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US shippers sound alarm

US shippers sound alarm
China will come under pressure from the US to provide some clear answers about Shanghai Shipping Exchange rules when the two sides meet next month, amid concerns that confidential freight rate information could be leaked.

US shippers sound alarm over Shanghai Exchange

China will come under pressure from the US to provide some clear answers about Shanghai Shipping Exchange rules when the two sides meet next month, amid concerns that confidential freight rate information could be leaked.

US shippers importing cargo from China have expressed concern to the Federal Maritime Commission in Washington about what ocean carriers are required to file with the exchange, and whether it could be made public.

Negotiated contract terms as well as tariff rates have to be notified to the Shanghai exchange under rules that came into effect last summer, but which remain far from clear with official translations not easy to understand.

Container lines and their customers regard such information as strictly private, and do not want to reveal it to the Shanghai authorities unless they are fully confident that no details could ever fall into the wrong hands.

?We have received a number of complaints from US shippers who are disturbed about the fact that they are required to give information of a confidential nature,? FMC chairman Richard Lidinsky told.

The issue will be on the agenda when US and Chinese officials meet in Dalian next month as part of a regular series of bilateral meetings between the two sides covering maritime issues. The Maritime Administration will be leading the US delegation, with the FMC having observer status.

Although it is carriers that are obliged to provide the information, US shipper interests are the one to have sounded the alarm about the implications of the SSE rules.

In a recent letter to the FMC chairman, the National Industrial Transportation League said it was not clear from information published by the SSE whether competing carriers could obtain access to negotiated rates included in confidential service contacts, or customer names.

?If Chinese authorities assert that such sensitive information is to be protected from disclosure to other carriers and shippers, then we would like to know how they intend to provide such protection,? wrote NITL executive vice-president Peter Gatti.

Although contracts have to be filed with the FMC, there has never been any question about the confidentiality of the information provided.

But what concerns some in the US is the possible conflict of interest at the SSE, which has a regulatory role but could also be influenced by state-owned Chinese carriers.

The rules state that service must be provided by carriers ?at a normal and reasonable prices?, and not at zero or negative levels, with lines facing financial penalties for any violation.

Most containerised cargo shipped to the US is moved under service contracts negotiated on a one-to-0ne basis between carrier and shipper that are regarded as strictly confidential. It remains unclear whether the SSE expects to see the full contract, which could include cargo routing and destination, or just the freight rate component.

The Dalian meeting will be an opportunity for the US to ask questions face-to-face and try to clarify the SSE requirements, rather than make any demands at this stage, said FMC officials.

In Europe, industry concerns are slightly different, as the SSE appears to be combining both contract and spot freight rates when publishing price data based on figures provided by lines and their customers. That would place doubts over the accuracy of statistics published by the SSE, said one senior executive. Questions have also been asked about how the exchange can quickly process the vast amount of data it must be receiving.

The SSE publishes the weekly Shanghai Containerised Freight Index, which is starting to be used as a base for container derivatives trading. However, Mr Lidinsky made it clear that industry unease about the SSE filing requirements was not connected with the recently launched index.

The FMC has also set its sights on Prince Rupert, the fast-growing Canadian west coast port that is starting to handle a fair amount of cargo destined for the US midwest. Volumes grew by 45% to around 265,000 teu in 2009, the container terminal"s second year of operation, and Cosco Container Lines is the principal user.

Questions have been asked about whether containers arriving in the US via Prince Rupert have been subjected to the same level of security vetting as those moving into the country directly through a US gateway, said Mr Lidinsky. Concern has also been raised about the fact that Prince Rupert customers are avoiding the harbour maintenance tax levied on US port customers.

The FMC will be assessing the reasons for cargo deviation to Prince Rupert and whether complaints about unfair competition or security breaches need to be followed up.


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