Terminal Handling Charges is an essential part of the shipping process and it can’t be ignored. Read on to get an overview of the different types of terminal handling charges and how you can minimize your container costs.
The shipping industry is a lucrative business but at the same time an expensive one too. Being an integral part of the shipping industry, you might have come across the term Terminal Handling Charges (THC) many times. But what exactly does it mean?
Do you sometimes wonder, why you pay this additional cost when you’re already shelling out on other charges? And if it’s really that important? Well, if you usually find yourself asking these questions, you’re at the right place. In this article, we’ll help you simplify this term and help you understand its importance.
What are Terminal Handling Charges?
Terminal authorities collect Terminal Handling Charges or fees/charges at different ports for the services they provide. These services can range from equipment handling, positioning, maintenance and storage to discharging of containers.
Local charges of a terminal highly affect the THC, thus, the cost may vary from port to port of each country.
To break it down, Terminal Handling Charges are an essential cost incurred while shipping your goods from point A to point B. There are many factors that impact these charges at different ports, starting from port of origin to destination port.
Terminal Handling Charges are some of the container charges you just can’t get around. However, there are some you can minimize or even avoid. Get the full overview of various charges in our separate blog – and see which ones you can sidestep.
What does Terminal Handling Charges include?
In the early days of the shipping industry, most port operations were manual intensive. Loading/unloading of cargoes, berthing/unberthing of ships and handling equipment such as cranes were a labor-intensive process. However, advancement of technology changed this phase. Ports now have tech-rich equipment, this means that most tasks are automatic.
Ports began to use different terminals to handle cargoes of various kinds. Each of these terminals used a separate equipment that handled a task with efficiency and safety. This was when ports started charging terminal handling charges to the shipping line.
Now, as we’ve mentioned earlier, terminal handling charges are the services they provide and additionally includes all the local charges of the terminal.
Therefore, the cost of handling varies from port to port for each country. It also depends on the total cost of port handling at each location.
For example, the Terminal Handling Charges charged at the port of Shanghai, China is different from that of Hamburg in Germany or even in Singapore.
It is also important to understand that different types of containers attract different Terminal Handling Charges because of its different handling process. We will get into more details on this in a bit .
Who charges them?
Terminal Handling Charges are payable at the port of origin (OTHC), trans-shipment port and at the destination port (DTHC).
Terminal authorities charge this fee to shipping companies who then send the cost to the shipper or seller. The shipping line usually does this while releasing the Bill of Lading after the final customs clearance procedure. The carrier usually pays the Terminal Handling Charges at the trans-shipment port as it includes in their ocean freight cost.
Now that we have an understanding of who charges this fee, it’s also important to understand why terminals charge this fee. And where they’re using this money!
It’s simple, freight terminals are now highly tech-rich. To keep these terminals up and running, regular servicing and maintenance of these tech-intensive assets is essential. Moreover, employees have to be paid their salaries and ports need to pay taxes and surcharges. Additionally, as the shipping market grows, there is always room for ports to expand and that requires investment and capital.
How much does Terminal Handling Charges cost and who pays for it?
Terminal Handling Charges are also called Container Service Charge (CSC). These charges hugely depend on local charges of a terminal and thus, can vary from port to port of each country and also within terminals of the same port. It also depends on the total cost of port handling at each location.
THC cover a wide range of services. A few of them include:
- Equipment maintenance
- Monitoring of goods
- Unloading of containers at the destination terminal
- Loading containers in the consignee’s vehicle
Each terminal has a specialized technology to handle the operations and thus cost may vary too.
The buyer and seller (shipper) already have an agreement/contract on the THC at the Origin and Destination ports. The shipping company moving the containers charges these to either of the parties (as per the contract). Depending on the agreement, the seller or buyer pays the THC.
While THC are charges that are important for a smooth functioning of a terminal or a port equipped with technology. It is also important because these charges help port workers get their salary. While Terminal Handling Charges are important and can’t be avoided, xChange can help you reduce other port charges.
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Understanding Terminal Handling Charges with examples
Let’s look at a few examples to understand Terminal Handling Charges better.
(Note: In the following examples, the company names portrayed are false)
THC charged to ABC Pharmaceutical company
For example, ABC Pharmaceuticals in Cape Town, South Africa has a contract to supply 2X20’ container loads of insulin to XYZ Imports of Doha, Qatar.
ABC Pharmaceuticals transports these containers to the port of Cape Town for shipment by container carrier Evergreen Line.
Upon arrival at the port, the containers are lifted by the port cranes and stacked ready for dispatch. The transport requires reefer containers because of the nature of the cargo. These reefers need regular monitoring by port technicians. They make sure that the desired temperature is maintained and the genset is working fine till it’s ready for loading onboard Evergreen Line.
Here, following are the terminal handling charges charged to the vessel operator:
- Cost of unloading of cargo from the trucks of ABC Pharmaceuticals
- Storage at the Port premises
- Monitoring of the reefer containers
- Subsequent loading onboard the vessel by the Port authority
Upon arrival at Port Doha, the reefer containers are offloaded from the vessel and stacked for collection by XYZ Imports. During storage, the reefers are monitored regularly for their efficient functioning by technicians of the port.
When the trucks of XYZ Imports come for collection, they are loaded on the trucks by crane or a heavy-duty forklift. The cost is recovered by way of terminal handling charges by the Doha Port authorities.
