Decoding Terminal Handling Charges in Shipping

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Terminal handling charges in shipping refer to the fees levied by the port or terminal authorities on the shippers or shipping companies to compensate for utilizing the port’s resources. Numerous shipping containers are loaded and unloaded at ports daily and stored temporarily for transhipment. Container terminals are port facilities where containerization and transhipment take place. Many maritime resources, including a workforce, such as equipment, vehicles, and machines, are used for container handling. The shippers must pay for using these maritime resources, which is added to the shipping rate as a terminal handling fee. Let us learn more about container terminals and terminal handling fees in shipping.

What is a container terminal?

A container terminal, also known as a container port or cargo terminal, is a specialized facility within a seaport or inland port designed for the handling, storing, and transferring of different types of shipping containers between different modes of transportation, including ships, trucks, and trains. At a container terminal, containers are loaded onto and unloaded from vessels using specialized equipment such as cranes, forklifts, and straddle carriers. These terminals are equipped with extensive infrastructure, including berths, quay walls, container yards, and storage facilities to facilitate the efficient movement and storage of containers. 

Container terminals play a vital role in global trade, serving as pivotal hubs for the movement of goods between producers, suppliers, and consumers across different regions. They provide essential services such as cargo consolidation, customs clearance, and cargo handling operations to ensure the seamless flow of goods through the supply chain. Container terminals are located near major shipping routes and transportation networks, enabling efficient cargo transfer between maritime vessels and land-based transportation modes and facilitating international trade and commerce.

What is a terminal handling charge in shipping?

In maritime shipping, terminal handling charge (THC) refers to the fee levied by terminal operators for handling containers at ports or terminals. It includes various operational costs incurred in handling containers, including loading, unloading, temporary storage, and other related services. These charges apply to import and export shipments and aim to cover the expenses associated with using terminal facilities and equipment. 

Terminal handling charges may vary depending on factors such as the size of the container, the type of cargo, and the range of services the ports offer. Container terminal operators impose THC on shippers to maintain and upgrade terminal infrastructure, invest in equipment, and compensate for labor costs. Importers and exporters can negotiate THC rates with shipping lines or freight forwarders to decrease the overall shipping rates. Let us learn more about the different types of terminal handling fees in shipping.

Types of terminal handling charges in shipping

There are three main types of terminal handling fees, depending on the shipping party that pays them. Let us learn more about which shipping party is responsible for paying THC.

  1. Original Terminal Handling charges – The origin terminal handling charges are generally paid by the exporter of the goods. They occur at the port of origin, where the port authorities charge the exporter for logistics activities such as container inspection, handling, and stowage to the vessel.
  2. Destination Terminal Handling Charges – The destination terminal handling fee is meant to be paid by the importer of the goods when the shipment arrives at the destination port. All activities, such as cargo unloading and handling, require resources and labor, which the port authorities charge the importer.
  3. Transshipment Terminal Handling Charges – The transshipment terminal handling charge is incurred and paid by the shipping company if the vessel stops at an intermediate port for cargo unloading, fueling, or maintenance. Cargo consolidation is a prime reason why vessels stop at multiple ports.

Components of terminal handling charge 

The various tasks at container terminals contribute to the final terminal handling charge. Let us learn more about the breakdown of terminal charges.

  1. Storage charges – Shipping containers are often stored in terminals before loading, unloading, or transshipment. Storage charges apply when cargo remains at the terminal beyond a specified free storage period. Terminal operators charge fees for storing cargo in warehouses or designated storage areas within the terminal premises.
  2. Loading and unloading containers – The process of containerization requires equipment, labour, and vehicles such as forklifts and automated guided vehicles (AGV). The weight and size of the container are determining factors that decide how much manpower and resources are needed. The terminal handling charge (THC) varies accordingly.
  3. Port infrastructure – There are major and minor ports, and both offer different levels of facilities. Smart ports benefit shippers by improving supply chain agility through automation. Such ports charge more for their services than traditional ports.
  4. Special handling equipment – Specialized equipment is required for specific containers, such as reefer containers for handling fragile and hazardous goods. In some instances, skilled workers are needed, and the price of THC increases in such cases.
  5. Cost of operations – For any shipping port to operate properly and provide high-quality services, timely upgrades and maintenance are required. This includes the cost of managing a workforce, personnel, and administration. Security, storage, and technology are also used significantly.

How do we minimize terminal handling charges in shipping?

To reduce shipping rates, exporters and importers must consider the following tips to reduce terminal handling fees.

  1. Optimize container utilization – Cargo consolidation helps maximize container space and share the terminal handling fee with other shippers. By fully utilizing container capacity, shippers can reduce the number of containers handled, lowering handling charges per cargo unit.
  2. Plan shipments efficiently – It is vital to plan shipments well in advance to avoid rush or urgent handling, which often incurs additional charges such as overtime fees. Prior scheduling allows for better coordination with terminal operators and optimization of resources.
  3. Choosing container terminals – Different types of ports offer different levels of terminal handling services. Compare terminal handling charges across different ports and terminals to select the one that suits your budget. Select terminals with competitive rates and favorable terms while ensuring they meet operational requirements and service standards.
  4. Negotiation – Building trade relations with logistics service providers helps in negotiating rates and reducing terminal handling charges. Many shippers commonly minimize shipping rates this way.

These are a few ways in which shippers can ensure the reduction of terminal handling charges in shipping and conduct an economic trade.

LOTUS Containers is a shipping container service provider that leases containers based on a range of container leasing agreements. You can also buy shipping containers of different types and sizes from us.

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