MASKargo rides into storm with new charges

comments     Tony Thien     Published     Updated

MASKargo, the wholly-owned cargo subsidiary of Malaysia Airlines (MAS), seems headed for a serious conflict with a large section of the country's airfreight industry.

Things came to a head after it announced in mid-October its decision to go ahead with applying new terminal charges on users at Kuala Lumpur International Airport (KLIA) and the Penang International Airport from yesterday, after saying it had sought and obtained endorsement from the Federation of Malaysian Freight Forwarders (FMFF) as well as the Penang Freight Forwarders Association (PFFA).

This was quickly challenged by the Airfreight Forwarders Association of Malaysia (Afam), whose members are all MASKargo's users at both locations, saying that MASKargo should not proceed with the new terminal charges without consulting the relevant parties.

Afam called an emergency meeting on Tuesday at Holiday Villa, Subang Jaya. The ballroom was packed to capacity attended by members in the airfreight and warehousing industries located in Klang Valley and Penang. The meeting, chaired by its outspoken chairman Walter Culas, unanimously decided to reject the new terminal charges.

Member multinational companies based in Kuala Lumpur with branches in Penang also decided to send letters of protest straight away to MASKargo. At a press conference after the meeting, Culas warned MASKargo it risked losing half of its business if it went ahead with the new charges.

"We will not stop any member from shifting to Singapore," he added.

No objection

The Afam emergency meeting also discussed MASKargo's proposal to introduce what is known in the industry as fuel surcharge to reflect rising fuel costs by airline operators. Culas said the meeting said no objection other than to question the manner in which the matter was being implemented.

"Our members express strong reservation to the 11th hour notice being given," he said. "We agree (to the new fuel surcharge) provided MASKargo agree to revert back to the old rates when fuel prices come down to the old level. We have no choice to pass this on to our customers."

MASKargo had earlier offer a 10 percent reduction in rental charges at the KLIA Cargo Village as a carrot to get the FMFF and PFFA to agree to the new terminal charges and fuel charges.

Culas said the Afam emergency meeting rejected the offer, saying that when MASKargo moved from Subang to Sepang about two years ago, it raised the rentals from RM1.25 per sq ft to RM5 per sq ft.

'This is a four-fold increase, something that is unheard of anywhere in the world. How can they ask us to pay so much more to cover their own investments?" Culas said, pointing out that 10 percent reduction is not enough. "It should be at least 50 percent to RM2.50 per sq ft plus the 25 sen service charge."

Afam has accused MASKargo of what its chairman says is a divide-and-rule policy by playing one association against another. Culas himself is disappointed that the FMFF has allowed itself to play into MASKargo's hands,without considering industry interests.

Afam ignored

For the last five years, according to Afam officials, MASKargo has chosen to ignore Afam, preferring to deal with FMFF and PFFA.

"This is in spite of the fact that we represent the industry, and that MASKargo's users are our members," Culas said, pointing out that Afam has recently been admitted as member organisation, despite of FMFF's strong objection, representing the airfreight industry by the Federation of International Freight Associations (Fiata).

FMFF is the other member organisation from Malaysia representing the other modes of transportation. During the Afam meeting, the secretariat distributed copies of letter from FMFF to the Fiata secretariat objecting strongly to Afam's application. The FMFF's move raised tempers at the meeting, and the matter was also brought up at the subsequent meeting with the deputy Miti minister that followed.

Openly critical

Afam's conflict with MASKargo appeared to have been exacerbated following the appointment of an expatriate, Ralph Gotz, to head MAS' cargo division following an internal reshuffle within the airline organisation. It became worse after MASKargo's move to the MAS Advanced Cargo Centre at Sepang where services deteriorated and Afam became openly critical.

This led to Afam being ignored and to MASKargo issuing a circular to all users that it only recognised FMFF as industry representative to deal with MASKargo.

The question now is after its latest debacle and Afam's universal recognition given by Fiata whether MASKargo can afford to ignore Afam. According to observers, it runs a lot of risks in continuing to adopt the same stance. "It is better for them to start talking directly to Afam."



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