Shipping lines agree to cut THC

Shipping lines agree to cut THC

Anissa S. Febrina, The Jakarta Post, Jakarta

Foreign shipping lines have agreed to reduce the much-debated
terminal handling charges (THCs) but not to the amount earlier
set by the government.

After an Intra Asia Discussion Agreement meeting in Singapore
on Tuesday, the Overseas Shipping Representative Association
(OSRA) reported that it had agreed to set THCs at US$113 per 20-
foot container and $175 per 40-foot container.

A 10 percent tax would be added on top of the charges, as
required by the Ministry of Finance's regulation on value-added
taxes.

In a unilateral move in an attempt to regulate the industry,
the government lowered on Nov. 1 the THC charges from US$150 to
$95 per 20-foot container and from $230 to $145 per 40-foot
container.

Shippers charge their customers THCs, which consist of
container handling charges (CHCs) paid to ports and extra costs
during container handling, at various rates. Common tariffs are
agreed at international conferences.

"Although the CHC has been reduced, there are several
increases in storage as well as lift-off and lift-on costs," OSRA
chairman J. C. Tassoni told The Jakarta Post on Wednesday.

Separately, Copenhagen-based shipping line Maersk Sealand said
it would start charging $125 for a 20-foot container and $190 for
a 40-foot container beginning Nov. 14.

It was previously among the nine foreign shipping lines to be
reported to the Corruption Eradication Commission by the
transportation ministry for alleged graft because it had refused
to lower its charges to the ones set by the government.

"(The) THC is a commercial tariff we charge to recover the
costs based on the government's charges and other factors such as
empty container handling," Maersk Indonesia president director
Soren P. Jensen said. "It has nothing to do with corruption."

He added that the mainland operators were invited to some of
the discussions prior to the reduction, but not in the final
discussion that lead to the amount announced by the government.

Jensen said his company could impose lower a tariff if the 10
percent VAT was scrapped.

However, the transportation ministry's director general for
sea transportation, Hartjarta Hariyogi, said the government's
decision on THCs was final.

"There will be no negotiations," he said. "Several China-based
shipping lines have agreed on the amount, one even offered to pay
lower than what had been decided. There is no reason for not
implementing it because we have lowered the CHCs."

Jensen said if the government could improve port
infrastructure along with access to and from the ports, the extra
costs charged on top of the CHCs could also be lowered.