International shipowners agree to cut THC<\/p>\n
Zakki P. Hakim, The Jakarta Post, Jakarta<\/p>\n
Global firms grouped under the Overseas Shipowner Representatives
\nAssociation (OSRA) has agreed to cut the much-debated Terminal
\nHandling Charge (THC) to between US$120 to $130 per 20-foot
\ncontainer (TEUs), according to a minister.<\/p>\n
Minister of Transportation Hatta Radjasa said on Monday the
\nshipping firms had finally agreed to cut the charge in Indonesian
\nports, following the government's commitment to reduce costs
\ncharged to importers and exporters, and eventually ease the high
\ncost economy.<\/p>\n
"They see that we are serious in removing the illegal costs in
\nour ports," Hatta said of the reasons behind the international
\nshipping lines' willingness to cut the THC despite the nation's
\nrelatively weak bargaining power.<\/p>\n
Indonesia has little to bargain with as shipping activities in
\nthe country heavily depend on foreign shipping lines, leaving
\nlocal traders with little option but to comply.<\/p>\n
The minister said further meetings with stakeholders were
\nstill needed to determine the details and date of implementation
\nof the new rate.<\/p>\n
By definition, THC is a kind of surcharge a shipping line
\nimposes on its customers, over an above the overall ocean freight
\nrates, to help cover extra operational costs in terminals.<\/p>\n
The local private sector has said that the surcharge was
\nillegal as all costs should be included in ocean freight rates,
\nwhile shipping lines claim that they need the surcharge to cover
\nnumerous "invisible" costs in Indonesian ports.<\/p>\n
Local business associations said that the THC makes Indonesian
\ngoods less competitive on the international market.<\/p>\n
Currently, shipping lines impose a THC of $150 for a 20-foot
\ncontainer and $230 for a 40-foot.<\/p>\n
Earlier this year, a government's special team for improving
\ntrade relations recommended to the government to assist exporters
\nand importers to negotiate with international shipping lines on
\nthe issue.<\/p>\n
The special team, which consists of various stakeholder
\nrepresentatives in the shipping industry, recommended that THC
\nshould be limited to $120 per TEU.<\/p>\n
THC was introduced in Europe in the 1980s on the request of
\nEuropean shippers.<\/p>\n
Over time, the practice was also implemented in Asian ports
\nincluding in China, Japan, Hong Kong, South Korea, Taiwan,
\nSingapore, Malaysia, Thailand, the Philippines and Indonesia.<\/p>\n
However, THC was imposed on practically all shipping customers
\nacross the globe during the Gulf War in early 1990s.<\/p>\n
The argument was that shipping routes to Europe through the
\nMiddle East faced far higher risks, therefore aside from the
\nfreight rate, shipowners charged the additional fee known as THC.<\/p>\n
The Gulf War is now over, but the conferences of shipowners
\nhave maintained the THC.<\/p>",
"url": "https:\/\/jawawa.id\/newsitem\/international-shipowners-agree-to-cut-thc-1447893297",
"image": ""
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"sponsor": "Okusi Associates",
"sponsor_url": "https:\/\/okusiassociates.com"
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