In trade, import, and export activities, surcharges are incurred costs that the owner of the goods must pay according to a careful agreement between the parties. THC is one of the extremely common surcharges in international trade. So what is THC in shipping terms? Who is THC regulated by and who will be responsible for paying? The answer will be right in this article!
I. THC meaning in shipping
THC stands for Terminal Handling Charge, which can be understood as a surcharge for loading and unloading at the port. Loading and unloading activities that are included in the THC fee can include unloading containers to the jetty, loading and unloading cargo containers from the ship, and port management fees.
THC – Terminal Handling Charge
In fact, the port will collect handling fees and any other related fees from shipping lines. Then, the shipping line collects these fees from the shippers (either the sender or the receiver).
There are two main reasons why the THC fee was born and clearly defined in the calculation of ocean freight. That is:
Enhance transparency when charging:
According to regulations before 1990, most shipping lines included all kinds of surcharges for transportation, loading, and unloading into freight charges. Therefore, many units are dissatisfied with the lack of transparency in the calculation of sea freight. The shipper units will be quite vague about how much they will need to pay for loading and unloading goods at the port.
When clearly distinguishing ocean freight rates and loading and unloading surcharges at the port, shippers will easily compare freight rates between ships. From there, make the most reasonable choice to avoid economic loss. Each shipping line will offer its own way of calculating THC, the difference between the parties is not too significant. But transparency will help the shipper know how much the shipping company has paid to the port and whether to keep it or not.
In order for all costs in sea transportation to be public, clear, and create credibility among the parties, the THC fee is separated from freight.
Avoid currency fluctuations
Another reason for the introduction of THC surcharge is to help shipping lines avoid fluctuations and negative effects from currency fluctuations. Most port operators that handle loading and unloading will charge in local currency, while ocean freight is quoted in US Dollars.
1. How to calculate THC fee
Since THC is the leading charge for each container, the total THC charge for each shipment depends on the type and number of containers of that type, which normally are THC containers 20 feet and 40 feet.
We have a formula for a shipment with n types of THC containers with different quantities as follows:
Total THC = Unit price THC 1 x number of containers of type 1 + unit price of THC 2 x number of containers of type 2 + ….+ Unit price of THC n x number of containers of type n.
2. Difference between THC fee and Container Pick Up/Off fee
There have been many forwarders and shippers who have confused the THC fee and the container lifting fee, also known as pick up/of cont.
THC in shipping terms
To avoid confusion, you can understand that the container lifting fee is a fee and the shipper will pay the port while doing customs procedures to clear the shipment. This fee is charged when lifting the cargo container at the port onto a specialized container trailer.
Meanwhile, the THC fee is the fee that the shipping line will collect when the shipping company carries out the loading and unloading of the container on the ship. Thus, the freight container handling fee is regulated by the port, not the shipping company, and the port will fully collect this fee. And THC is a surcharge collected by the shipping company.
II. Structure of handling charge
The handling charge is an important fee in the field of logistics set up by shipping lines or forwarders to collect fees from shippers or consignees to offset the cost of taking care of your shipment. For example, transaction fees between shipping agent/forwarder, manifest cost, D/O cost, telephone cost, and depreciation expense.
Today, the handling charge is divided into 2 fees including:
THC (Terminal Handling Charge): As mentioned before, THC meaning in shipping is the surcharge for loading and unloading at the port collected per container. This cost is calculated according to the number of containers of goods of the consignor.
For the purpose of paying for the loading and unloading of goods at the port. At that time, the ship owner units will have to pay a loading and unloading fee to the port to compensate for this fee. The ship owners collect from the customer the THC surcharge.
THC meaning in shipping
Handling fee: surcharge for goods handling. This fee is used to cover and maintain the agent network of carriers worldwide. To be able to maintain a network of links between shipping units around the world into a common information network, helping the exchange and receipt of goods take place quickly and conveniently. The shipping unit must pay the charges such as telephone charges, vouchers, papers, … and other costs. To be able to cover these fees, it is imperative that carriers collect a cargo handling fee from the customer’s fee.
>>Read more: Import From Japan to UK – A Completed Guide for Businesses
III. Compare handling charge with THC charge?
THC is a fee collected per container to offset the cost of cargo handling activities at the port. Specifically the costs:
- Charge for loading and unloading containers from the ship.
- Fee for transporting containers from the pier to the container yard.
- Forklift charges for loading containers onto the yard.
- Port labor fee.
- Parking charges.
- Port management fee.
THC in shipping terms
THC charges are applied at both the import and export ports. Consignee bears THC charges at the port of loading for terms (EXW, FCR, FAS). Shipper bears at the port of discharge for delivery terms (DAT, DDP).
As analyzed above, the THC charge is a surcharge at the port, related to the process of loading and unloading import and export goods. The handling charge is the fee collected by the forwarders to serve the process related to freight forwarding services.
Conclusion
Here are the full details of the THC surcharge. Hopefully, you have had a better overview of the surcharges in import and export activities, and understand the THC in shipping terms and how it is collected. If you have any questions about THC fees please contact Janbox, our staff will assist you.
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