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THC among issues to feature in KL world shippers meet

One of most contentious issues facing shippers worldwide which will be up for discussion at the World Shippers Conference in Kuala Lumpur on 18 September will be the contentious terminal handling charge (THC).
 
The imposition of the charge is seen by shippers worldwide as anti-competition since it is unilaterally imposed by shipping lines and is neither influenced by the shipping market nor based on actual services.
 
Collecting terminal handling charges (THC) is a major issue in global maritime trade, and shippers groups and governments have protested against the surcharge, some with success but mostly otherwise.
 
While a China, Indonesia and Australia – have reined in shipping lines, including mandating discussion with national shippers’ bodies before such charges can be imposed, by and large shippers are left with mp coirse but to pay the charges.
 
The charges are not only imposed by shipping lines on international trade, but curiously even in domestic trade as is the case by shipping lines serving between ports in Peninsular Malaysia and Sabah/Sarawak.
 
Shippers, including the Malaysian National Shippers Council, which is organizing the World shippers meet in Kuala Lumpur, have argued that the imposition of the THC has made a dual negative impact on international trade: increased shipping cost and reduced growth in cargo volume.
 
Shippers feel the THC is being levied at an increasing rate and could account for 0.2-0.3 percent of the free-on-board exports, or as high as 15-20 per cent of the freight charges.
 
China Shippers Association, which succeeded in convincing its government to prevent shipping lines calling Chinese ports from imposing the THC unilaterally, will present its experiences at the Kuala Lumpur meeting detailing how it dealt with the shipping lines with the support of its government.
 
The Chinese government’s move to declare THC illegal followed a high level investigation on the imposition of the THC at Chinese ports by international liner companies it carried out in 2006 at the request of the China Shippers Council.
 
Shippers worldwide generally feel there is a disparity in the imposition of THC across Asian countries which shipping lines are unable to provide the reasons or the basis for the charge and its quantum.
 
For some shipping lines or consortia, THC does not vary with respect to origin/destination in all Asian countries except in the Philippines, Hongkong and Japan.
 
China has the lowest THC, while Hongkong records the highest in Asia. Likewise, Indonesia, Sri Lanka and the Philippines are being charged with US$-based THC, while the rest are being charged in their respective currencies.
 
It is felt the THC imposition has caused shippers to pay twice for a number of services since the cargo-based costs have already included the freight costs or paid directly to the terminal operators, while the ship-based related cost and the cost for handling specialized cargo, including reefers, should rightly be a part of the carrier's administrative and operational costs.
 
The World Shippers Forum, which will be officiated by the Minister of International Trade and Industry and attended by shippers from across Europe, North America, Japan, Australia and Asia, will also take a re-look into the joint declaration of global shippers on THC made in September 2005 at Jakarta.
 
The declaration included an action plan to be pursued by the shippers' councils of the region, notably to bring the THC issue to the International Chamber of Commerce to draw up guidelines and move the Word Trade Organisation through the respective governments to formulate suitable policy guidelines. The meeting demanded that carriers apply a simple ocean tariff structure, which includes the basic ocean freight.
 
Shippers claim that services performed by and payable to terminal operators/port authority should not be included in the THC, otherwise, shippers will be paying twice for the same service, Mendoza also said.
 
Cargo-based related charges such as wharfage and arrastre are paid directly by the shipper/cargo owners to port authorities and the terminal operator, respectively, as such, it should not be part of THC, shippers said.
 
Shippers have pointed out that ship-based related charges should not be part of the THC since this is part of the carrier's administrative and operational costs imputed in the ocean freight.
 
Shippers want to include THC into the ocean freight as an "all-in-freight" to simplify its application and make the shipping cost fair and more competitive because it will now be influenced by market factors such as the number of shipping lines, trade routes, type and volume of cargo, among others.
 
Re-incorporation of THC into the ocean freight will effect a fair competition and rationalize the cost-freight system in international shipping.
 
It will also conform to internationally accepted incoterms under which carrier's charges such as the THC shall be payable only by the party paying the freight.

               

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