Law sought to stop undefined detention charges, demurrage

June 03, 2020

KARACHI: Traders on Tuesday called for legal changes to restrain shipping companies from imposing any charges other than those specified in the bills of lading and encashment of security deposits...

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KARACHI: Traders on Tuesday called for legal changes to restrain shipping companies from imposing any charges other than those specified in the bills of lading and encashment of security deposits received from consignees.

The Karachi Chamber of Commerce and Industry (KCCI) said importers were unable to obtain clearance from customs and take delivery of their imported cargo well beyond the allowed free time due to the long period of lockdown and closure of industries and transport.

“Consequently, the agents of shipping lines are recovering penal charges which may range from $150 to $250 per container per day, in addition to other charges and penalties at their discretion,” the KCCI said in a statement. “The conversion rate of rupee to dollar is taken as Rs167 to Rs168 during April and early May as against the official rate of Rs159 to Rs161 to a dollar.”

Under the proposed law proposed in 2015, the KCCI said punitive action would be taken against the agent in case of any additional charges other than freight, not mutually agreed by shipper and shipping line and not specifically written of the bill of lading. The agents could not demand charges at their will and punitive action will be taken in case of violation in terms of detention charges not agreed between shipper and shipping agents after specified free days.

Under the proposed law, the licencee (agent) would have to refund security deposit within seven working days after settlement of accounts.

Federation of Pakistan Chambers of Commerce and Industry Vice President Khurram Aijaz said there is no legislation under which the government could compel shipping lines to provide relief to the importers.

Aijaz said Senate Deputy Chairman Saleem Mandviwala invited proposals about legislation when he was informed about non-cooperation of shipping companies during a recent meeting.

Traders said statutory provisions in the Customs Act 1969 and relevant rules confer powers to some extent to the customs authorities to regulate the functions of shipping lines and monitor their charges.

The KCCI said Pakistani ports are the most unregulated in the region with lax rules having no clear guidelines, regulatory framework or specified tariffs for container detention, and other miscellaneous charges.

“Ministry of maritime affairs has hardly paid any attention in the last two years of present government to regulate the activities of shipping lines and their agents,” it said. “FBR (Federal Board of Revenue) and Customs Preventive have failed to come to the rescue of importers and protect Pakistan’s economic interests in the face of immense clout and ability of the shipping lines to circumvent any such leverage by customs.”

KCCI said importers and clearing agents are forced to pay the discretionary charges without contest because the delay of each single day increases the cost of imported cargoes. “There have been instances where detention charges have accumulated to a level where the entire value of cargo was wiped out and customs authorities had to auction the cargo to recover their dues.”

The chamber said ports have been taken over by foreign shipping lines and foreign based terminal operators.

“Pakistan’s foreign trade and local industry are held hostage by these shipping lines, agents and terminal operators, resulting in higher cost of doing business,” it said.

“No other port authorities and ministries of shipping in the region including those in India, allow such kind of freehand to the shipping lines or terminal operators to blackmail importers and exporters at their whims.”

The KCCI said shipping lines have given generous concessions to the consignees in India without much delay, on the orders of ministry of shipping. In some cases, the licences of shipping lines were cancelled who refused to waive the detention charges during the lockdowns, it said.

The chamber said ministry of maritime affairs and FBR appear to be helpless in enforcing the relevant provisions of law and constitution, which may be invoked under such emergency circumstances and provide much-needed relief to the entire trade and industry.

“Shipping lines and private terminal operators have made billions of rupees for last many years, but in the time of an unprecedented crisis they not only refused to help and rescue Pakistan’s trade and industry, rather they

exploited this situation inhumanly and made a windfall profit at the cost of country’s economy,” it added.

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