China's THC ruling to set precedent

REPORT RELEASING: Shippers in the region have found renewed optimism with the release of the report on "THC Investigation Conclusion" by China's Ministry of Communications which they hope will be adopted by other governments and territories as the way THC be regarded. No. 9 Notice issued on April 18, 2006, stipulated primarily "terminal handling charges is in nature a component of international container transport freight."

"Shippers are encouraged by the results of the THC investigation by the MOC, the National Development and Reform Commission, and the State Administration for Industry & Commerce of China, said Willy Lin, Chairman of the Hong Kong Shippers' Council.

"We hope that the conclusions outlined in the report would serve as guiding principles to other countries and territories of how THC should be collected and we offer our full support to the China Shippers' Association's achievement of its aims."

The most important conclusion reached by the investigation is that THC is a component of international container transport freight. As such, THC should be collected from the party that pays freight.

The conclusion also condemned the anti-competitive action of liner conferences and freight discussion agreements.

"Through collective agreements, announced in the form of joint notices or declarations that they would start to collect THC in China at the same time and the same level" de facto limits the right of shippers to choose carriers freely.

"It was not good for the normal price competition among liner companies and disturbed the order of the international shipping market to a certain extent."

This is a clear reprimand of the announcements being anti-competition.

Shippers have been most resentful over shipping lines' unilateral pricing actions. The investigatory authorities, addressing shippers' grievances, "urged the liner conferences and the freight discussion agreements to set up an effective consultation mechanism with shippers or the shippers' association in China." There is no support indicated of shipping lines unilateral pricing action on freight rates or surcharges.

"We praise the action of the China Shippers' Association in taking the matter of THC before the authorities. We reiterate our full support of the CSA in the achievement of their aims. We expect also those liner conferences and discussion agreements to be more open to regular dialogue with the industry," said Lin.