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Thursday, November 20, 2008

CONTAINER HANDLING FEE REVOKED AFTER PROTEST

The Jakarta Post , Jakarta Fri, 11/14/2008 11:06 AM Business

After a fierce protest from shipping companies, the Ministry of Transportation temporarily revoked Thursday a new set of Terminal Handling Charge (THC) fees and returned to the old charges.

On Nov. 1, the ministry set new THC fees -- the charges exporters or importers have to pay to shipping companies -- at US$95 for a 20-foot container and $145 for a 40-foot container, lower than the previous charges of $117 and $177, respectively.

The ministry however kept the Containter Handling Charge (CHC) -- the fee the shipping companies have to pay to port administrators which is part of the THC -- unchanged at $83 for 20-foot containers and $124.5 for 40-foot containers.

The result was that the new regulations slashed the income of the shipping firms, who objected to this as soon as the changes were introduced. There were even reports that some shipping companies had refused to carry out their activities at the Tanjung Priok port, in protest at the new tariffs.

Tanjung Priok is the largest port in the country, where more than 60 percent of exports and imports take place.

Against that backdrop, the ministry revoked the new rules.

Herry Asmari, chief of the container division in the Indonesian National Shipowners Association (INSA), said the revocation was made after a meeting early in the day among representatives of INSA, traders and government officials.

Herry said that the ships are now allowed to use the old charges and issues related to a more permanent fee adjustment will be discussed further.

"We are very thankful and we respect their decision," he said.

Agus Barlianto, public relations manager of the Jakarta International Container Terminal (JICT) which handles a part of Tanjung Priok port, said shipping companies had begun resuming their operations immediately after the revocation decision.

"After the record detailing the decision was distributed this (Thursday) afternoon, ships started to collect containers from the harbor," Agus said, adding that dozens of ships had refused to operate earlier in the day and Wednesday. (dis)


http://www.thejakartapost.com/news/2008/11/14/container-handling-fee-revoked-after-protest.html

INTERNATIONAL SHIPOWNER AGREE TO CUT THC

Zakki P. Hakim, The Jakarta Post, Jakarta

Global firms grouped under the Overseas Shipowner Representatives Association (OSRA) has agreed to cut the much-debated Terminal Handling Charge (THC) to between US$120 to $130 per 20-foot container (TEUs), according to a minister.

Minister of Transportation Hatta Radjasa said on Monday the shipping firms had finally agreed to cut the charge in Indonesian ports, following the government's commitment to reduce costs charged to importers and exporters, and eventually ease the high cost economy.

""They see that we are serious in removing the illegal costs in our ports,"" Hatta said of the reasons behind the international shipping lines' willingness to cut the THC despite the nation's relatively weak bargaining power.
Indonesia has little to bargain with as shipping activities in the country heavily depend on foreign shipping lines, leaving local traders with little option but to comply.

The minister said further meetings with stakeholders were still needed to determine the details and date of implementation of the new rate.

By definition, THC is a kind of surcharge a shipping line imposes on its customers, over an above the overall ocean freight rates, to help cover extra operational costs in terminals.

The local private sector has said that the surcharge was illegal as all costs should be included in ocean freight rates, while shipping lines claim that they need the surcharge to cover numerous ""invisible"" costs in Indonesian ports.

Local business associations said that the THC makes Indonesian goods less competitive on the international market.

Currently, shipping lines impose a THC of $150 for a 20-foot container and $230 for a 40-foot.

Earlier this year, a government's special team for improving trade relations recommended to the government to assist exporters and importers to negotiate with international shipping lines on the issue.

The special team, which consists of various stakeholder representatives in the shipping industry, recommended that THC should be limited to $120 per TEU.

THC was introduced in Europe in the 1980s on the request of European shippers.
Over time, the practice was also implemented in Asian ports including in China, Japan, Hong Kong, South Korea, Taiwan, Singapore, Malaysia, Thailand, the Philippines and Indonesia.

However, THC was imposed on practically all shipping customers across the globe during the Gulf War in early 1990s.

The argument was that shipping routes to Europe through the Middle East faced far higher risks, therefore aside from the freight rate, shipowners charged the additional fee known as THC.

The Gulf War is now over, but the conferences of shipowners have maintained the THC.


http://www.thejakartapost.com/news/2005/07/26/international-shipowners-agree-cut-thc.html