State to weigh-in on shipping dispute

The Government Office has recently sent a prime ministerial draft decision requiring shipping firms and port services operators to publicise the list of shipping and port services charges to relevant ministers and sectors for feedback. The draft decision, penned by the Ministry of Transport (MoT), has triggered diverse sentiments from the respective parties. In a document to the prime minister and several authorised government agencies, Freshfields Bruckhaus Deringer – a law firm headquartered in the UK which represents four major foreign shipping firms including MSC, CMA/CGM, and APL-NOL – has proposed that the government carefully consider the draft decision.

According to the UK-based law firm, the draft decision, once approved, could have a detrimental impact on Vietnam’s trade. The firm’s lawyers stated, “In the context when most international freight adheres to privacy contract terms, if shipping firms must make public their charges and fees, their rivals would get to know the transport fare of Vietnamese exporters and their customers.

“Foreign firms buying the goods of Vietnamese exporters would be strongly opposed to the requirement to disclose shipping fees and charges, and they might then shift to using suppliers from other countries.”

The lawyers also voiced concerns that the “draft decision will increase administrative intervention, as well as put rising pressure on the Vietnam Maritime Administration when they must oversee the operating costs of international shipping firms with thousands of transactions every day.”

In light of the draft decision, shipping firms will be obliged to publicise on their own websites as well as the Vietnam Maritime Administration (VMA) Portal their applicable list of shipping charges and fees. While the gloomy repercussions claimed by foreign shipping firms may prove to be overstated in the time to come, the benefits from greater transparency of shipping charges and fees to local importers/exporters are apparent.

According to VMA, the draft decision, if it gets the go-ahead, would protect the legitimate rights of customers that have to use the services of shipping firms and businesses operating port services.

Deputy Minister of Finance Vu Thi Mai said, “Many kinds of shipping surcharges are not in the list of items subject to the state price stabilisation scheme, so that collecting such fees is imposed by foreign shipping firms, and remains out of the control of the state management agencies.”

“The new measure will allow local importers and exporters to take the initiative in negotiating with foreign partners on shipping charges and surcharges,” Mai said. According to VMA, about 40 foreign shipping firms currently operate in Vietnam, handling about 88 per cent of Vietnam’s import-export transport volumes. They are in pole position when it comes to container transport to Europe, and the America.

Vietnamese importers and exporters are reported to having paid foreign shipping firms a range of surcharges not clearly regulated in the bills of lading nor in the export-import business contracts. The MoT’s figures show that of the VND77 trillion ($3.53 billion) that the agents had collected on behalf of shipping firms during 2013-2014, surcharges gobbled as much as VND26.5 trillion ($1.2 billion).

“This is a huge cost that is dampening Vietnam’s import and export business efficiency,” said Bui Thien Thu, duty head of VMA.

According to the Vietnam Leather and Footwear Association, surcharges account for 1 per cent of the total import/export value of its member businesses, equal to about $110 million per year. Moreover, the surcharge rate has inched up 20 per cent annually on average.