KUALA LUMPUR – The Malaysian National Shippers’ Council (MNSC) urged the government to help importers and exporters to address the issue of container and space shortage on board shipping lines due to the Covid-19 pandemic.
In a statement today, it said that the shortage during the second half of the year increased container freight rates for both export and import shipments by 300% to 400%.
Chairman Datuk Dr Ir Andy Seo said MNSC is concerned that skyrocketing shipping costs will increase the cost of doing business and subsequently affect consumers as it would further increase the cost of living, especially during this challenging period.
“This issue is expected to persist during this peak season (Christmas festive season) until the Chinese New Year holiday mid-February 2021,” he said.
According to MNSC, the container shortage stemmed from the boom in China following the country’s post-pandemic trade recovery.
It said Chinese exporters are willing to pay premium rates to secure containers and space, and thus most of the shipping lines have moved their inventory there to cater to demand.
“As almost every vessel out from China is full and Port Klang is the last port of call for ships headed west, Malaysia’s trade is badly affected by the shortage of containers and space to meet shippers’ demand,” said MNSC.
Additionally, shipping lines had reduced the number of vessels and manpower due to low demand during the first wave of COVID-19.
“Coupled with the inability to collect empty containers in countries imposing movement control restrictions, this has led to a backlog of demand for containers from across North Asia,” it said.
The council said it sought the government’s help via the Transport Ministry and port authorities to request shipping lines to increase capacity and allocate equipment to the more critical trade lanes where rates are climbing.
It has also called for the government’s help to discourage liners from skipping port calls to move to more lucrative transpacific lanes.
MNSC also urged the government to consider offering more tax incentives, such as tax rebates and double tax deductions, to enable exporters to pay higher or premium rates to compete with international exporters.
The council also proposed for the government to remove the 30% cap on the reimbursement of logistic costs under the temporary relief granted through the Market Development Grant (MDG).
The grant allows for the reimbursement of up to 30% of total logistic costs, including the cost of transportation, warehousing, and freight, subject to a maximum of RM15,000 per shipment.
It is applicable for logistics costs incurred until December 31, 2020 or until the Covid-19 pandemic is officially declared ended by the government, whichever comes first. – Bernama, December 5, 2020