THC on transporting cosmetic goods
Company A in Shanghai gets a contract to ship 3×20’ container load of makeup items to ABC Cosmetics Imports of Singapore. Company A transports these containers to the port of Shanghai for shipment. Once arrived at the port, the port authorities use cranes or heavy-duty forklifts and stack them – making them ready for dispatch. At the port, these containers need to be stored and monitored until it’s time to load them in a said shipping line. Here, Terminal Handling Charges include unloading of cargoes from the trucks of Company A, using port services like cranes to stack them in place, monitoring and loading them on the vessel.
This cycle continues, when the shipment arrives at the Port of Singapore. Once arrived at the destination port, these containers are unloaded from the vessel and stacked back for collection by ABC Cosmetics Imports.
The total container cost when shipping
The way a carrier charges Terminal Handling Charges depends on the route of shipping. Depending on this, a carrier either chooses to include or exclude THC in the freight. Usually, the total container cost can add up consisting of the following surcharges:
- Local charges at the origin port
- Origin Terminal Handling Charges (OTHC)
- Sea/ocean freight charges
- Destination Terminal Handling Charges (DTHC)
- Local charges at the destination port
A full load of 40ft container shipping spare parts from Shanghai or Hamburg can add up the following cost at origin and destination ports.
- Export customs clearance (Origin Port)
- Booking fee
- Origin Terminal Handling Charge (OTHC)
- Pick-up charge
- Verified Gross Mass (VGM)
- Electronic Data Exchange (EDI)
- Handling Fee
- Destination Terminal Handling Charge (DTHC)
- BL release fee
- Equipment inspection fee
- Import handling
- International Ship and Port Security (ISPS)
THC are crucial surcharges and can impact heavily on the overall line of shipment transaction.
Types of Terminal Handling Charges
Terminal Handling Charges are present at Origin, Trans-shipment and Destination ports. The seller or buyer pay the Origin THC (OTHC) and Destination THC (DTHC). These two parties already have a contract signed as to who will pay which charges.
The carrier usually pays the Trans-shipment THC as it includes in their ocean freight rate.
Here, it’s also important to understand that different containers and cargo types have different Terminal Handling Charges. This is mainly because of the different methods of handling. For example, special equipment or cargo such as a reefer container, hazardous liquid or Out of Gauge (OOG) cargoes will have Terminal Handling Charges. This is because the handling charges of such cargoes and containers are different from normal dry containers.
Hazardous liquids require special attention for the safe storage and monitoring of the cargo and thus attract more cost. Similarly, OOG cargoes may require the use of heavy-duty forklifts or slings due to its over dimensional nature. Reefers, on the other hand, need constant monitoring of the genset to ensure consistent temperature flow to the cargo. The Terminal Handling Charges here reflect different than say an OOG or a Hazardous cargo.
Origin Terminal Handling Charge (OTHC)
Origin Terminal Handling Charges are paid for port services before a vessel departs the origin port. OTHC charges are collected by the terminal operator in regards to container movements from the seller’s truck to the vessel.
Destination Terminal Handling Charge (DTHC)
DTHC are collected at the port of arrival. This includes loading or unloading of containers and other charges such as storage, monitoring and other port facilities.
THC also called “Liner Out Charge”
The term Liner Out Charge is common on the West African trade lane. It’s a relatively new term and is stated under the a under the Asia-West Africa Trade Agreement (AWATA). The AWATA members include China Shipping Container Lines (CSCL), CMA CGM, Delmas, Gold Star Line, Maersk/Safmarne, Mediterranean Shipping Company (MSC), MOL, and Pacific International Lines (PIL). This is to make the freight structure more transparent. In some countries in West Africa the Terminal Handling Charges is shown as Liner Out Charge.
Avoiding container charges
Terminal Handling Charges are one of those shipping charges that can’t be avoided. And as we have read, these are important as well, especially for ports to have their terminals up and running. Therefore, it makes sense if you are aware of these charges and how much you are shelling out so you can instead save on charges that can be minimized or avoided. For example, demurrage and detention charges are expensive but can be avoided with SOC containers. Container xChange gives you the liberty to find your own SOC container and gain overall flexibility. At xChange, you will find more than 800 certified partners across 2,500 locations for one-way moves. And be sure to get your money on time. All you have to do is type in your pick-up and drop-off location. You’ll get a list of results with the best deals and possible new partners and available equipment.
Terminal Handling Charges is an essential part of the shipping process. Terminal authorities collect these charges at different ports for the services they provide. From equipment handling, maintenance and storage to discharging of containers, ports provide a range of services.
These charges are influenced by local charges of the terminal. Thus, the cost varies from port to port of each country. THC can also vary depending on the container type and the cargo that’s been shipped. This is mainly because each of these container types require a specific kind of handling at the port.
With the development of technology, every terminal now has special machines to handle specific cargo. This ensures safe and efficient functioning of ports. And to keep these functional and also pay wages to the worker at the ports, collecting THC is important.
THC can’t be avoided but there are some charges that you can certainly avoid or at least minimize. So, why not save some money when you can. Get overview here.
Terminal handling charges FAQs
What are terminal handling charges?
Terminal Handling Charges (THC) are also called Container Service Charges (CSC). These are charges collected by port authorities from the shipping lines for the services they provide at ports. These services can be from storage, positioning, stacking or even using equipment such as cranes, etc. THC is collected at the origin port as well as the trans-shipment and destination ports.
Who pays terminal handling charges?
THC is paid by the shipper or the consignee (depending on the agreed contract between the two parties. The trans-shipment THC is usually paid by the shipping line (carrier) as it includes in their ocean freight rate.
How can you calculate terminal handling charges?
Terminal Handling Charges are changed as per containers and the services a terminal is providing. This includes equipment maintenance, equipment use, and stevedoring. The wharfage charge is calculated by weight or volume that’s loaded or unloaded at the terminal in units of tons, cubic meters, etc.