News / Shippers ‘despair’ as carriers hit trade with flurry of new surcharges

The head of the Global Shippers Forum (GSF) has slammed what he describes as “a flurry of surcharge announcements” from ocean carriers and airlines over the past week which will drive up shippers’ operating costs considerably.

“As an example of the impact, one Australian exporter has told us that these (surcharges) would cost him an additional $250K for his Middle East exports,” James Hookham told The Loadstar.

“When MSC’s outrageous ‘End of Voyage’ announcement and arbitrary $800 surcharge was announced, this estimate rose to $600K.

“This is the sort of behaviour that makes shippers despair. It is also the worst way to build the essential sense of trust between customers and full logistics service providers that many of the shipping lines aspire to become.”

Mike Duggan, head of cargo at Oman Air, told The Loadstar the carrier would be careful not to break that trust.

“We don’t want to rape and purge the market, because that will only come back to bite us in the future.”

Mr Hookham explained that GSF had often emphasised that surcharges were real cash transfers, levied and payable almost in real time.

“In total, the surcharges will have more than doubled the agreed or contracted freight costs for these shipments, but the scope for recovery of them from customers, consumers or suppliers will take a much longer time to negotiate, so the ‘hit’ stays on the shipper’s accounts as a budget overspend and an increase in working capital requirements in the meantime. For SME shippers particularly, these will be scary times.”

Highlighting President Trump’s comments overnight that the war with Iran would end “very soon”, Mr Hookham said he hoped this would be translated into “tangible reductions in threat levels in the Straits of Hormuz that are rapidly reflected in lower war-risk premiums from the International Group of Protection and Indemnity Clubs.

“These are the pre-requisites for the reliable resumption of transits. I expect air space re-opening will be on a different trajectory, and dependent more on a formal ceasefire or cessation of hostilities being declared.”

Mr Hookham also noted that while the focus had been on energy exports from the Gulf region, a growing concern of Middle East importers was the non-arrival of essential consumer goods.

“Extraordinary efforts are being made by forwarders and, indeed, some ocean shipping lines, to find overland routes to bring in fresh food, live animals, pharmaceuticals, and commodity foodstuffs. There are few easy options but this is the pro-active, solution-seeking approach that shippers look for from logistics partners, rather than the ‘not my problem’ attitude experienced from some,” he added.