Published : April 3, 2024, Updated : April 3, 2024

Terminal Handling Charges (THC): Meaning, How It Is Calculated, with Examples

Terminal Handling Charges (THC): Meaning, How It Is Calculated, with Examples

Terminal Handling Charges (THC) might sound fancy, but they’re simply fees you pay when your goods arrive at a port. Think of them as the cost of behind-the-scenes work to make sure your stuff gets where it needs to go smoothly. But how are these charges figured out?

We’ll break it down for you in easy steps, so you’re not left scratching your head. Plus, we’ll use some examples to make things clearer. So, if you’re ready to learn about THC and how it affects your shipping costs, let’s dive in!

What are Terminal Handling Charges in India?

Terminal Handling Charges (THC) in India are the fees charged by port terminals for their services when goods arrive. These services include tasks like loading/unloading, storage, and moving shipments around the terminal. It’s like a “handling fee” for your packages, but on a larger scale. Picture it as the cost for the terminal’s effort in getting your goods where they need to go.

Now, here’s the thing: every port has different terminals, and they handle various kinds of cargo. This means THC rates aren’t the same everywhere. They can vary quite a bit depending on the terminal and even the port’s location. It’s kind of like how prices for a burger can differ from one restaurant to another.

So, if you’re shipping goods through Indian ports, it’s essential to keep an eye on these THC charges. They can sneak up on you and affect your overall shipping costs. Understanding these fees helps you plan your logistics better and avoid any surprises along the way.

Explaining Terminal Handling Charges With an Example

Imagine you’re a business owner based in Mumbai, India, and you’ve just sealed a deal to export a shipment of electronics to New York, USA. You’ve packed everything into a 40-foot container and it’s ready to go. Now, before your container can board the ship, you’ll need to pay THC.

Here’s how THC works in this scenario:

Origin Terminal Handling Charges (OTHC)

At the port of origin (Mumbai), the terminal authorities will charge you OTHC. This includes services like loading your container onto the ship, maintaining it while it’s at the port, and storing it if needed until departure. Let’s say OTHC for your 40-foot container amounts to $500.

Destination Terminal Handling Charges (DTHC)

Once your container reaches the destination port (New York), the courier will collect DTHC from the consignee (the buyer in the USA). DTHC covers unloading your container from the ship, storing it at the terminal if necessary, and arranging its pickup. Let’s say DTHC for your shipment in New York comes to $600.

So, in this example, you, as the shipper/exporter, would pay $500 as OTHC at the port of origin (Mumbai). And the consignee/importer in New York would pay $600 as DTHC upon arrival to receive the goods.

Understanding THC helps you anticipate and budget for these charges, ensuring a smooth shipping process for your business.

What is Included in Terminal Handling Charges With Example?

Terminal Handling Charges (THCs) includes many services provided by port terminals, which can vary from port to port. These services typically involve the handling of cargo from the point of arrival at the port to various stages of onward transport or storage. Here are some of the services commonly included in THCs, along with an example illustrating their application:

Loading and Unloading: This involves the movement of goods onto and off of ships or other transport vessels at the port.

Transportation to End Destination: Depending on the arrangement, THCs may cover the transport of goods from the port to the final destination, such as a warehouse or distribution center.

Storage: Charges for keeping goods within the port terminal facilities for a specified duration.

Maintenance: Costs related to the upkeep of terminal facilities, equipment, and infrastructure necessary for cargo handling.

Berthing:
Fees associated with the docking of vessels at the port.

Labor: Charges for the manpower involved in various aspects of cargo handling operations at the terminal.

Terminal Facilities: Costs related to the use of terminal facilities, including equipment such as cranes, forklifts, and storage yards.

Let’s consider an example to illustrate these charges:

Person A, based in India, is shipping a container to Person B’s warehouse in the US. Person A arranges for the container to be transported from India to a port terminal in the US, where it will be unloaded. In the scene, THCs would typically cover loading and unloading fees, berthing charges for the vessel, labor costs, and terminal facility usage. Additionally, if Person A opts to store the container at the terminal for a brief period before onward transport to Person B’s warehouse, storage charges would also be included in the THC.

Who Needs to Pay Terminal Handling Charges?

Usually, the person sending the goods (the exporter) pays the Terminal Handling Charges (THCs) until the goods are unloaded. They give this money to the shipping company folks, who then pass it on to the terminal authorities when they load the goods. When the goods get to the destination port, the person receiving them (the importer) pays the terminal charges to the carrier before picking up the goods. The carriers then give this money to the terminal authorities.

Before sending the goods, the exporter and importer decide who will pay these charges. Sometimes, the exporter pays everything, as agreed in their contract. Other times, they share the cost.

For instance, let’s say person A sends goods to person B. They agree that person A will only pay charges at the starting port. So, person B has to pay the charges at the destination port or when the goods reach person B’s warehouse, according to their deal.

Calculating Terminal Handling Charges

Calculating Terminal Handling Charges (THC) isn’t too complicated. It’s mainly based on the size of the container you’re using to ship your goods. If you’re using a standard 20 or 40-foot container, the terminal authorities have fixed rates for those.

Now, if you’re sending a lot of stuff and filling up a whole container (called Full Container Load or FCL), you can find out the THC rates at the port where you’re sending your goods from.

But sometimes, you might not have enough stuff to fill a whole container. That’s called Less than Container Load (LCL). In LCL, your goods share space with other people’s stuff in one big container. The folks who gather these smaller shipments (called shipment consolidators) charge each shipper and make a profit.

So, for LCL shipments, you figure out THC based on the weight of your goods, usually in tons or cubic meters.

One thing to remember: THC rates can vary from port to port and even between different terminals at the same port.

Types of Terminal Handling Charges Explained

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Terminal Handling Charges (THC) come in three main types, depending on where you are in the shipping journey: Origin Terminal Handling Charges (OTHC), Destination Terminal Handling Charges (DTHC), and Transshipment Terminal Handling Charges (TTHC).

Origin Terminal Handling Charges (OTHC): These are fees paid by the shipper at the port of departure. The terminal authorities collect OTHC for services like loading, maintenance, and storage of the goods before issuing the Bill of Lading (BOL).

Destination Terminal Handling Charges (DTHC): Paid by the consignee at the destination port, DTHC covers unloading, maintenance, storage, and sometimes transportation of the goods upon arrival.

Transshipment Terminal Handling Charges (TTHC): These charges occur at transshipment ports, where goods are moved from one vessel to another. Shipping companies or carriers pay TTHC, which includes unloading, storage, and loading onto the next vessel, and they often include these charges in their overall freight rates.

Understanding these different types of THC helps both shippers and consignees anticipate and manage costs at each stage of the shipping process.

Difference between Wharfage and Terminal Handling Charges

Here’s a comparison between Wharfage and Terminal Handling Charges (THC) presented in a table format:

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Understanding the difference between Wharfage and Terminal Handling Charges can help clarify the various costs associated with port operations and cargo handling.

In conclusion, Terminal Handling Charges (THC) play a crucial role in the logistics of shipping goods through ports. By understanding THC, shippers and consignees can anticipate and budget for the costs associated with various services provided by port terminals. From loading and unloading to storage and documentation, THC covers a range of essential tasks. Additionally, recognizing the difference between THC and other charges like Wharfage helps demystify the complexities of port operations. Ultimately, navigating THC efficiently ensures a smoother shipping process and helps businesses manage their logistics effectively.

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