To run and grow an export business efficiently, it is important to factor in all possible costs involved in completing a trade deal. Without detailed understanding and visibility of the expected costs, it might be challenging for a business to maintain transparency. Among the multiple kinds of cost involved, terminal handling charges is an important one, which usually involves charges from ports and terminals for handling cargo.
What is Terminal Handling Charges (THC)?
Terminal Handling Charges are fees charged by ports and terminals that handle imported or exported cargo. This covers costs incurred by the terminal in handling the cargo, including loading and unloading, storage, documentation, and security1.
How to calculate Terminal Handling Charges (THC)?
Terminal handling charges in shipping are charged based on several factors, including the type of cargo, its size and weight, and the type of container used. There are different methods to calculate THC – the most common methods are based on the cargo’s weight or container size. If the weight of the cargo is used to calculate THC, the charge might be a certain amount per kilogram of cargo. Alternatively, if the size of the container is used to calculate THC where the charge might be a certain amount per container or a twenty-foot equivalent unit (TEU).
Why is THC charged?
THC is charged to cover the costs incurred by the port or terminal in handling the cargo. These costs are reflected in the terminal handling receipt and include use of equipment and personnel, storage and security, and administrative costs. It varies depending on factors such as size and weight of cargo, the type of container used, and the specific services required.
Types of Terminal Handling Charges (THC)
There are three types of THC2:
This is charged by the origin port covering the costs of handling the cargo at the port of origin. For instance, if cargo is being shipped from India to the US
, the port of origin charges an Origin THC to cover the costs of handling the cargo at the port in India.
This is charged by the port of destination and covers the costs of handling the cargo at the port of destination. If the same cargo is being shipped to the United States, the port in the US charges a Destination THC to cover the costs of handling the cargo.
This is a combination of origin and destination THC charges. Some ports might charge a Combined THC, which covers both the costs of handling the cargo at the port of origin and the port of destination.
Impact of THC on shippers and consignees
THC can significantly impact the cost of transporting goods. This fee is usually passed on to the shipper or consignee, which can affect the final price of goods. Shippers and consignees need to take THC into account when budgeting for the cost of transporting their goods. THC can also impact the competitiveness of different ports. If a port has high THC compared to other ports, shippers and consignees may choose to use other ports with lower THC to reduce their transportation costs.
Strategies to reduce or avoid THC
While reducing or avoiding THC can be challenging, below are a few commonly followed strategies that shippers and consignees use:
By consolidating shipments
with other shippers, the cost of THC per unit can be reduced, as the costs of handling cargo is divided.
Choosing a port with lower THC
By choosing a port with lower THC, shippers and consignees can reduce their overall transportation costs.
Negotiating with carriers
Shippers and consignees can negotiate with carriers to include THC in the freight rate or to reduce the amount of THC charged.
Comparing THC across different ports
Comparing THC across different ports can help shippers and consignees
make informed decisions about which port is suitable for their business size and budget. When comparing THC, it is important to consider factors such as type of cargo, its size and weight, and the type of container used. It is also important to compare different types of THC charged by each port.
Terminal Handling Charges are an important aspect of international trade
that shippers and consignees need to be aware of. It is also important to compare THC across different ports to make informed decisions. Indian exporters are today opting for e-commerce exports
to expand their businesses and ship in a hassle-free manner. Amazon Global Selling
provides tools and programs like Fulfillment by Amazon (FBA)
and SEND, which enables easy shipping, delivery and returns.
Easy e-commerce exports and logistics with Amazon Global Selling
With increasing adaption to e-commerce exports, Indian exporters have more opportunities to expand their local businesses and take their products from India to the world. Whether you are a multi-city store, local seller, upcoming startup or a seasoned exporter, irrespective of your business size, you can export from India and establish your business on the world map with Amazon Global Selling. To support you for hassle-free logistics, Amazon has also launched SEND, enabling you to ship directly to international fulfillment centers at competitive prices. All you have to do is book, pay and track shipments without any hassles from India to the world.
Published on March 29, 2023.