Backlog fees hit enterprises

Import and export companies are fiercely resisting the increase in backlog fees being imposed on them by shipping companies who say they are doing so to deal with container backlog at ports.

Ships could now face a rise in charges from between US$50 to $100.

Taiwan’s Wan Hai Lines was the first company to apply the new fee. A representative of the firm said that it consulted other shipping companies and agreed on a new fee as a way to reduce the losses they were suffering while ships waited at the ports to clear formalities and load and unload their goods.

On July 16, Wan Hai Lines sent letters to its clients informing them of the change in fees from July 23.

A South Korean shipping firm said that a container ship now took between 20 to 25 days to travel from South Korea to Viet Nam instead of the 10 days it used to take earlier. The rental charge of one 40-feet container was $4 to $5 per day while it was $3 per day for the rental one 20-feet container.

Deputy general director of the Nha Be Textiles and Garment Joint Stock Company Pham Phu Cuong estimated that "with a business of 200 containers of exports each month, our cost for the backlog reached VND253 million ($15,300). This scenario is proving to be a heavy burden, especially amid current difficulties."

He said his company in particular and textiles and garment enterprises in general were in a hurry to fulfil their contracts which they were unable to do.

Each day when imported materials arrived at the ports, companies want to immediately clear the procedure that is required of them. However, due to the current backlog at ports, firms risked having to suffer the inability to meet their contractual obligations, thus having to compensate for not delivering the goods as scheduled.

Nguyen Dinh Truong, deputy chairman of the Viet Nam Textile and Apparel Association (Vitas)‘s HCM City branch was however against the increase in fees. "Why do enterprises have to suffer all the costs when it is the responsibility of the port management boards to ensure that there is no backlog at the ports?"

According to Pham Xuan Hong, general director of the Sai Gon 3 Textile and Garment Joint Stock Company, there were about 300 textile companies exporting goods via the ports. Large scale business imported and exported a number of containers ranging from 200 to 300, while the number was between 50 to 100 for medium and small scale companies. If backlog fees are raised, they would have to pay additional costs ranging from $2,000 per month to $30,000 per month.

Director of the import and export division of the Esquel Garment Manufacturing Company Nguyen Hoang Pho pointed out that the terminal handling charge had been raised to $75-105 per container and companies would not stand for an increase in the fees for backlog.

There are other problems that result from a container stagnancy at ports. Companies have to pay more in transportation costs as container trucks had to make detours.

Port authorities meanwhile blame the backlog at seaports like Cat Lai, Tan Cang and VITC as the reason shipping companies have been burdened with additional costs.

General director of the Tan Cang port Nguyen Dang Nghiem said he opposed the new charge.

"Shipping companies should be supporting importers and exporters rather than saddling them with more difficulties," Nghiem said. (Viet Nam News)