Traders to see lower shipping costs
Rendi A. Witular, The Jakarta Post, Jakarta
The government will soon issue a regulation requiring state port operators PT Pelindo I to IV to lower their container handling charge (CHC) in order to ease the burden of shipping costs on local exporters and importers.
Under the new regulation, Pelindo will only be able to impose a CHC of not more than US$62 for handling an empty 20-foot container, lower than the current rate of $93, Minister of Transportation Hatta Radjasa told The Jakarta Post on Tuesday.
"A ministerial decree to lower the CHC will be issued this week. This is part of incentives for the business community provided by the government in the wake of the increase in fuel prices," said Hatta.
The CHC is the main component for foreign shipping companies in deciding the amount of the terminal handling charge (THC), which represents a burden to exporters and importers quite apart from actual shipment costs.
With lower CHC, shipping companies will be able to reduce their THC significantly, amounting currently to 50 percent of the CHC.
At present, exporters have to pay THC of $150 for a 20-foot container and $230 for a 40-foot container, which on average makes up about 10 percent of the total shipping costs they have to bear.
By definition, THC is a kind of surcharge a shipping line imposes on its customers, over and above the overall ocean freight rates, to help cover extra operational costs in terminals such as paying illegal fees to port operators and security officers.
For 20-foot containers, the THC component costs includes $90 for the CHC and the remaining $60 for the costs imposed by foreign shipping lines.
"In the future, foreign shipping companies can no longer impose a THC exceeding 50 percent of the CHC. After we issue the regulation, we expect the THC will be reduced from $150 to only $90," Hatta asserted.
The minister said foreign shipping companies that refused to lower their THC after the implementation of the new regulation would face severe sanctions from his ministry. The sanctions would include revocation of their licenses to operate in Indonesia.
However, it remains unclear whether shipping companies will comply with the new decree as Indonesia has very little bargaining power over shipping in a country heavily dependent on foreign lines.
Over the past two years, local businesses have been intensifying calls for the reduction or abolition of THC imposed by shipping firms grouped under the Overseas Shipowner Representatives Association (OSRA).
Local companies claim that the THC is a burden on their shipping costs since it is the highest compared to similar charges imposed in other Southeast Asian countries.
The THC issue is among factors causing Indonesia's high-cost economy that the government has been working to reduce, aside from illegal levies and other harbor charges, such as bills of lading (B/L) fees.