What are Terminal Handling Charges (THC)?
Terminal Handling Charges (THC) are fees collected by port or terminal authorities for handling containers at the port during export or import operations. These charges cover services such as loading, unloading, stacking, storage, movement within the terminal, and use of port equipment. THC is an essential cost component in ocean freight and varies by port, carrier, and cargo type.
Key Points
Covers Cargo Movement at the Terminal: THC includes all activities required to move containers within the port, from storage yards to the vessel, and vice versa.
Use of Port Equipment: Charges account for the use of cranes, reach stackers, forklifts, yard tractors, and other terminal equipment.
Paid at Both Origin & Destination: Exporters typically pay origin THC (OTHC), while importers pay destination THC (DTHC). However, the responsibility varies based on Incoterms.
Standardized but Variable: Though commonly listed in carrier rate sheets, THC rates can differ depending on container size, type (FCL/LCL), and port policies.
Part of Ocean Freight Costs: While not technically included in freight charges, THC is a mandatory cost associated with moving containers through terminals.
Applies to Both Imports and Exports: Covers services for both inbound and outbound shipments handled at the port.
Benefits & Challenges
Benefits
Efficient Terminal Operations:
THC supports essential port activities, ensuring smooth container movement.
Cost Transparency:
Ports and carriers provide THC as a defined charge, allowing businesses to budget accurately.
Infrastructure Maintenance:
Revenue from THC helps maintain cranes, yards, and port technology systems.
Supports Safety & Regulation Compliance:
Funds robust safety protocols and ensures adherence to maritime standards.
Challenges
Non-Standard Pricing:
THC varies significantly across ports and carriers, leading to confusion for shippers and forwarders.
Unexpected Cost Additions:
Forwarders may face last-minute THC revisions due to port tariff updates.
Double Charging Issues:
Misinterpretation of Incoterms may result in both exporter and importer being charged incorrectly.
Annual Tariff Hikes:
Many ports revise charges yearly, impacting freight budgets.
Example Scenario
Scenario:
A freight forwarder is exporting a container from New York port.
Container Entry:
The empty container is brought to the terminal and checked in.Yard Handling:
Terminal staff lift and position the container in the yard using reach stackers.Pre-loading Preparation:
The container is moved closer to the vessel loading area when the ship arrives.On-Vessel Loading:
Cranes lift the container and place it on the vessel as per the stowage plan.Billing:
The terminal charges THC for all equipment usage and handling during this process.
Conclusion
Terminal Handling Charges (THC) are a crucial part of port operations, covering the essential handling and equipment used to move containers efficiently. For exporters, importers, and freight forwarders, understanding THC helps ensure accurate cost planning, prevents billing disputes, and supports smoother port operations. Awareness of these charges allows businesses to better estimate their total logistics expenses and optimize shipping decisions.
Frequently Asked Questions (FAQs)
1. What does THC include?
THC covers the loading, unloading, stacking, and movement of containers within the terminal using port equipment.
2. Who pays Terminal Handling Charges?
Depending on Incoterms, exporters pay origin THC while importers pay destination THC.
3. Is THC included in ocean freight?
No, THC is billed separately by terminals or carriers but is mandatory for all shipments.
4. Why do THC rates differ across ports?
Rates vary due to local port regulations, equipment costs, and operational complexity.
5. Does THC apply to LCL shipments?
Yes, but LCL THC may be charged per CBM or per shipment instead of per container.