The Hindu Business Line : Strong reforms, for smooth sailing

The Global Shippers’ Forum, that met recently in Singapore, recognised that Asia represents a growing and dynamic base for world trade and has called for reform of laws and regulations to make global shipping and freight transport effective and secure.

Santanu Sanyal

At the end of a three-day conference in Singapore recently, the Global Shippers’ Forum (GSF), an umbrella organisation of shippers’ associations, including those from India, brought out two important documents, namely, ‘Joint Declaration’ and ‘Special Statement in Support of Competitive Shipping Reforms’, after discussions on the goals and challenges facing shippers and the freight transport industry. The Joint Declaration, signed by the Asian Shippers Council, Canadian Industrial Transportation Association, European Shippers Council, Japan Shippers Council and the National Industrial Transportation League, supported security measures to protect the world’s supply chain.

The Special Statement of Support of Competitive Shipping Reforms in Asia emphasised the need for a major overhaul of laws and regulations by Asian countries, outlawing anti-competitive practices by liner conferences and discussion agreements.

Changes imperative

Today, as the conference noted, Asia represented a growing and dynamic base for world trade and this required governments in the region to review their domestic laws to consider changes that would embrace principles calling for competitive, secure, efficient and effective freight transport.

Without these, the GSF felt, the continuing prosperity and economic growth of Asian countries would be hindered.

It would be difficult for the region to sustain its position as world trade leader since the very supply chain that serviced international markets would find it hard to handle the expanding volume of traffic.

In recent years, America and Europe have made some progress with regard to statutory and regulatory reforms.

These began with the Ocean Shipping Reforms Act in the US, followed more recently in Europe by steps to abolish liner-block exemption.

The new regime that would replace the European block exemption, it was felt, would foster a more competitive ocean shipping industry.

Alongside this, most Asian countries, instead of recognising that competition should be embraced as a desirable objective, chose to adopt the role of spectator, watching the developments in western countries.

Worse, the Asian Ship-owners Forum, at a recent meeting, voiced concern over progressive measures being adopted by western countries.

The ASF policy statement demonstrated a clear intent to perpetuate the existing regime, i.e. forcing consumers to pay higher prices without commensurate improvement in services.

Thrust areas

The GSF identified several thrust areas, such as enhancing a more competitive environment in freight transport, programmes for more efficient transport and trade, support to effective government programmes and achieving greater efficiencies through communication.

A more competitive freight transport environment, it was felt, would be possible through maritime regulatory measures, rationalisation of surcharges and ancillaries, particularly terminal handling charges and abolition of cartels, not only of shipping but also of airlines.

The GSF was of the view that all surcharges should be used to compensate carriers for unforeseen short-term increases and be temporary in nature.

It agreed with the view of many shippers, particularly Asian, that terminal handling charges (THCs) should form an integral part of the freight rate.

Call for numbers

Developing programmes for efficient transport and trade would presuppose enhancing freight transport efficiency in the supply chain, identification of probable areas of congestion in future, which again would require precise freight demand forecasts and assessment of existing infrastructure capacity limits and investment to expand capacity where required.

The only way to identify freight transport and infrastructure solutions that would yield maximum benefits would be to determine appropriate measurements.

And, accordingly, the Global Shippers Forum decided to support initiatives for joint development of service performance indicators and standard performance measurements, by all industry stakeholders.

In a move that would be encouraging to ocean carriers, GSF members appealed for more accurate freight demand forecasts and assessment of existing infrastructure capacity limits when dealing with inland congestion.

This is what ocean carriers would like their own associations to be allowed to produce with respect to vessel supply and demand once the conferences come to an end in the European Union from October 2008.

Concern over US LAW

About security measures, as contained in the Joint declaration, the GSF, reiterated concern over the US scan-all container provision, which was included in a recently passed law, as it contradicted many of the goals and objectives of the 9/11 Commission.

It would divert vital funding from other programmes which, along with screening and scanning, proved effective in thwarting attacks on sea-borne trade.

The support for effective government programmes, it was felt, should also include ocean cargo liability, emissions trading scheme, liberalisation of air transport and regulating wood packing materials.

The GSF also decided to launch its own Web site shortly for efficiency through communication.

The GSF reconfirmed its support for the development of ‘Guidelines’ by the European Commission that aligned the treatment on the liner shipping sector closer to that of most other industrial and services sectors with regard to their compliance with European Community competition law.

It will submit a detailed comment on the Commission’s draft guidelines.

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