Traders will soon enjoy cut in port fees

Anissa S. Febrina, The Jakarta Post, Jakarta

Bowing to pressure from traders, the government will later this week decide on the container handling charge (CHC) from several new tariff alternatives under consideration -- all lower than the existing one.

Following a meeting on Monday between the transportation ministry, port operators and related business associations, several pricing options -- US$70 for a 20-foot container, $79 and $83 -- were offered for consideration before the final decision is made on Oct. 14, a ministry source said on Tuesday.

Previously, Minister of Transportation Hatta Radjasa proposed that port operators impose a CHC of no more than US$62.

The latest alternative agreed upon by exporters and shipowners, however, proposed that CHC be cut to $79 per 20-foot container, as against port operators' proposal of $83.

If the cost was set at no higher than $70, exporters and importers could save up to Rp 2 trillion annually from shipping costs alone.

Currently, CHC is set at $93.

Separately, Hatta also mulled lowering lading fees to around a quarter of the current $40 and scrapping the current agreement that CHC costs be increased every two years.

"In the future, there should not be anymore increases since we are aiming to reduce the high-cost economy," he said.

Meanwhile, Indonesian National Shipowners Association (INSA) chairman Oentoro Surya backed up the idea stating that CHC costs had been increased randomly from $62 to the current cost of $93.

CHC is the main component for foreign shipping companies in deciding the amount of the terminal handling charge (THC), a cost that importers and exporters have to bear, apart from actual shipment costs.

With lower CHC, shipping companies would be able to reduce their THC significantly.

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.

THC was introduced in Europe in the 1980s at the request of European shippers and later during the Gulf War in the 1990s, it was imposed on all shipping customers.

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.

As a comparison, exporters would only pay THC of $90 for a 20- foot container and $135 for a 40-foot container in Malaysia, or $107 and $158 respectively in Singapore.

Local businesses said the cost made Indonesian goods less competitive on the international market, while shipping lines have claimed they need the high surcharge to cover numerous "invisible" costs in Indonesian ports.