If you work in logistics, you may have come across the term “terminal handling” before. But what exactly does it mean? And why is it important for your business?
Terminal handling refers to the process of loading and unloading cargo at a port or terminal. This includes tasks such as moving containers, storing goods, and securing them on ships or trucks.
The reason why terminal handling is a crucial aspect of logistics is that it directly impacts the cost and efficiency of transporting goods. If not managed properly, it can result in delays, damages, and additional charges that can significantly affect your bottom line.
In this blog, we will discuss everything you need to know about terminal handling and provide you with some tips on how to avoid unnecessary charges.
What is a Terminal Handling Charge?
A Terminal Handling Charge (THC) is a port charge imposed by carriers and terminal operators to cover the costs of handling cargo at ports and terminals. These charges are levied on both importers and exporters, and they vary depending on factors such as shipment size, type of cargo, and location.
Terminal handling charges can include services such as loading and unloading containers, stacking goods in warehouses or yards, inspecting cargo, and providing security. Additionally, some terminals may also charge for equipment usage or storage fees if goods are held for an extended period.
How Much is a Terminal Handling Charge?
The cost of terminal handling charges (THCs) varies widely depending on several factors, including the port, the type of cargo, and the specific services required. Generally, these charges can range from a few hundred to several thousand dollars. Factors such as advanced equipment used, the volume of cargo, and the efficiency of the terminal handling methods involved all play a role in determining the exact amount.
Costs can vary significantly from one country to another. For instance, Germany and the UK have higher THCs compared to India. These variations highlight the importance of understanding and planning for these charges based on your shipping routes.
Aspects of THC Calculation
Several factors influence the calculation of terminal handling charges. Here are some key aspects:
Cargo Type: Different types of cargo may require specific handling equipment and methods. For instance, hazardous materials, refrigerated containers (reefer containers), and oversized cargo often incur higher THCs due to the special handling equipment and safety measures required.
Cargo Dimensions and Weight: The size and weight of the cargo can impact the cost of handling. Larger and heavier items typically require more resources and time to load and unload, resulting in higher charges.
Container Specifications: The type of container used (e.g., standard 20ft or 40ft containers, high cube containers) also affects the THC. Certain containers may need specialized equipment for handling, influencing the overall cost.
Port Efficiency: The efficiency of the port and the terminal operator’s handling methods can impact the charges. Ports with advanced equipment and well-trained personnel often handle cargo more quickly and efficiently, potentially reducing costs.
Volume of Cargo: The volume of cargo being handled at the port can affect THCs. Higher volumes can sometimes lead to discounts due to economies of scale, while low volumes might incur higher per-unit charges.
Additional Services: Any additional services required, such as storage, customs clearance, or special handling, will add to the total THC. These services can vary significantly between ports and cargo types.
Example of Terminal Handling Charge Calculation
Let’s illustrate with an example. Imagine a company, GreenTech Electronics, shipping a 20ft container of solar panels from Japan to the UK. Here’s how the terminal handling charges might be calculated:
- Origin THC in Japan
- Cargo Type: Standard 20ft container of solar panels.
- THC: $242 (covering loading operations, use of handling equipment, and port facilities).
- Transshipment THC in Singapore
- Cargo is transferred at a transshipment port.
- Additional THC: $178 (covering unloading from one vessel and loading onto another).
- Destination THC in the UK
- Cargo Type: Standard 20ft container.
- THC: $225 (covering unloading operations and any necessary storage).
The total terminal handling charges for this shipment would be calculated as follows:
- Origin THC (Japan): $242
- Transshipment THC (Singapore): $178
- Destination THC (UK): $225
Total THC for the shipment: $645
This example demonstrates how terminal handling charges can accumulate across different ports, emphasizing the need for careful planning and budgeting. By understanding these costs and their components, businesses can better manage their shipping expenses and avoid unexpected financial burdens.
Who Charges the Terminal Handling Fee and Who Pays?
The terminal handling fee is typically charged by the port or terminal operator for the services they provide. As mentioned above, this can include loading and unloading cargo, storing containers, and other handling tasks. In some cases, this fee may also cover the use of equipment such as cranes or forklifts.
So who exactly is responsible for paying these fees? The answer is not always straightforward. In many cases, it will depend on the specific terms of your shipping contract. Usually, the party responsible for arranging and paying for transportation (often the shipper) will cover these costs. However, in some cases, these fees may be negotiated to be split between both parties or even paid by the receiver.
Types of Terminal Handling Charges
Terminal handling fees can vary depending on the type of cargo being shipped and the services required. Some common types of terminal handling charges include:
Origin Terminal Handling Charge (OTHC)
This charge covers the cost of handling cargo at the origin port, including loading the container onto the vessel.
Terminal Handling Charge (Or Liner Out Charge)
This fee includes all costs associated with handling the cargo at the shipping terminal, from arrival to departure. This comprehensive charge ensures that all aspects of cargo handling are covered, providing a clear overview of the costs involved.
Destination THC
This charge covers the cost of handling the cargo at the destination port, including unloading cargo from the vessel and any necessary storage.
Import THC
Similar to destination THC, this fee applies specifically to imported goods and covers handling and processing at the destination port.
So now you’ve got a better handle on the fees, let’s look at an example scenario to understand how they work in practice.
