MARITIME industry players are beginning to voice their fears that consumers may end up being burdened by indirect costs as a result of the implementation of the International Ship and Port Facility Security (ISPS) Code and the container security initiative (CSI).

It is anticipated that such costs, which can be factored into the freight rates or terminal handling charges, will be passed on to end users. The uncertainty resulting from possible delays at ports due to ship checks and clearance are also some of the commercial impacts the ISPS Code could have upon the logistics chain.

The issue was touched upon by key maritime industry players during the panel session at the International Maritime Expo 2004 held in Kuala Lumpur last week. Malaysian National Shippers Council (MNSC) vice chairman S. Darumalinggam said there was always the possibility of shipping lines imposing additional surcharges as a result of having to comply with increased security measures. He said whatever extra fees should be made transparent.

"There should be a regulation to ensure that any rate hike can be deliberated upon and that the quantum of increase is fair. "It is important for us to consider the consumers' viewpoints and needs so that whatever additional charges imposed are not arbitrary and exorbitant. "MNSC is not against any increase in charges but it must be made transparent so that shippers can explain the rise to their buyers," he said, adding they would be able to include it in their cost of production. Recently, Port Klang Authority said the port would not charge any security surcharge to its users and that all extra costs would be borne by Northport and Westport.

Westport executive chairman Tan Sri G. Gnanalingam said ultimately, whether or not there would be any additional charges would depend on the requirements of the ISPS and CSI. "It depends on whether ports are required to carry out any extra movement to deal with the CSI. Currently, there is a fee of RM60 per box for extra movement such as Customs checks for the container to be lifted, put onto a trailer, taken to the Customs area for inspection and hauled back to the yard again. "It will not be fair to ask ports to absorb additional charges arising from the need to comply with increased safety requirements." "If shippers and importers want their cargo to be safe then it is only fair that they pay for it."

Malaysian Maritime Institute (Ikmal) president Captain Jaffar Lamri said one of the commercial impacts that the ISPS Code would have upon ship owners was with regards to long-term charter parties that had already been signed. "The cost of ensuring that their vessels meet the regulations set out under the Code would have not been factored into the contracts which are already concluded.

"The cost of chartering a ship daily is likely to increase because of the need to train officers and equip the vessel with additional safety features. "However, charterers are under no obligation to pay for these extra costs as the contracts have already been fixed and the ship owners will end up having to absorb the differences." Capt Jaffar said other 'indirect' costs that would result from the implementation of the ISPS Code include delays in ports due to the carrying out of inspections and increased workload.