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Sri Lanka the latest to outlaw THCs

Posted to Far East Maritime (by on December 4, 2013

Shippers are dancing in the streets of Colombo after the Sri Lankan president put the kibosh on terminal handling charges.

Well, maybe not dancing, but they are pretty happy. For a good 15 years, shippers in Asia have been trading barbs with the container lines over the carrier practice of slapping terminal handling charges on top of freight rates. And then adding peak season surcharges, and congestion surcharges, bunker adjustment factors, currency adjustments, etc, etc.

There are a host of surcharges carriers levy on their customers outside the bill for transporting the freight, and the shippers have been irritated about it ever since the practice began back in the 1990s.

You can understand the shipper frustration. What they want is an all-in rate without all the extras. It’s like buying a TV for the listed price then being hit with a delivery fee, a package handling fee, a fuel levy, a carrying-up-stairs charge, an installation fee, packaging removal fee and a currency adjustment for the exchange rate that rose between the time the retailer acquired the TV and you paid for it.

Forget the name, terminal handling charges, known as THCs, are the fees levied by container lines on shippers to get their cargo loaded aboard a ship.

The shipping lines claim THCs are levied to recover the costs of their ships calling at terminals, but shippers have long believed the THCs are used more as a revenue stream than a cost recovery mechanism.

Leading the campaign against the lines for almost two decades has been John Lu, head of the Singapore National Shippers Council and chairman of the Asian Shippers Council.

Initially the lines refused to budge, but Lu kept on hammering away and his councils have made headway in the last few years.

Working together with the Exporters Association of Sri Lanka, the Joint Apparel Association Forum and the National Chamber of Exporters, the shippers managed to force the ruling.

In its 2014 budget, Sri Lankan president and minister of finance and planning Mahinda Rajapaksa said: “In order to prevent the monopoly pricing in the shipping trade, no shipping line will be permitted to levy terminal handling and other charges in addition to freight and specified international charges for containerised cargo. Relevant prohibition will be made effective through amendments to the Finance Act, effective from January 2014.”

Sri Lanka follows Bangladesh in outlawing THCs and there is widespread optimism that this could apply to other jurisdictions in Asia.