OUR businesses are affected badly due to containers shortage and the Government must intervene to resolve the matter, said the Malaysian National Shippers Council (MNSC).
It said that due to the COVID-19 pandemic, Asia has been hit hard due to container and vessel capacity shortage, which is now causing serious problems for importers and exporters, as well as the logistics industry.
“The container and space shortage on board shipping lines during the second half of the year has led to the increased container freight rates for both export and import shipments, between 300% and 400%.
“Following our discussions with Shipping Association of Malaysia (SAM) and individual shipping lines, we were told that container shortage issue is due to the economic recovery in China.
“Chinese exporters are willing to pay premium rates to secure containers and space, attracting shipping lines to move their inventory there to cater for the soaring demand.
“Plus, large volumes of cargoes are sent from China to North America for Christmas businesses since September,” said its chairman Datuk Andy Seo in a statement.
As result, he said, Malaysia is badly affected by shortage of containers and space to meet shippers’ demand.
He added that the problem was compounded when 19 shipping lines reduced the number of vessels and demand due to the first wave of the pandemic.
“And due to low demand, coupled with the inability to collect empty containers in countries that have imposed movement control restrictions, has led to a backlog of demand across North Asia.
“To fulfill our contractual obligation and continue production, shippers have no choice but to purchase containers at higher prices.
“And we are concerned that the skyrocketing shipping costs will passed to consumers, which will increase cost of living in this tough times.
“This problem is expected to persist during this peak season (Christmas festive season) until Chinese New Year Holiday, in February 2021,” said Seo.
Give us tax incentives, rebates
Offering solutions, the MNSC leader urged the Government to step in and request shipping lines to increase capacity and allocate equipment to the more critical trade lanes, where rates are soaring.
“This measure will discourage liners from skipping port calls to move to the more lucrative transpacific lanes.
“My suggestion is nothing new as the US Federal Maritime Commission and the South Korean Authority have done the same,” said Seo.
He added the Government should also offer more tax incentives such as rebates and double tax deductions to enable exporters to pay premium rates, which will enable them to compete with international exporters.
“And please remove the cap of 30% of total logistic costs for export subject to a maximum of RM15,000 per shipment from the current conditions, under the temporary relief granted through Market Development Grant (MDG) for the reimbursement of logistic costs including the cost of transportation, warehousing and freight.
“MDG funding must be expanded to allow importers to claim reimbursement of the logistics costs for import shipments,” said Yeo. – Dec 5, 2020.
