What Are Terminal Handling Charges (THC)?

International shipping involves various costs beyond the simple freight rate. Among these, terminal handling charges (THC) represent a significant component of overall logistics expenses. These charges are fees levied by port authorities or terminal operators for services involved in managing cargo as it moves through a port facility. Understanding THC is important for businesses engaged in global trade, as these charges directly impact the final cost of transporting goods and can vary.

Understanding Terminal Handling Charges

Terminal handling charges are fees imposed by port or terminal authorities to cover the operational costs associated with the movement and management of cargo within a port facility. They compensate terminal operators for the resources, equipment, and personnel required to handle the constant flow of goods at busy transit points. THC are distinct from ocean freight costs, which cover sea transportation, and land transportation costs, which apply outside the port.

These charges ensure operators can maintain and upgrade infrastructure, invest in equipment, and cover labor expenses. THC are applied at both the origin (loading port) and destination (discharge port) of a shipment. At the origin port, THC cover handling before containers are loaded onto a vessel, while at the destination port, they cover offloading, storage, and handling until collection.

Services Included in Terminal Handling

Terminal handling charges cover a range of specific operations and services vital to the efficient movement of cargo through a port. These services include:
Lift-on/lift-off (LoLo), which involves the physical loading and unloading of containers from vessels, trucks, or railcars using specialized cranes and equipment. This action is fundamental to containerized shipping, as most container ships do not possess their own onboard cranes.
Stacking and unstacking of containers within the terminal yard, where containers are temporarily stored awaiting their next movement, including transfers to the quay for loading onto a ship.
Gate-in and gate-out procedures, which involve administrative checks and the physical movement of containers as they enter or exit the terminal gates.
Basic documentation processing related to these terminal operations.

Factors Influencing Terminal Handling Costs

Terminal handling costs are not uniform and can vary significantly due to several influencing factors. These include:
Port and Terminal Location: Different facilities have varying operational costs, infrastructure capabilities, and local regulatory environments. Major international ports with advanced facilities might have higher THC than smaller, less busy ports.
Container Size and Type: Larger containers, such as 40-foot units, incur higher fees than 20-foot containers. Specialized containers, like refrigerated (reefer) or hazardous materials, often incur additional surcharges due to special handling, equipment, and safety procedures.
Carrier Agreements: Individual carriers might incorporate different agreements or markups that affect the final billed amount.
Local Labor Costs and Port Congestion: Higher labor expenses or delays can lead to increased operational costs for terminals, indirectly influencing base charges.

Responsibility for Terminal Handling Fees

Responsibility for terminal handling fees often depends on the agreed-upon Incoterms (International Commercial Terms) between the buyer and seller. THC are incurred at the origin port as Origin Terminal Handling Charges (OTHC) and at the destination port as Destination Terminal Handling Charges (DTHC). OTHC cover costs for handling cargo before it is loaded onto the vessel at the origin port.

DTHC are fees for handling containers once they arrive at the destination port, including unloading and temporary storage. Under Incoterms like Free on Board (FOB), the seller is responsible for OTHC, covering costs until goods are loaded. The buyer then assumes responsibility for DTHC. In a Cost, Insurance, and Freight (CIF) contract, the seller covers OTHC and freight to the destination port, while the buyer pays DTHC. Although carriers often pay the terminal directly, these costs are passed on to the shipper or consignee, emphasizing the importance of clear contractual terms.