03 May 2010

The China Surcharge

One of our members imported a couple of shipments from Xingang in China. The freight was prepaid by the supplier in China, but the New Zealand forwarder billed the importer $1,400 for a "China surcharge" and $1,800 for "overseas shipping".

The importer queried these charges, but the local forwarder (a P&O subsidiary) dismissed the inquiry saying that the charges were their standard tariff prices. The importer went back and asked just what exactly is a "China surcharge" and why was he being charged for "overseas shipping" when the freight had already been paid in China.

The forwarder replied by saying that they were just billing what their Chinese principal had asked them to collect. Delivery was refused until the bill was paid in full. The importer paid the charges and then referred the matter to the Disputes Tribunal. As soon as a hearing date was set, the forwarder decided to refund the disputed charges, in full.

Creative invoicing by some forwarders is nothing new and that is why we always advise our members to nominate their own forwarders - regardless of where the freight is paid. Importers should get written quotes for all charges, including "Port Service Charges", these days a significant revenue item for forwarders that has little to do with actual port costs.

2 comments:

  1. We import also from Xingang and are charged a higher PSC for freight that have been prepaid in China from other ports like Shnaghai. Our question is always why can they justify this if the freight has already been prepaid in China and what is this mysterious PSC made up of?

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  2. The chinese forwarder sells extremely low freight charges locally in order to get the booking - usually below actual cost. However, once the goods arrive into NZ, the local agent/office of the Chinese forwarder is instructed to collect higher than normal 'local PSC's then rebate a large chunk of that revenue back to the Chinese forwarder. In effect, the consignee in NZ is paying a portion of the freight charges - even when the goods are freight prepaid (C&F terms). There's a simple way to get around this problem - buy FOB or EXW, and instruct your local NZ forwarder to arrange the freight using quoted rates.

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