A dispute between exporters, importers and shippers lasting almost a decade may soon subside. The Sri Lanka Shippers’ Corporation (SLSC) made up of exporters and importers had been in conflict over terminal handling charges (THC) levied by shipping agents, represented by the Ceylon Association of Shipping Agents (CASA) for moving freight through the Colombo port. An official of CASA told the Island Financial Review that when the matter was taken up in courts, the Chief Justice had insisted that both parties come to a settlement through mediation. A mediation committee was duly appointed and according to the CASA official, this report is expected to be released this week with a recommendation to reduce the THC by US$ 7. However, this could not be confirmed. During its AGM last month SLSC said that authorities turned a blind eye to their problems despite years of complaining and campaigning to get the THC removed. SLSC said in its web site that THC was first introduced in the 80’s in the Far East as actual land based cost recovery and that the freight rates dropped by a similar amount. THC was first introduced in Sri Lanka in 1994 on import cargo and importers did not protest as the cost was passed down to the consumer. In 1997 a freight surcharge was introduced on export cargo by the Ceylon Association of Shipping Agents (CASA). This move was challenged and SLSC alleged that CASA then changed began to call it THC and unlike in the Far East freight rates were not dropped. SLSC points out that THC rates in Sri Lanka is the highest in the region at US$ 148 for a 20FT container and USD$ for 40FT (source SLSC website). "Up until 1994 THC was a part of freight charges but with falling rates shipping lines started losing money. Separating THC from the freight rate was one way for them to recover part of the losses as there is a profit element and over recovery," the SLSC says. SLSC says the THC has made exports uncompetitive and estimates the cost to the nation on imports and exports to be Rs. 4.4 billion as a result of the THC. The additional cost incurred by consumers on imports is estimated at Rs. 2.5 billion while the cost to the export industry is Rs. 1.9 billion. A member of CASA told the Island Financial Review that shipping lines insist on THC to recover costs which have escalated over the years. He said the contention of the exporters and importers was misplaced and had to do with increased freight costs of cargo handlers. The THC is charged as a Port of Origin THC and Destination Port THC which is levied in ports anywhere in the world. He said that CASA would convene a press conference this week after the expected report is released.
