‘Importers must take a stand against Chinese kickbacks’

Vocal industry concern appears
to be having little impact on the
growing incidence of the China
import service fee (CISF) which
surfaces with clockwork regularity
in correspondence forwarded to
FTW.
The following email received
from a forwarder recently illustrates
the point:
“We are in receipt of your invoice
totalling R 11 322.50. Kindly advise
what the US$ 337.50 Chinese Import
Service Fee as well as US$ 140.63
System Charge and US$ 100.00
Doc Charge as well as a R 116.95
‘collect fee’ are for?
“This is over and above your
already very high unpack and
release fees.”
The CISF, which is most prevalent
on the routes from China and India,
involves a kickback paid to the
overseas exporter by his appointed
forwarder or groupage operator.
“The general feeling seems to be
don’t rock the boat because there’s
so much trade with China,” an
industry source told FTW.
“Three weeks ago we had a full
container shipped as LCL 37 cubic
metres. The breakbulk charge alone
was R21 000 just to unpack what
was part of an LCL shipment.
“And that excludes the extra
charge.
“You will very often find where
an importer is buying on a CIF
basis – which the Chinese exporter
seems to insist on when the order is
placed – that they ship it in a 40 foot
container as part of a groupage box.
The local breakbulk agent will set
his rates for unpack of cargo if he’s
done the forwarding at R300 per
cubic metre – but if he’s representing
an unknown foreign agent to whom he has to make payments,
the rate will be R850 to
recover the kickback he has
to pay.”
And in the end it’s the
consumer who has to cough
up.
The only way to avoid
the fee is to refuse to buy
CIF. But since the Chinese
exporter generally insists
on CIF this is not always
possible, particularly for
smaller players who tend
to be typical groupage
customers, where the
practice is most prevalent.
While FTW sources
have described the fee as
‘scandalous’ there seems to
be no way out other than to
insist on buying FOB or ex
works.
The bottom line,
according to another
source, is that the Chinese
are undercutting their
competitors by manipulating
the costs.
“They’ll sell you an
umbrella for $1 and add
onto their price through
the kickback, undercutting
another supplier in another
part of the world who is
selling a similar umbrella for
$1.50. The Chinese exporter
will supplement his price by
adding the import service
fee or some other degroup
charge.”
He advises importers to
ensure that their freight
forwarders do not pay
kickbacks and to avoid
buying CIF.
“Something needs to be
done about it,” says Dave
Watts, maritime consultant
to the SA Association of
Freight Forwarders in KZN.
“But it really ought to be
lobbied by the people who
are being impacted rather
than an organisation like
Saaff.”
And if it’s a CFR or CIF
shipment, he points out
that there can be no other
charges however you couch
them. “If there are other
charges being transferred
back to the shipper they are
dutiable.”
Watts believes that there
needs to be government
intervention with the likes of
the Reserve Bank declaring
payment of these fees
illegal.
But until that happens,
or until importers take a
proactive stand against the
practice, it seems that the
CISF is here to stay.