THC in Ocean Freight: An In-Depth Explanation of the Terminal Handling Charge

1. News Flash: Why THC Matters in Shipping Costs

In ocean freight logistics, THC (Terminal Handling Charge) is an essential, often unavoidable fee. For importers, exporters, and freight forwarders, understanding THC's meaning, composition, and potential disputes is crucial for cost control and avoiding conflicts.

THC represents the total costs that the shipping company charges the shipper or consignee to cover operations at the container terminal. These fees are usually incurred when the container is loaded onto or unloaded from a vessel, either at the origin port (export) or the destination port (import).

2. What Exactly Does THC Include?

THC is a “bundled” fee that covers nearly all container handling operations at the terminal, including:

Container Loading/Unloading Fees: The cost to load or unload a container onto/from the vessel.

Terminal Hauling Fees: Costs for moving containers within the terminal area, from the dock to storage, gate, or warehouse.

Storage Fees: Charges for using terminal space beyond the free storage period (usually 7 days). Afterward, demurrage (storage fees) or detention (container return delays) charges apply.

Administrative Charges: Includes documentation processing, data entry, and gate management.

Equipment Usage: The cost of using cranes, forklifts, and other heavy machinery at the terminal.

However, THC does not cover additional services like customs clearance, inspection fees, return charges, or security fees.

3. Who Pays THC?—The Role of Trade Terms

The responsibility for paying THC is determined by international trade terms (Incoterms).

FOB (Free On Board)

Origin Port THC: Paid by the seller (shipper).

Destination Port THC: Paid by the buyer (consignee).

CIF/CFR (Cost, Insurance, and Freight / Cost and Freight)

Origin Port THC: Paid by the seller (shipper).

Destination Port THC: Paid by the buyer (consignee).

DDP (Delivered Duty Paid)

All Fees: Both origin and destination port THC are paid by the seller (shipper).

The core principle is that whoever arranges transport at the port is responsible for paying the associated THC.

4. How Is THC Calculated?

THC is generally calculated based on the size and type of the container, not the weight or value of the goods. For example:

20GP (Standard Container)

40GP (Large Container)

40HQ (High Cube)

45HQ (High Cube)

THC rates are typically set by shipping companies or local shipowner associations but must be approved by local transportation authorities. These fees vary by port, reflecting differences in terminal operations, equipment, and efficiency.

Currency: In China’s origin ports, THC is typically settled in RMB (CNY), while at destination ports, it’s settled in the local currency (USD in the U.S., EUR in Europe).

5. Why Is THC So Critical and Often Controversial?

Mandatory Fee: If a container passes through a port, THC must be paid—there is no choice.

Lack of Transparency: For shippers, especially buyers under FOB terms, it’s easy to confuse THC with ocean freight. Shipping companies often bundle charges into an “All-in” rate, which may mask the separate THC costs.

Significant Cost: THC is a major local charge, especially for short-distance transport or low-value cargo, where THC can account for a significant portion of the total logistics cost.

Historical Disputes: The introduction of THC fees in Asian ports in the early 2000s triggered protests and lawsuits from cargo owners, who believed the fee should be included in ocean freight. However, it has since become a global industry standard.

6. Impact on Businesses & How to Manage THC

Cost Control: As THC is a mandatory local cost, businesses must account for it separately from ocean freight in their shipping budgets.

Avoiding Disputes: Clear communication on trade terms (Incoterms) can help avoid confusion regarding who is responsible for paying THC. Ensure both the seller and buyer understand the division of costs.

Maximize Efficiency: Freight forwarders and importers should choose reliable, transparent shipping partners who provide clear breakdowns of all charges to avoid surprise fees.

7. Call to Action

For businesses navigating the complexities of international shipping, understanding THC is crucial for controlling costs and avoiding unexpected expenses.

👉 Passionship International Logistics is here to help optimize your cross-border shipping process. We provide transparent, compliant solutions for both FCL and LCL shipments, ensuring clear cost breakdowns and efficient operations from port to destination.