines have a bunker adjustment factor (BAF) - a formula which decides on a surcharge amount designed to overcome the impact of increased fuel prices. “Would this apply to an all-in freight rate as well?” the FTW contact asked. The answer from ESAC, he added, was that they would provide “transparency” on this issue. “Again this remains to be seen,” he said.