Govt asked to help lower port fees

Govt asked to help lower port fees

Zakki P. Hakim, The Jakarta Post, Jakarta

The government should assist the local private sector in
negotiating with international shipping lines for a significant
cut in the much-debated Terminal Handling Charge (THC), a special
government team for improving trade facilitation has recommended.

The team also suggested that shipping lines include THC as a
component in their overall ocean freight rates.

The recommendations are a response to complaints from local
exporters and importers, who claim that shipping lines had
imposed an "illegal" THC rate on Indonesia that was far higher
than other countries in the region.

Local associations said the practice made the country's goods
less competitive in the global market.

A report from the Ministry of Transportation, however, showed
that conferences of foreign shipowners had the final say in
determining the THC rate for Indonesia.

"The government can only facilitate negotiations between the
foreign shipowners and local exporters and importers," it says.

The team recommended that the THC should be limited to US$120
per 20-foot container equivalent units (TEUs), or a 30 percent
margin on the actual official container handling charge (CHC) of
$93 in the port of Tanjung Priok.

The Indonesian Exporters Association (GPEI)'s secretary-
general Toto Dirgantoro said such negotiations would be more
effective if Indonesia became a member of the conferences.

He said Indonesia could become a member if the country bought
at least five vessels each with a capacity to transport 2,000 20-
foot containers.

By becoming a shipowner and joining the "cartel", it would be
easier for Indonesia to have a say in determining the THC rate
for the country, said Toto, who is also a member of the team (not
the team's head as reported earlier).

THC is imposed by shipping lines on their customers to cover
extra operational costs in terminals outside the overall ocean
freight rates.

The local private sector has claimed that the surcharge was
illegal as all costs should be included in the ocean freight
rates. Shipping lines, however, claim they need the surcharge to
cover numerous "invisible" costs in Indonesian ports.

The transportation ministry issued a ministerial circular
dated Oct. 10, 2002, suggesting that all kinds of additional
costs should be included in the ocean freight rate.

Currently, shipping lines imposed a THC tariff of $150 for a
20-foot container and $230 for a 40-foot.

According to the Indonesian National Shippers Council (INSC),
the imposition of THC cost local exporters and importers losses
of $825 million annually.

Toto, who is also the INSC deputy chairman for ports and
custom's services, said the government should try and persuade
all shipping lines to include the THC into their overall ocean
freight rates.

"Several shipping lines have agreed to include THC in their
ocean freight rates after the transportation ministry summoned
them for a meeting to remind them about the circular," he said.

THC was first introduced in Europe in the 1980s at the request
of European shippers as a means of leveling freight costs among
ports on the continent.

Over time, the practice has also been implemented in Asian
ports, including China, Japan, Hong Kong, South Korea, Taiwan,
Singapore, Malaysia, Thailand, the Philippines and Indonesia.

Comparison of Terminal Handling Charges (THC) in Asian countries:

Countries THC*

Thailand 65

China/Shanghai 66

Malaysia 78

The Philippines 78

Singapore 101

Indonesia 150

* Note: THC for 20-feet container in US$

Source: Indonesia National Shippers Council (INSC)