Hidden transport costs passed on to shippers

Goods and products transported by ships have their hidden costs and passed on expenses much like the pork from Bulacan, the vegetables from Baguio and beef from Batangas motored to the markets in the metropolitan areas.

The rise in the price of crude, the middleman’s mark-up and the cost of "kotong" (grease money) for the streetcorner cops and highway checkpoints have their counterparts or equivalents in the maritime transport industry.

Containerization International, a reputable United Kingdom-based monthly maritime publication, reported in its May 2002 issue that difficult trading conditions have prompted ocean carrier groupings to announce further rate increases this year.

Most of the members of the ocean carrier groupings, also called alliances or conference, call on Manila.

The increase in freight rates are then passed on to shippers, including importers and exporters, who in turn pass them on to the end-users or consumers.

The bunker adjustment factor or BAF caused by the volatility in fuel prices is another thing that sends total transport costs up.

Port Calls, a reputable maritime publication based in Manila, reported in its April 29, 2002 issue that member lines of the Far Eastern Freight Conference (FEFC) will impose an increase in the BAF due to the frequent fluctuation in fuel prices as a result of the Middle East tension between Israel and Palestine.

This increase is also tacked on to the total transport cost of shippers, including importers and exporters.

Thus, from May 15 to June 14, carriers charge a BAF of $37 per 20-ton equivalent unit or TEU and $1.85 per revenue ton for LCL cargo.

FEFC member lines include APL, CMA, CGM, Hapag Lloyd, Hyundai Merchant Marine, K-Line, Maersk Sealand, MISC, Mitsui OSK, NYK Line, OOCL, P&O Nedlloyd and Yang Ming Marine Transport.

Another charge passed on to shippers is the terminal handling cost, which includes trucking charges of approximately P3,500 per TEU. Trucking charges are not regulated.

Without public hearing, shipping lines can increase their rates through the application of various surcharges such as terminal handling charges and currency adjustment factor to compensate for imbalanced container trades.