Freight forwarders urge govt to intervene, put stop to containers deposit practice

TheEdge Thu, Dec 20, 2018 09:50pm - 5 years View Original


KLANG (Dec 20): The less regulated logistics sector, particularly the freight forwarding business, has resulted in international shipping companies imposing exorbitant charges which is revised at their own free will, says Federation of Malaysia Freight Forwarders (FMFF) Vice-President Tony Chia Han Teun.

The federation is urging the government to look into the matter of collecting deposit for containers by shipping lines as it is a real burden on forwarding agents, many of whom are small and medium enterprises (SMEs).

“Collecting deposit for containers is not a normal practice in the international business environment. There are certain countries that are practising this, however, the deposit value put up is still far below Malaysia.

“For instance, in the Philippines and India, the deposit is more or less than a RM100 per twenty-foot equivalent (TEU) while for Malaysia, forwarding agents need to pay RM1,000 per TEU, which put us in an unfavourable position. What will happen to the deposit if the shipping line collapsed, just like Korea’s Hanjin Shipping?” he lamented during a press conference here today.

The financial impact of collecting deposits for containers based on the volume of containers imported through Port Klang alone in 2017, was estimated at a staggering RM2.18 billion.

Chia further added that FMFF, alongside other associations such as the Selangor Freight Forwarders Association (SFFLA) and state-based freight forwarders associations, would like to notify importers and exporters and other associations, representing the parties, that their members would no longer put up container deposit on behalf of them beginning Jan 1, 2019.

“We raised this issue at the National Logistics Task Force meeting in July, however, there is still no light at the end of the tunnel for us,” he explained. 

Shipping companies, Naming China Ocean Shipping Company (COSCO), Hyundai Merchant Marine (M) Sdn Bhd, Newstar Shipping, Hapag Lloyd and Emirates Shipping, among others, are directly involved, but Chia said the association had tried to negotiate the matter but it ended in a deadlock.

He hoped the government would view the matter seriously as it could jeopardise local companies and local sector.

Meanwhile, on separate matter, SFFLA Deputy President Chua Seng Wah said the association hoped to receive feedback on the sales and services tax imposed on their services which was currently categorised as management services.

“Prior to this, we had a meeting with the Royal Customs Department which informed us that and we have  been informed that only customs agents’ services would be deemed as taxable services.

“However, in September, the department announced that freight forwarding services would be grouped under management services, which is contradictory to our nature of business. We buy and sell activities, not management services,” he explained.

Chua said they consulted the Customs Department and was informed that the issue was being addressed by the Ministry of Finance, but until now, there has been no response from the ministry.  

“Inefficiencies and an under regulated logistics sector has resulted in Malaysia’s logistics performance, as evident from the Logistics Performance Index (LPI) which has deteriorated continuously ,” he explained.

Overall, Malaysia’s LPI score for the year, covering six dimensions, namely customs, infrastructure, international shipment, timeliness, logistics competence and tracking and tracing declined and has been declining since 2007. — Bernama

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