21 September 2010

Forwarding and Honesty

The Importers Institute receives a regular stream of complaints about freight forwarders. Sadly, they are often justified. Some forwarders' charges are outrageous.

Take the case of POTA Global Management NZ Ltd, a division of P&O Trans Australia. We have earlier reported a scam operated by POTA's agents in China, where freight ends up being collected at both ends. When threatened with Court action, POTA promptly refunded an importer for a fictitious "China Surcharge" but continues to charge it to other importers.

That is not the end of it. A recent invoice from POTA included a "bio-security fee" of $18, a "compliance fee" of $36 and a "port security fee" of $36. These fees all have something in common: they are a figment of POTA's imagination. They don’t exist. They are made up. They are devices to extract money from importers under false pretences.

Those fees apply in addition to delivery order and administration fees of $50 and "port service charges" of $70 per m3.

Another forwarder, Agility, recently agreed to pay a fine of US$600 million to the U.S. government for overcharging the military on supply contracts in the Middle East. The Arab-owned company (with a subsidiary in New Zealand) was black-listed from future US government contracts.

The Commerce Commission has filed proceedings in the High Court in Auckland against a number of prominent local forwarders, alleging price collusion. The forwarders involved are Schenkers, BAX Group, Kuehne & Nagel, Panalpina, EGL and Geologistics. The Commission said, "Agreements between competitors to fix, control or maintain prices distort the normal forces of competition and keep prices artificially high".

Our advice to importers is that they should always seek a full quote from forwarders, including destination charges. If you have been ripped off by a forwarder, we suggest that you take the matter to the Disputes Tribunal and forward copies of the invoices to the Importers Institute (in confidence). We will continue to expose dubious practises to the disinfectant of sunlight.