Malaysia freight forwarders to stop container deposits Dec 1

The Federation of Malaysian Freight Forwarders announced yesterday that it will stop providing container deposits or letter of indemnity from December 1 this year.


Port Klang: Malaysian freight forwarders will soon stop placing deposits on behalf of shipping lines for the handling of containers, a move that may lead to slower trade movements, and thus affect the country’s competitiveness as a trading nation.

The Federation of Malaysian Freight Forwarders(FMFF) announced yesterday that it will stop providing container deposits or letter of indemnity from December 1 this year.

Until recently, container deposits have been advanced by freight forwarders in an effort to shorten the time of processing container movements.

With shippers (importers and exporters) having to provide their own money as deposits now, industry players said trade movements will be grossly affected.

The move is seen as largely a failure on the part of Port Klang Authority (PKA) and Ministry of Transport to mediate on the matter.

The practice of deposit-taking for containers by shipping lines started in 2009 and the announcement made by the FMFF is seen as the culmination of its campaign to make the practice illegal for the last two years.

A move to resolve the issue initiated by PKA through an alternative container security management scheme fell flat with only five shipping lines agreeing to join the scheme in the last four months.

“The position taken by Selangor Freight Forwarders and Logistics Association (SFFLA) and FMFF today is the culmination of all our endeavours and efforts to engage the stakeholders and government authorities to find a workable and acceptable resolution to this issue,” FMFF said in its statement yesterday.

The decision was made following an extraordinary general meeting held with 131 FMFF members to vote on the cessation of the practice.

FMFF had also consulted some 15 trade associations to explain its position.

It is understood that these associations had sent a memorandum to the Ministry of International Trade and Industry to resolve the issue.

"The logistics chain will definitely be affected. Can you imagine if the deposit is in the form of an outstation cheque? Significant delays could happen," FMFF president Alvin Chua Seng Wah told reporters at its headquarters here yesterday.

FMFF said the move was also undertaken to avoid escalating charges and ease members' cash-flow woes.

Freight forwarders pay an average of between RM60,000 and RM80,000 a month for container deposits, which are only refunded between one and three months later.