causes of high freight rates
HIGH freight rate of moving goods
between Peninsular and east Malaysia is not due to ocean shipping
cost alone, said Malaysia Shipowners Association (MASA).
Chairman Nordin Mat Yusoff said
there were other cargo intermediaries involved in the total
transportation chain, which contributed to high freight rate.
“It is important to distinguish
what constitutes as ocean shipping charges before any scurrilous
criticism is made against us,” he said in a statement.
Last Monday, the National Logistics
Council requested that the Transport Ministry set up an independent
body to review the Cabotage policy and address complaints about the
high shipping freight rate.
This was following shippers'
complaints against the high charges made by the small group of local
vessels that serve the route.
The Cabotage policy reserves the
domestic sea trade to only Malaysia-flagged shipping lines since
The ministry, however, via the
Domestic Shipping Licensing Board, can make exemptions for foreign
shipping lines if national-flagged vessels were underperforming.
“The ocean shipping charges to
transport a 20-foot container in this specific route constitute
about 46 % of the total supply chain costs paid by the shippers and
consignees,” said Nordin.
The remaining 54% are from eight
other cargo intermediaries, which are involved in the transport
chain in the shipment of cargo from the shipper to the consignee.
“The other intermediaries in the
transportation chain include the forwarding agent, shipping agent,
trucking and ports before the cargo is loaded into a vessel.
“Under such circumstances, MASA
fails to see the rationale of the blatant accusations that
completely disregard the involvement of the other intermediaries,”
Ocean shipping charges have two
components – the basic charges for the ocean carriage of cargo and
the surcharge paid for bunker (ship fuel) due to price fluctuation.
“A review of the last 10-year trend
of the average basic charges for the ocean carriage of cargo reveals
that ocean shipping charges have actually declined by as much as 40%
to 50%,” he said.
Nonetheless, MASA supported the
suggestion for the Government to conduct an independent study on the
matter, he said.
The association is confident that
the high freight rates could be reduced immediately by as much as
25% if, for instance, preferential port tariff is introduced for the
handling of domestic containers.
The rates could also be reduced via
the distinction made between the handling of laden and empty
containers, he said.
“The ports in Sabah and Sarawak can
also improve and sustain higher level of productivity, which will
contribute positively in solving the matter,” Nordin added.