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
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
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
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
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
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
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.