What Are Terminal Handling Charges (THC)

The shipping business has many costs. Terminal Handling Charges (THCs) are a key part. These charges pay for crucial port services. They keep shipping running, so they're a must.

Yet, there are other financial aspects to watch out for. To avoid demurrage and detention fees, use shipper-owned containers (SOCs). They are better than carrier-owned containers (COCs). When you use SOCs, you gain the freedom from the rigid return schedules associated with COCs. This flexibility gives you more control over your shipping. It also shields you from pesky, avoidable fees.

What are Terminal Handling Charges (THC)?

Terminal Service Charge (THC) charged by the terminal.Before containers are hoisted onto a vessel, terminals must store and position them. THCs account for this. Also, these fees include the costs of: loading and unloading the containers, storing them in transit, handling all documents, paying the workers, and ensuring cargo security.

A battery factory in China ships a 40GP container of batteries to the United States. At the port in China, the terminal will charge THC fees after the container arrives at the port.They will then store it in the port terminal and load it onto the outbound vessel. Once the shipment reaches the US port, THCs again come into play. They pay for offloading, storage, and handling until the buyer claims the container. This way, THCs underpin the smooth flow of goods through ports on both ends of the shipping journey.

What are the different types of THC?

In the web of shipping costs, Terminal Handling Charges (THCs) are of three types.

The Origin Terminal Handling Charge (OTHC) is a crucial upfront expense. It kicks in before the vessel even sets sail from the origin port. Terminal operators charge this fee to cover all container maneuvers.The process begins when the truck arrives and ends when the container is on the ship. It involves moving the container from the truck to the dock and then lifting it onto the ship.

Import THC, or Destination Terminal Handling Charges, are due at the arrival port. Here, the charges encompass a broad spectrum of services. It's not just about unloading the container from the ship. It also includes safely storing and watching the goods. It includes paying for the port facilities while the container waits for the importer to pick it up.

Then there’s the Transshipment THC. This comes into play when a container’s journey involves an intermediate stop. At a transshipment port, the container must be unloaded. Next, it is stored temporarily. Then, it is reloaded onto another vessel bound for the final destination. The costs associated with these operations are what make up the Transshipment THC. Each type of THC plays a vital role in facilitating the seamless flow of global trade.

Who pays Terminal Handling Charges?

The buyer and seller's shipping agreement dictates who pays the terminal handling charges.

The client, either the seller or buyer, must pay the OTHC and DTHC. They are the Origin and Destination Terminal Handling Charges. This depends on the agreed-upon terms of sale. 

If the seller commits to delivering the goods until they are loaded onto the vessel, they must pay the THC at the port of origin. If the buyer assumes liability for the goods at the destination port, they must pay THC there.

In essence, who pays THCs depends on the shipping contract. Due to this variability, sellers, buyers, and carriers must know these charges. To grasp the implications, let's first explore what THCs are.

What is included in Terminal Handling Charges?

Terminal Handling Charges (THC) are fees for managing containers at port terminals. These charges cover essential services. They are vital to the smooth flow of cargo at the port. Here's a breakdown of the principal elements subsumed under THC:

1. Efficient Container Transfer: This is the process of hoisting containers off the ship and onto the terminal, or the reverse. It's a crucial step in shipping that ensures goods move on time.

2. Warehousing Expenses: Containers awaiting loading or unloading occupy terminal space. The charges levied for this temporary storage are a significant part of THC.

3.Mechanical Aid Costs: Ports rely on an arsenal of heavy machinery like towering cranes and nimble forklifts to shuffle containers around. The costs associated with operating and maintaining these workhorses factor into THC.

4. Cargo and Container Scrutiny: To protect shipments, terminals inspect the cargo and the containers. The fees for these checks are bundled into the overall THC.

5. Paper Trail Management: The complex web of shipping demands meticulous documentation. Processing and handling papers, from bills of lading to customs forms, at the terminal adds to THC.

It's important to note that THC isn't a one-size-fits-all figure. Variations occur based on the port's infrastructure and costs, the cargo, and the shipping line's policies. The cargo may be bulky machinery or fragile electronics. By understanding these charges, businesses can better predict shipping costs. They can then avoid unwelcome surprises in the supply chain.

How much is a Terminal Handling Charge?

Terminal Handling Charges (THC) aren't fixed. They vary with several factors. Four factors dictate the final cost. They are: the port where your goods land, the shipping line you've hired, your container's size, and your cargo's nature.

Typically, you can expect to fork out anywhere from $50 to $250 per container for THC. But hold on, that's just a ballpark estimate. Reality might see these charges change, depending on the terminal's quirks.

Picture this: bustling ports on the U.S. West Coast and in Europe, alive with activity. They often levy heftier fees compared to their quieter, smaller counterparts. It's a basic supply and demand equation. If your shipment needs a special container, expect a higher THC. This includes refrigerated ones for perishables or oversized ones for bulky machinery. These containers require extra care and specialized handling equipment.

To get an accurate read on THC, don't rely on generalizations. Reach out to your shipping company or the port authority. Market tides, operating costs, and shipping agreements can change these charges. And, don't forget. Ignoring THC in your shipping budget could lead to some surprises.

How to mitigate THC for your next shipment?

Looking to trim down your terminal handling costs? Here are five handy tips to get you started:

1. Opt for the Ideal Port: THC rates can be as diverse as the ports themselves. Do your homework and scout for a port that offers lower handling charges. This simple step could significantly lighten your shipping cost burden.

2. Merge Shipments: Got less than a full container load (LCL)? Consider consolidating your container shipments with other shippers. This clever move can slash the per-unit THC cost, putting more money back in your pocket.

3. Prioritize Port Proximity: The freight terminal's location to the port matters. A long haul from the port to the terminal may incur extra charges for transporting your cargo. So, choose a port with a nearby freight terminal to avoid these extra costs.

4.Shop Around for the Best Rates: Remember, THC isn't a one-size-fits-all price tag. It varies not only from port to port but also among carriers. When planning your shipment, compare these rates. Consider your cargo's type, size, weight, and container. This helps you find the best option.

5. Check Port Facilities: High-end freight terminal facilities can mean higher handling charges. If cost-cutting is your top priority, consider cheaper ports. They have basic, but suitable, facilities for your cargo. This can help keep those terminal handling fees in check.