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Carriers in Argentina adopt ‘freight collect’ to avoid payments in local currency

May, 25, 2023 Posted by Gabriel Malheiros

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On Wednesday, May 24, leading shipping company MSC, followed by seven others, announced that, from June onwards, ‘freight collect’ will be charged for exports from Argentina, meaning that these charges will be billed to the party receiving a shipment, often called the consignee by the recipient. Most companies have not charged import freight in the country for the past two weeks.

As soon as the decision from the market’s largest carrier was announced, the others were expected to follow suit. Since the Central Bank established a decree encouraging the non-collection of freight rates for imports, operators wondered when a similar export restriction would be established. Companies have been accumulating pesos while being unable to exchange them into dollars.

Argentina, like Venezuela, now falls into the “dirty port” category, where freight cannot be paid in local currency. “We were only halfway there because it was only for imports,” a source told LA NACION. “With the decision taken by MSC, we are now in the same situation.” There are no other ports on the planet with these specifications.

Since May 15, shipping companies have not been charging import freight in Argentina; these payments are made through local freight agents, who can transfer dollars abroad. The decision responded to the Central Bank’s resolution that deferred payments of around $2 billion in service and freight imports.

The following shipping companies will stop charging export freight in Argentina on the following dates: June 23 for MSC, June 13 for Seaspan Harrier, June 12 for Cape Akritas, June 17 for Monte Verde, June 22 for London Trader, June 12 for Meridian, and June 14 for MV Argentina in Zárate.

See below the top ten most exported products from Argentina in the first quarter of 2023, according to maritime data by Datamar.

Top 10 exports from Argentina | 1Q23 | TEU

Source: DataLiner (click here to request a demo)

Today, the Federation of Foreign Trade Chambers of Argentina (Fecacera) sent a letter to Miguel Pesce, President of the Central Bank, and the heads of AFIP and the Ministry of Commerce expressing their “deep concern about the impact that regulations on foreign trade may have on international trade operations, which will severely affect the performance and competitiveness of companies and, consequently, the possibility of genuine foreign exchange earnings.”

The reference is specifically to Central Bank Communication A 7746, published on April 20, which established that authorizations must be requested prior to 90 days for freight payments and other transportation services.

According to Fecacera, shipping firms’ decision to no longer charge import freight in Argentina “will result in increased lead times and costs for cargo, also forcing suppliers rather than buyers to deal with the freight.” In the short run, this decision is expected to disrupt the flow of the logistics chain, affecting commercial activities, particularly for SMEs that “lack the infrastructure and financial capacity to pay their freight at the origin.”

In the not-so-distant future, the association believes logistics systems “may collapse, disrupting trade flows to and from Argentina, with all of the consequences for our economy and society as a whole.” Therefore, in this note, the entity requests the industry to review its methods to avoid the “negative impact that they could have on all international trade.”

Adding to this situation, operators are also concerned because the port terminal in Zárate is currently not operating due to a strike by the Federation of Maritime, Port, and Naval Industry of Argentina.

Source: La Nacion

To read the original news report, see:

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