CHINA REQUIRES CARRIERS, NVOS TO FILE RATES,
AGREEMENTS
CHINA REQUIRES CARRIERS, NVOS TO FILE RATES,
AGREEMENTS
The People’s Republic of China has adopted new requirements for the filing of tariffs and rates by ocean carriers and non-vessel-operating common carriers that appear to defy the trend towards deregulation in international container shipping.
The “Regulations on International Maritime Transportation of the People’s Republic of China” would apply to freight moving into and out of mainland China, including the special administrative regions of Hong Kong and Macao.
The regulations were adopted by the People’s Republic of China’s State Council on Dec. 5, 2001.
The Chinese regulations would require ocean carriers and NVOCCs to file freight rates — both published rates and service contract rates — with an appropriate government agency. Published rates would only become effective 30 days after filing, while service contract rates would be effective 24 hours after filing, according to industry sources.
The regulations also include a requirement that a carrier seeking to commence or terminate a liner service, change vessels or adjust schedules “should make an announcement of its intent 15 days in advance, and apply for a filing with competent departments of communication under State Council within 15 days upon which the above behaviors are conducted.”
The wide-ranging regulations also requires carriers to file their conference agreements, freight rate agreements, and operational agreements within 15 days of the agreement itself.
Carriers and NVOCCS are forbidden from “providing services with freight rates below normal and reasonable levels handicapping fair competition; accepting cargo bookings with a discount to consignors that is not indicated in the accounting books; abusing privilege to damage trade counterparts with discriminatory pricing and restrictive conditions; and other behavior harmful to trade counterparts or to order in the international maritime transportation market.”
The regulations spell out the requirements that carriers and NVOCCs apply for a licence, and that each NVOCC posts a “deposit” of at least 800,000 Renminbi (about $96,000).
Industry organizations, including the U.S. National Industrial Transportation League and the International Federation of Freight Forwarders Associations, are considering their responses to the new regulations and trying to assess the exact impact of the rules.
“Our initial reaction.. is that we are disappointed,” said Peter Gatti, vice president of the NIT League. “It gives us a lot of concern,” he added.
“The regulations themselves appear to be moving in the opposite direction of what we’ve seen in the U.S., Canada and in the report of the Organization for Economic Cooperation and Development,” Gatti said.
The date of entry into force of the regulations is not clear. The regulations mention an effective data of Jan 1. 2002, but the International Federation of Freight Forwarders Associations believes that the new regulations may still only be in draft form. According to U.S. government sources, there will be a set of implementing rules issued towards the beginning of March.
The heavy regulatory demands of the new Chinese rules on shipping lines and NVOCCs, as well as the potential conflict with the confidentiality of service contracts under the U.S. Ocean Shipping Reform Act, are expected to create controversy and opposition within the industry and from western governments.
The new Chinese rules appear to be inspired from the Rules for Enforcement of Freight Rate Filing System for International Container Liner Service of October 1996. The 1996 rules, introduced at the same time as the law creating the controversial Shanghai Shipping Exchange, failed to have the stifling regulatory impact that had been feared by parts of the industry at the time. Contrary to the 1996 rules, the latest regulations do not specifically exclude the China/U.S. maritime trade from the tariff-filing requirement.
The NIT League considers that the latest regulations also have a much wider scope than the rules of 1996.