China concludes THC investigation
A three-year investigation into the collection of terminal handling charges at China’s ports has ruled that liner conferences and freight discussion agreements must file such charges with China’s Ministry of Communications from now on.
At the end of 2002, the China Shippers’ Association requested the investigation by the Ministry of Communication, the National Development and Reform Commission, and the State Administration for Industry & Commerce of China.
THCs are common worldwide but were only introduced in China in January 2002. Chinese shippers who export Free On Board have to pay the THC in their country, even though ocean transportation is arranged by the overseas consignees.
The China Shippers’ Association claimed that THC’s should be a part of the freight, paid by the party who pays the freight. They also accused carriers of detaining bills of lading and cargoes when Chinese shippers failed to pay the charges.
Carriers argue that THCs offer a transparent freight tariff that allows shippers to see the components of the overall freight costs.
The Ministry of Communications ruled that liner conferences and freight discussion agreements were “entitled to collectively reach freight agreements ' However, such agreements shall not be detrimental to the fair competition and disturb the order of international shipping market.”
It also condemned agreements for announcing the collective charges without declaring that individual carriers were allowed to opt out. “It was not stated in those joint notices or declarations that the decision of collecting terminal handling charges was not compulsory to the members of the liner conferences or freight discussion agreements and the members had the right to act independently,” the Ministry of Communications said in its “THC Investigation Conclusion” report.
“Such a decision de facto limited the right of shippers to choose carriers freely. It was not good for the normal price competition among liner companies and disturbed the order of the international shipping market to a certain extent.”
As a consequence of this practice, the Ministry of Communications ordered all agreements to revise their declarations and to file them with the authority from now on, or face penalty charges.
“The investigatory authorities urged the liner conferences and the freight discussion agreements to set up an effective consultation mechanism with the shippers or shippers’ associations in China for the purpose of full and effective consultation on issues of mutual interests before the implementation of freight agreements and various surcharge agreements that involve Chinese ports,” the Ministry of Communications said.
“Shippers are encouraged by the results of the THC investigation,” said Willy Lin, chairman of the Hong Kong Shippers’ Council. “We hope that the conclusions outlined in the report would serve as guiding principles to other countries and territories of how THC should be collected and we offer our full support to the China Shippers’ Association’s achievement of its aims,” Lin said.
