Cargo handling fees raised now for Hanjin shipping customers

Cargo handling fees raised now for Hanjin shipping customers

September 15, 2016

Port operator DP World has been allowing ships from troubled South Korean line Hanjin Shipping to dock and unload at its Jebel Ali Port, but is charging customers who were awaiting goods a premium to get hold of their cargo, shipping agents and freight companies said. The port operator is only allowing containers to leave its facility once a security deposit is paid.

A circular has been distributed to members of the UAE’s National Freight and Logistics trade body detailing the increased terminal handling chargers for Hanjin customers, which one shipping agent claimed was close to double regular handling fees. Deposits of Dh10,000 are also being sought for 40ft containers to ensure they are returned.

A DP World spokesman said: “The deposit is repayable and traders also have the option to clear their shipment through our systems without any deposits. We are trying to help the traders as best as we can with different options to clear their containers. They have a choice of options.”

Peter Mathew, the managing director of Dubai-based Fleet Line Shipping Services, said that under normal circumstances customers would pay shipping lines directly, with port operators like DP World generally extending credit to operators.

However, since Hanjin is now seeking bankruptcy protection in several countries, ports have reacted in a number of ways. Some, such as Jeddah Port in Saudi Arabia, have refused to let Hanjin ships dock. DP World, on the other hand, appears to be recouping its money through higher handling charges.

Shipping agents who spoke to The National generally approved of this approach. Mr Mathew said that DP World had the right to protect its interest.

“In fact, DP World is one of the few port operators around the world to come out with a quick decision,” he said.

Atif Rafiq, business development director at Al Sharqi Shipping, said that DP World’s added costs would help to ease the disrupted supply chain.

“If you really need your cargo, that is very facilitating,” said Mr Rafiq. “If I was a supplier or buyer, I would want that, because the legal issues are going to take a long time to sort out.”

He said that a likely downside is that cargo could be held up at other ports en route to the region, or even when unloaded could take time to transfer to other available fleets.

But not all shippers are happy about the new charges.

Usman Rehman, the managing director of Time World Freight, was unhappy about the number of security deposits it has had to lodge to remove cargo from the port.

“It’s costing us a lot,” he said. “We are giving one after another cheque.”

Simon Heaney, a senior research manager at shipping consultancy Drewry, said that shippers may not be happy to pay extra for delivery, but will generally do so because “the value of the goods far exceeds any costs”.

“They have insurance and there may be counter-claims they can make against Hanjin [although] how much of that they will get back is debatable,” said Mr Heaney. “But from a shipper’s point of view, the imperative is to find out where your cargo is and then find an alternative solution.”

He said the decline of Hanjin is “a big shock to the industry, even though the warning signs were there”.

Global freight rates have plummeted over the past two years as huge new container ships were commissioned just ahead of a severe drop in trade levels.

For instance, Mr Heaney said that the cost of shipping a 40ft container from Shanghai to Jebel Ali dropped last month to US$830 from US$2,280 in May 2014.

Hanjin was “a relatively large player” on the Asia-Middle East routes before seeking bankruptcy protection. Its 83,000 twenty foot-equivalent container units (TEU) capacity represented about 10 per cent of the overall market.

“So it would be one of the trades where we would expect to see a bit of a pickup [in rates],” he said. However, he added that plenty of competition remains on these routes, and that utilisation rates are low, especially as they are affected by excess capacity on more popular Asia-Europe routes.