Example of a Terminal Handling Charge
Let’s consider a shipment from China to the United States. A company using China Shipping Container Lines might incur various terminal handling charges at both the origin and destination ports. At the origin port, the OTHC covers loading the cargo onto the vessel.
Upon arrival at a transshipment port, additional terminal handling fees may apply for transferring the cargo to another vessel. Finally, at the destination port, the destination THC covers unloading and processing the cargo. These charges are essential for the efficient functioning of freight terminals and ensure smooth container movements through different terminals.
How to Mitigate Terminal Handling Charges
When it comes to mitigating terminal handling charges, there are a few strategies that can help:
1. Negotiate with Shipping Lines
One of the most effective ways to reduce terminal handling charges is to negotiate with your shipping lines. Establishing strong relationships with shipping companies can give you the leverage needed to secure more favorable terms. These negotiations often involve discussing volume discounts, long-term contracts, or bundled services that can help reduce overall costs.
2. Choose Efficient Ports (if Possible)
Selecting ports known for their efficiency can significantly reduce terminal handling charges. Ports equipped with advanced handling equipment and staffed by well-trained port technicians are often able to handle cargo more quickly and with fewer delays. This efficiency can translate into lower costs for businesses. It’s beneficial to consider ports that have a reputation for minimal congestion and streamlined customs procedures.
3. Consolidate Shipments
Consolidating multiple shipments into a full container load (FCL) can be a highly effective way to lower terminal handling charges. By combining smaller shipments, you reduce the number of individual handling operations required, which can lead to significant cost savings. Additionally, consolidating shipments can improve logistical efficiency and reduce the risk of delays.
4. Stay Informed
Keeping abreast of changes in terminal handling fees is crucial for effective cost management. Terminal authorities and shipping companies frequently update their fee structures, and staying informed about these changes can help you avoid unexpected costs. Regular updates from industry sources, port authorities, and shipping terminals allow for accurate cost estimates. Subscribing to industry newsletters, attending relevant conferences, and maintaining direct communication with terminal operators are excellent ways to stay informed.
5. Optimize Route Planning
Effective route planning can also help mitigate terminal handling charges. By choosing routes that involve ports with lower THCs or fewer transshipment points, you can reduce the overall handling costs. Analyzing different shipping routes and selecting those that offer the best combination of cost and efficiency can make a substantial difference. Advanced route optimization tools can identify the most cost-effective shipping paths, taking into account both THCs and overall transit times.
6. Utilize Technology
Leveraging technology can provide insights and efficiencies that help reduce terminal handling charges. Using software solutions for cargo tracking, documentation management, managing port calls, and communication can streamline operations and reduce errors that lead to additional costs.
Base is committed to delivering innovative software solutions tailored for maritime service providers and contractors, focusing on enhancing billing processes for vessel agents. Our technology can help you manage terminal handling charges more effectively by providing real-time data and streamlined billing processes.
7. Build Strong Relationships with Terminal Operators
Developing good relationships with terminal operators can lead to better service and potentially lower costs. When terminal operators are familiar with your business and its shipping patterns, they may be more inclined to offer flexible terms or expedited services that reduce handling charges. Building these relationships can involve regular communication, on-site visits, and consistent business dealings.
While there are things that are out of control when it comes to terminal handling charges, by using the tips above, you can minimize the impact on your business and keep costs as low as possible.
Terminal Handling Charges Takeaways
Understanding how terminal handling charges are calculated and what factors influence them can help businesses make informed decisions when it comes to their shipping strategies. By staying informed and utilizing techniques like consolidating shipments, businesses can save money on THCs and keep their operations running smoothly.
So next time you’re handling a shipment, keep these key points in mind to minimize the impact of terminal handling charges on your business. With the right knowledge and strategies, you can stay ahead of the game and make sure that your logistics process is as cost-effective as possible.
Frequently Asked Questions
How do you calculate terminal handling charges?
To calculate terminal handling charges, you need to consider various factors, including the type of cargo, the services required at the freight terminal, and the specific fee structures of different shipping terminals. The charges can vary based on the terminal operator and the complexity of the loading and unloading operations involved.
What is the difference between terminal handling and wharfage?
Terminal handling refers to the comprehensive process of handling cargo at a freight terminal, including loading and unloading operations from ships. On the other hand, wharfage is a specific fee charged for the use of the wharf where the ship docks.
While wharfage is a part of terminal handling charges, it is just one aspect of the broader costs incurred at shipping terminals. Understanding this distinction helps businesses better manage their overall shipping expenses, especially when dealing with the same port repeatedly.
What does parcel in terminal handling mean?
The term “parcel in terminal handling” refers to the handling of smaller, individual parcels within the broader context of operations at a freight terminal. This often involves specialized equipment and procedures managed by the terminal operator to ensure efficient handling.
Who pays terminal handling charges?
Terminal handling charges are typically paid by the shipping line and then passed on to the shipper or consignee. However, the exact payment responsibility can vary and should be clearly outlined in the shipping contract. This clarity helps avoid misunderstandings and ensures smooth transactions within the shipping industry. Whether dealing with the same port or different ports, knowing who is responsible for these fees at each freight terminal is crucial.
What is the destination terminal handling fee?
The destination terminal handling fee covers the cost of handling cargo at the destination port, including unloading from the vessel and any necessary storage or processing. Understanding these fees and the operations at shipping terminals helps businesses plan and budget effectively within the shipping industry.
