An association of Shanghai shipping agencies is so enraged at attempts by a foreign ship operator to cut commission fees that it is calling on its members to stop providing services to the world's largest shipping firm as of April 14, in hopes of pushing fees back up.
The Shanghai International Freight Forwarders Association has asked its some 300 members not to handle any cargo for Maersk Shipping Co Ltd, the world's largest container shipping operator. Around 80 of its major members have agreed not to offer any services for the Denmark-based company.
The agencies book space for cargo on ships, shepherd cargo through customs and provide local transportation in return for a commission from both ship operators and cargo owners.
"The move is just one of our methods to draw foreign shipping companies back to the negotiation table," said Zheng Zhong, an official with the association. In its statement, the association said Maersk was "unwilling" to change its decision to cut or even cancel commission fees.
Officials with Maersk's local office couldn't be reached yesterday for comment.
The company has already canceled the commission fee in Guangzhou - forcing agencies to charge cargo owners more.
The local association and its members are striving for a "minimum" commission fee of 2.5 percent of the total shipping price. Currently, foreign shipping companies have cut rates to 1 percent or lower.
"After the cut, we can hardly earn a profit by managing cargo for these foreign shipping liners," said a manager surnamed Ye who works with Shanghai Port International Container Forwarding Corp Ltd.
With the new rate, local cargo agents earn only US$10 per TEU (Twenty-foot equivalent unit) on the long-haul services bound for Western destinations, while they used to charge US$35 for this service.
Zheng said about 70 to 80 percent of foreign shipping operators lost money last year, so they are trying to cut costs. "But they can not squeeze the money out of their agents."
However, some industry insiders said Maersk's business may not be hit as severely as expected.
"There'll be some firms who are willing to offer the services for Maersk and the company is not worried about the cargo as some customers in the US will always use the company as a carrier," said an industry insider surnamed Yin.
(Eastday.com April 4, 2003)
