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THCs charged at both ends often exceed freight rates

Shipping News, 23rd April 2004

(SINGAPORE) Controversial Terminal Handling Charges (THCs) were first introduced by the Far Eastern Freight Conference (FEFC) in 1990 as it restructured the box tariff to separate freight rates, denominated in US dollars, from port charges priced in local currencies.

The THCs were initially implemented for container shipments from Singapore, Malaysia, Hong Kong and Taiwan to Europe, before being expanded to other countries. Other conferences soon followed suit. In the same year, the Australian & New Zealand/Eastern Shipping Conference (Anzec) imposed a THC in Hong Kong, while two other conferences - the Intra-Asia Discussion Agreement (IADA) and Asia North America Eastbound Agreement (Anera), replaced in 1999 by the Transpacific Stabilisation Agreement (TSA) - introduced it in 1991. It is now a widespread industry practice, except for African ports.

The Federation of Asean Shippers' Councils (FASC) argues that THCs, charged separately from freight rates and other event-specific surcharges, are simply ‘non-transparent, unjustified and baseless price fixing', despite liner shipping’s claims of ‘cost recovery’.

There is a wide disparity in the THCs imposed across different Asian countries and in the intra-Asean trade, THCs - charged at both origin and destination - often exceed the actual freight rates.

Unlike in Europe or the US, anti-trust laws are either weak or non-existent in the Asean region, allowing this sort of practice to flourish, according to the FASC.

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