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China ministries at loggerheads over THCs

by Nick Savvides

China’s Ministry of Communications (MoC) and Ministry of Commerce (MoCom) are at loggerheads over terminal handling charges (THCs) it emerged today.

An investigation into THCs was ordered last year under the auspices of MoCom with the State Development and Reform Commission, the General Administrations of Industry and Commerce establishing an Investigation Group (IG) to look into the THC dispute between shippers and carriers.

The IG established an expert group of consultants, with some 13 people from universities and research institutions to report on the issue. Ci-online understands that the experts gave a 'fair and balanced opinion' late last year.

They concluded that the traditional trade practice was that THCs were included in the freight rate, but whether it was separated or not the THCs ought to be paid by the freight payer.

That in turn is decided by the terms of the contract. If cargo is sent FOB then the consignee pays, but if it is sent CNF or CIF then the shipper pays, with the level of the THCs set by negotiation between the freight payer and the carrier and included in the contract between the two parties.

A simple and fair enough solution. However, the IG disagreed with their experts' findings and through its own investigations decided that THCs were a commercial charge levied by the lines.

The MoC seized on this view and has pushed for its adoption. One cynical source also pointed to the good relations that the MoC enjoys with Cosco and China Shipping Container Lines, which the ministry used to administer.

‘It’s hard to say what the outcome of this stand-off will be,' said the source, 'but the MoCom is a strong supporter of the shippers and it is pushing the experts' view hard,' he said.

Originally the investigation was meant to have been concluded last autumn and was put back until the spring, it has now been delayed until the summer.

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