Terminal Handling Charges (THC) are fees applied in international shipping to cover the handling of cargo at port terminals. The charges are typically applied at both the port of origin, where cargo is loaded, and the port of destination, where it is unloaded.
Terminal handling involves various physical processes carried out by terminal operators and stevedores to manage cargo flow within the port. These activities include unloading containers from ships, moving containers within the terminal, operating cranes, stacking containers, and loading them onto trucks or trains for further distribution. These operations ensure efficient cargo movement through the port. In addition to handling services, THC may also cover associated costs, such as labor and personnel, equipment and facility use, and administrative fees incurred by the terminal.
Furthermore, it is important to bear in mind that Terminal Handling Charges (THC) may sometimes be referred to as Container Service Charges (CSC). However, the two terms are not universally interchangeable and imply different things in certain instances.
Frequently Asked Questions
The following are some of the most frequently asked questions related to Terminal Handling Charges, origin and destination charges, and how freight forwarders manage these charges.
What’s Included in Terminal Handling Charges?
THC typically includes a range of services and costs, such as:
- Loading and unloading containers from the vessel.
- Moving containers within the terminal, including loading them onto trucks or trains.
- Temporary storage of cargo at the port.
- Equipment usage like cranes, forklifts, or other heavy machinery used to move containers.
- Administrative costs, including security, inspections, documentation, and customs paperwork.
- Labor costs for the personnel handling the goods.
Each of these aspects of shipping are necessary to ensure goods move safely and securely from one place to another. Without these operations, shipments could be delayed, damaged, or even lost. THC is an essential cost when it comes to making sure goods are securely shipped and delivered.
What Are the Types of Terminal Handling Charges?
There are two primary types of Terminal Handling Charges (THC):
Origin Terminal Handling Charge (OTHC)
Charged at the port of departure where cargo is loaded onto the ship. OTHC typically covers services such as unloading goods from trucks, moving containers within the terminal, and loading them onto the ship. It also includes the use of terminal equipment (such as cranes), labor costs, temporary storage, and administrative services.
Destination Terminal Handling Charges (DTHC)
Applied at the port of arrival where the cargo is unloaded. DTHC includes services like unloading containers from the ship, moving them within the terminal, temporary storage, and loading them onto trucks or trains for onward travel. It also accounts for equipment usage and labor costs.
In addition to these, there is another type of THC that is often overlooked:
Transshipment Terminal Handling Charges (TTHC)
These fees may apply when cargo must pass through an intermediate port before reaching its final destination. In international shipping, transshipment may occur when a shipment is offloaded at one port and requires temporary storage or is moved to a different vessel for onward transportation to its final destination. This type of charge may occur when a direct shipping route is not available.
How Does Wharfage Differ From Terminal Handling Charges?
Wharfage is a fee associated with using the dock or wharf where cargo is loaded or unloaded. It is charged as a separate fee to cover the cost of maintaining and repairing docks. Wharfage could be considered the rent paid for using the port’s actual loading/unloading space. Typically, these charges are based on the weight of the goods or their volume. The wharfage fees are calculated and charged by the relevant port authority.
In contrast, the Terminal Handling Charges (THC) are fees charged by terminal operators for the actual physical handling of containers or cargo at the terminal. THC includes the cost of moving containers between the ship and the stack in the container yard, as well as other services within the terminal.
Unlike wharfage, which is based on cargo characteristics, THC is typically charged per container. While wharfage is for infrastructure use, THC is for operational services provided by the terminal operator.
How Are Terminal Handling Charges (THC) Calculated?
THC is calculated based on various factors such as:
- The size and type of container
- Type of material transported
- The volume and weight of the cargo
- The specific services required at the port
- Type of equipment used
- Local labor market conditions and laws
- Port infrastructure
- Local economic conditions
Terminal Handling Charges are typically calculated based on the container size for a Full Container Load (FCL), or the cargo’scargo’s weight or volume for a Less-than-Container- Load (LCL) Keep in mind that these charges will fluctuate depending on the location of the port, its local infrastructure, and services required. The rate will also take into account the cost of labor in the local labor market.
How Do Terminal Handling Charges Differ Between FCL and LCL Shipments?
Terminal Handling Charges (THC) vary based on the shipment type. For Full Container Load (FCL) shipments, where a single shipper uses an entire container, THC is typically charged per container. In contrast, when shippers don’t need a full container, they may opt for Less-than-Container Load (LCL) shipments, sharing container space with others. For LCL shipments, carriers calculate THC based on the cargo’s weight or volume. This approach ensures fair pricing whether a business ships a full container or only a partial load.
Are Terminal Handling Charges the Same at All Ports?
THC rates vary from port to port, depending on factors like local labor costs, market conditions, and port efficiency. Larger, more modern ports may offer lower fees as their operations are streamlined and they have the space to process goods efficiently. On the other hand, smaller or busier ports may face challenges such as lack of equipment or labor.
Who Is Responsible for Charging Terminal Handling Fees (THC)?
Port authorities or terminal operators charge Terminal Handling Fees. These entities are tasked with managing logistical operations at each port facility. While these charges may vary by terminal, they are an established fee that each location has set and are equally applied to all shippers who use the port.
Who is Responsible for Paying Terminal Handling Fees (THC)?
Typically, the buyer will be responsible for THC at the port of destination, while the seller, in most cases, is responsible for THC at the port of origin. However, the responsibility to pay for Terminal Handling Charges (THC) will vary depending on the point where shipping responsibilities are transferred.
Ultimately, it is determined by the Incoterms agreed upon in the trade contract, which clearly defines each party’s obligations throughout the shipping process.
Incoterms, or international commerce terms, are a set of internationally recognized rules that define the responsibilities of the buyer and the seller in the export transaction. The Incoterm agreement should lay out who is responsible for the goods, including the payment of THC in accordance with the shipping contract.
Here are some examples of different Incoterms and their effects on THC:
Delivered Duty Paid (DDP)
The seller is responsible for all charges, including THC, at both origin and destination ports.
Ex Works (EXW)
The buyer takes responsibility for all charges as soon as the goods are made available at the seller’s premises. The seller’s obligation ends once the goods are made available for collection, typically at their factory or warehouse.
Cost, Insurance, and Freight (CIF)
The seller is responsible for the THC at the port of origin, while the buyer is responsible for the THC at the destination. It is common for the seller to handle all origin costs, while the buyer must manage all costs once the goods reach their destination.
Cost and Freight (CFR)
The seller pays for the shipment to reach its destination, but the buyer is responsible for THC and all other charges once the goods arrive.
What Role Does a Freight Forwarder Play in Managing Terminal Handling Charges (THC)?
Forwarders provide comprehensive shipping solutions, which can include everything from container transport to the management of Terminal Handling Charges (THC), which allows businesses to focus on their operations while the forwarder handles logistics. Let’s take a closer look at how freight forwarders manage Terminal Handling Charges (THC):
- Facilitation of THC Payment: Freight forwarders make sure THC is paid on time, preventing delays in cargo movement and ensuring smooth logistics.
- Documentation Handling: They handle and submit documents, such as Bills of Lading and other related documents, to port authorities, ensuring proper processing of THC payments.
- Communication Coordination: Through their role as an intermediary between the shipper, carrier, and port authorities, freight forwarders ensure that all parties are informed and any issues related to THC are swiftly resolved.
- Dispute Resolution: In cases of discrepancies or disputes over THC, the freight forwarder mediates between involved parties to resolve the issue and keep the shipping process on track.