Freight forwarders cornered by high container deposits

PORT KLANG: Freight forwarders in the country have been pushed into a corner due to high container deposits imposed by international shipping lines.

Seeking a lifeline to save their business, the Federation of Malaysian Freight Forwarders is urging the government to intervene.

Association vice president Datuk Tony Chia (pic) said the freight forwarders are required to place a deposit of between RM1,000 and RM4,000 per container by the shipping lines.

“The industry brings in about two million containers per annum, so just imagine the amount of money we are required to fork out,” said Chia who is also Selangor Freight Forwarders & Logistics Association president.

He said the quantum of the deposits was far too much for the freight forwarding business to handle.

Since the contractual parties are the carriers and the importers, it is the latter that should be paying the deposit, he said.

“We are only the intermediary party,” he said after a dialogue on the matter with all parties here yesterday.

Given this, he hoped the government would intervene and do the necessary.

“We hope the government will put in a regulatory mechanism and guidelines to prevent the shipping lines from arbitrarily imposing big amounts of deposit,” said Chia.

According to him, the shipping lines imposed the deposit in 2008 but had only requested RM100 to RM200 per container then.

However, the amount was increased to RM1,000 to RM4,000 beginning this year.

Currently, Malaysia and India are the only countries required to pay such a deposit.

Chia said the shipping lines imposed the hefty deposits because Malaysia does not have guidelines or regulations on the matter.

“Unless the government does something, we are going to lose out to other regional countries which are not required to pay any deposit to the shipping lines,” he said.

Chia said industry players also want the central bank to verify whether the shipping lines have the right to collect the deposits under the Financial Services Act.

Besides the association members, others at the event were representatives from the Transport Ministry, the Federation of Malaysian Manufacturers, Malaysian National Shippers’ Council, the Associated Chinese Chambers of Commerce and Industry of Malaysia, Malaysia Automotive Recycler Association and freight forwarders associations from other states, among others.

On another matter, the industry players also called upon the Customs Department to have clear guidelines on the Sales and Service Tax to prevent double taxation imposed on their businesses.