Freight forwarders want regulations on deposits paid to shipping lines

The newly launch Container Terminal 7 at Westport in Port Klang.

PORT KLANG: The Federation of Malaysian Freight Forwarders wants the Federal Government to formulate regulations to prevent international shipping lines from crippling them with expensive deposits.

 

The association’s vice-president Datuk Tony Chia said freight forwarders are currently required to put down a deposit of between RM1,000 and RM4,000 per container brought in 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.

 

A shipping line is a company that transports cargo from the loading port to the discharge port.  

 

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

 

He added that since the contractual parties were the carriers and the importers; the latter should pay the deposit to the shipping lines.

 

“We are only the intermediary party,’’ said Chia at a press conference after a dialogue on the matter with all relevant parties on Thursday (Dec 20).

 

He claimed that because of this, freight forwarders were at risk of facing huge financial losses in the event the shipping lines go bust before returning the deposits to them after delivering the shipments.

 

“We hope the government will put in a regulatory mechanism to prevent the shipping lines from arbitrarily imposing large deposit amounts,’’ Chia said.

 

According to him, the shipping lines first 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 at the beginning of this year.

 

Currently, Malaysia and India are the only countries required to cough-up the deposit by the shipping lines.

 

Chia said the shipping lines imposed the hefty deposits because Malaysia did not have any guidelines or regulations pertaining to the matter.

 

“Unless the government does something, we are going to lose out to other regional countries where such deposits are not required," he said.

 

On another matter, the industry players also called upon the Customs Department to have clear guidelines in regards to the sales and services tax to prevent double taxation imposed on their businesses.