'Rip-off' warning from institute
01 July 2014
Shipping Gazettetm No42/10, Octorber 30, 2010
New Zealand Importers Institute secretary Daniel Silva is warning shippers to be on alert for “rip-off” practices being perpetrated by some freight forwarders. In his latest e-newsletter, Mr Silva referred to international forwarders Schenker, BAX Group, Kuehne & Nagel, Panalpina, EGL and Geologistics which had recently pleaded guilty in the United States to conspiring to fix prices for international airfreight shipments.
He said the six companies – which have also had proceeding filed against them by the New Zealand Commerce Commission – had collectively agreed to pay fines of over US$50 million. Mr Silva said his organization continued to receive evidence of so-called “China scams” – with the involvement of companies such as POTA Global Management and Abba Logistics specifically alleged.
“An importer buys goods from China at a price that includes freight – The freight cost are set by shipping companies and are much the same for all forwarders,” he explained. “The actual freight cost is say, $5000, and the exporter adds that to his price. He finds a local forwarder that charges him $4000.”
“When the goods arrive, the importer gets the bill from the local agent of the Chinese forwarder inflated by $2000 with fees like ‘China surcharge’, ‘security fees’ and wildly inflated ‘port service charges’. The local agent remits $1500 to the forwarder in china, who thus recovers his loss of $1000 on the lower quote that got him the job. The exporter pockets $1000 and the scam forwarders get $500 each to line their pockets”.
“The importer looses by paying $2000 more than the going rate. The other big losers are the forwarders who missed out by quoting an honest freight rate”.
Mr Silva also criticized the Customs and Freight Forwarders Federation of New Zealand (CBAFF) for not acting to denounce the scam. CBAFF president Willie Van Heusden said his organisation objected to the use of the word “scam” because of its “emotional connections” and explained that for legal reasons his organisation was “unable to comment on pricing and charges made by individual companies”.
“We’re aware the practice is occurring and strongly recommend importer to deal only with registered CBAFF members,” Mr Van Heusden told the Shipping Gazette™. CBAFF maintains an industry-wide advocacy role and will act on any complaint received involving one of its members. If an importer buys FOB and assiduously prepares [itself, it] will not end up with any of the spurious charges described. The obvious lesson here is that if importers don’t understand the INCO terms then they should seek advice rather than being guided by their seller into a ‘too good to be true’ cost.”
Mr Van Heusden added the as with any business transaction the onus was on all parties to agree on full transparency of any ancillary charges, and to agree on a conflict resolution process should there be any dispute.
Read the Importer Institute article