KUALA LUMPUR (Dec 24): The Shipping Association of Malaysia (SAM) agrees with freight forwarders that they should not be made to pay security deposits to container liner operators for the release of cargo.

SAM said the Federation of Malaysian Freight Forwarders (FMFF) and Selangor Freight Forwarders and Logistics Association (SFFLA) are right in parking the responsibility of putting up the security deposit with the merchant, as it is the merchant who has a contract with the carrier.

“It is also impractical for the customs broker to undertake this financial responsibility as the cash outlay required of the customs broker will be too much for them to bear as the volume of consignments they handled daily is rather large compared to the individual merchants,” SAM chairman Ooi Lean Hin said in a statement today.

FMFF and SFFLA have in the past week urged the government to put a stop to the practice of carriers securing a security deposit for the release of cargo.

Ooi said the security deposit requirement is common among container liners worldwide.

“This is commonly practiced by container liner operators worldwide where carriers face risks of non-payment of detention and container damage recoveries due from the merchants after the cargo is released to them. It’s similar to a hotelier requesting a deposit from guests upon checking in,” he said.

Deposits are also important, as they mitigate the risk or exposure to the non-payment of container damage recoveries and detention charges, Ooi said.

“The practice of securing a security deposit against a release of an import consignment is one of the measures taken by container liner operators to mitigate their risks or exposure to non-payment of container damage recoveries and detention charges,” he said.

Ooi said there are many forms of security measures imposed by carriers to importers and it varies from one carrier to the other, depending on the carrier’s assessment of risks.

It’s a matter entirely between the merchant and the carrier in respect of the security instrument used to secure the release of the consignment, he said.

Ooi said SFFLA’s claim that RM2.81 billion was collected in security deposits is “overstated and misleading”,  saying the actual deposit banked into  carriers’ account is “a small percentage”.

“RM1,000 is the highest amount levied by a few carriers, whereas the majority of carriers are collecting a much lower deposit,” he said.

“There are also a large percentage of consignments released without any security deposit,” he added.