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Dispute Over Import Freight Charges (And What to Do With It)

The freight forwarding charges debate here in New Zealand, as discussed in the past, has probably come to a head with the statement by the Commerce Commission that “it is not the commission’s role to enforce “Incoterms” in contracts between forwarders and importers.”

The most the commission will do is to “consider any misrepresentation of such terms as part of our general investigation” when investigating allegations of breaches of the Fair Trading Act about the way import freight charges applied in the importing of products are represented.

This tallies with my conclusion last week that the commission’s position is that it would focus on the specific terms of any contract, as opposed to accepting that Incoterms is the necessary base of such freight/trading contracts when making its investigations.

In one sense that will disappoint importers who feel that the application of Incoterms correctly should be a default position in international trading contracts. The Importers Institute says traders should not have to have explicit contracts to define commonly-accepted terms.

“When a forwarder charges part of the freight to an importer in a CFR — freight prepaid — shipment, the onus should be on the forwarder to prove why Incoterms do not apply,” said Institute secretary Daniel Silva.

However, at least, we now know where the Commerce Commission sees its boundaries. It disagrees that enforcement of Incoterms is part of its role, and therefore, we also know that the resolution of the complaints and accusations that have been flying in the Shipping Gazette™ pages over recent weeks will probably be settled only in court.

I agree with the Importers Institute that international trading terms should be recognised in international forwarding contracts. I still feel the best way to do this would be for the Government, via whatever Act it chose to amend, to enshrine that in New Zealand law.

As it happens, the proliferation of Disputes Tribunal cases, and possibly other litigation, may well create a body of case law to make that the default position anyway.

In the meantime, I wonder how many importers are taking the institute’s advice and changing their terms of trade from CFR (or GIF) to FOB and nominating forwarders from whom they can obtain binding quotes for freight and destination charges. By doing so, they are driving a change for the better.

Source: NZ Shipping Gazette

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