Paying Terminal Handling Charges (THCs) is an essential part of the shipping process. Read this blog to know all about THCs and how you can reduce your shipping costs.
The shipping industry involves various costs, and Terminal Handling Charges (THCs) are one of them. THCs cover essential port services, making them unavoidable.
However, there are other charges, like demurrage and detention fees, that you can completely avoid by using shipper-owner containers (SOCs) instead of carrier-owned containers (COCs). With SOCs, you’re not tied to strict return timelines, giving you flexibility and saving you from unnecessary fees.
But how do you find SOCs for your next shipment? Right here on Container xChange.
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What are Terminal Handling Charges (THC)?
Terminal Handling Charges are fees charged by the shipping terminals for the storage and positioning of containers before they are loaded onto a vessel. THC also includes the cost of loading and unloading, storage, documentation, labor costs, and cargo security.
For example, a furniture company in Singapore ships a 40ft container of wooden chairs to a buyer in the US. At the Singapore port, THCs include unloading the container from the truck, storing it in the port terminal, and loading it onto the vessel. Upon arrival in the US, THCs cover offloading, storage, and handling until the buyer collects the container.
What are the different types of THC?
There are three types of THCs:
- Origin Terminal Handling Charge (OTHC):
OTHCs are paid for port services before a vessel departs the origin port. They’re collected by the terminal operator for container movements from the shipper’s truck to the vessel.
- Destination Terminal Handling Charges (DTHC) or Import THC:
DTHCs are collected at the port of arrival. This fee includes the loading or unloading of containers, storage, monitoring, and usage of port facilities.
Transshipment THCs are charges incurred when a container is unloaded, stored, and reloaded onto another vessel at a transshipment port during its journey to the final destination.
Who pays Terminal Handling Charges?
The responsibility for paying terminal handling charges depends on the terms of the shipping agreement between the buyer and the seller.
Origin THC (OTHC) and Destination THC (DTHC) are paid by the client—seller or buyer—depending on their terms of sale. Whereas, transshipment THC is always paid by the carrier.
If the seller agrees to deliver the goods until they are loaded onto the vessel, they pay the THC at the port of origin. However, if the buyer takes responsibility for the goods at the destination port, they pay the THC at the destination port.
Ultimately, the responsibility for paying THCs varies depending on the contract between shipping parties. All players need to be aware of these charges. To get a better understanding, let’s understand what’s included in THCs.
What is included in Terminal Handling Charges?
Terminal Handling Charges include costs of loading and unloading operations (including cranes and forklifts), storage, documentation, security, and terminal maintenance.
Different cargo and container types have different THCs. This is mainly because of the different methods of handling.
For example, hazardous goods need special attention for safe storage and monitoring and often incur higher costs. Similarly, out-of-gauge containers may require the use of heavy-duty forklifts or slings due to their large size.
Reefer containers also demand constant monitoring to ensure a consistent temperature flow to the cargo. In this way, it’s easy to see why special cargo and containers incur higher fees than standard shipping containers.
How much is a Terminal Handling Charge?
Terminal handling charges vary from one carrier to another and depend on the shipping route you’re opting for.
On average, THC charges for a 20ft container from Asia to the US are $550. For shipping a 20ft container from Asia to Canada, it’s $540.
Find the exact port terminal handling charges for your preferred route here:
- Hapag Lloyd terminal handling charges
- Maersk terminal handling charges
- MSC terminal handling charges
While THCs are some of the container fees you can’t get around, there are some ways to mitigate these charges. Let’s explore them next.
How to mitigate THC for your next shipment?
Here are 5 tips you can use to reduce terminal handling costs:
Choosing the right port
THC rates vary from port to port and from terminal to terminal. Look for a port with lower THC to reduce your shipping costs.
Consolidate shipments
By consolidating container shipments with other shippers, you can reduce the per-unit cost of THC. This is especially helpful if you have LCLWhat is less than container load? Less than container load (less than container load, LCL) is a shipping term that refers to the delivery of cargo in smaller quantities than a full container load. A f... More (less than full container load).
Accessibility of the port
Considering the accessibility of freight terminals from the port is also important. If the terminal is far away, you would be charged extra for hauling and moving the cargo to the terminal. Select a port that has a freight terminal close by to mitigate terminal handling charges.
Compare THC across different ports and carriers
As we mentioned before, THC varies from port to port. It also varies from one carrier to another. Compare these rates to find which one is most suitable for your shipment. When comparing, consider factors such as the type of cargo, its size and weight, and the type of container you’re using.
Facilities at the port
The facilities in a freight terminal can increase the terminal handling charges. If your priority is to mitigate terminal handling charges, you can opt for ports with facilities that don’t utilize high-end equipment, as long as it’s suitable for the cargo that you are shipping.
While these are some ways to reduce costs, THCs are costs you can’t avoid. However, other costs are completely avoidable, like demurrage and detention. Read our blog on SOC container to learn how it can help you avoid these charges and keep your shipping costs to a minimum.
Further information:
With over a decade of experience in container trading and logistics, we have developed helpful resources covering all aspects of shipping containers.
- Cost of shipping containers: Factors influencing container pricing include size, condition, location, and type.
- Types of shipping containers: Different containers, including dry, high cube, reefer, double door, open top, and flat rack, along with their uses.
- Shipping container conditions: Container grading and quality standards.
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