News

Vietnamese shipping industry concerned over THC hikes by foreign shipping companies

27/02/2024    86

The recent increase in Terminal Handling Charges (THC) by foreign shipping companies operating in Việt Nam has raised significant concerns within the local shipping industry.

Since the start of 2024, these foreign shipping lines have consistently announced a 10-20 per cent hike in fees for all container services. This surge in fees follows the implementation of Circular 39/2023/TT-BGTVT by the Ministry of Transport (MOT), which came into effect on February 15, 2024. The circular increased fees for loading and unloading container services by approximately 10 per cent compared to Circular 54.

THC are fees levied by shipping lines and terminal operators at seaports for services such as cargo handling, storage and documentation.

Three logistics sector business associations – the Vietnam Shippers' Council (VNSC), Vietnam Ship Agents, Brokers and Maritime Services Providers Association (Visaba) and Vietnam Logistics Business Association (VLA) – have been particularly vocal about this issue.

In documents sent to the ministries of Transport, Finance, Industry and Trade, and Vietnam Maritime Administration this month, the VNSC highlighted that these companies have been imposing various fees and surcharges for years. Furthermore, they have been increasing these fees without proper justification or compliance with State regulations.

As a result, the fees charged by these companies are much higher than the fees paid to Vietnamese ports for container handling services.

Since early this month, Taiwan's Yang Ming Marine Transport Corp increased its rates from nearly VNĐ2.54 million to VNĐ3.04 million for a 20-feet container, marking an increase of more than VNĐ500,000 or 20 per cent growth, effective February 20. Similarly, Korea Marine Transport Co Ltd (KMTC) and Heung-A Line both raised its rates by $12. Other shipping lines with fee growth of more than 10 per cent included CULine, Evergreen Marine Corp (EMC), WanHai Shipping (WHL) and SITC Container Line.

“It is noteworthy that this fee increase is exclusive to Việt Nam, as they have not made any moves to raise THC in other countries in the region. Specifically, the 10-20 per cent increase in THC fees by shipping companies is three times higher than the adjusted price for container loading and unloading at Vietnamese ports," stated the VNSC in its documents.

The VNSC has also highlighted the fact that this recent adjustment in THC rates is not the first time such a move has been made. They argue that this poses a significant challenge to the country's efforts in managing foreign shipping companies and protecting the legitimate interests of Vietnamese importers and exporters, as well as the country's ports and logistics sector.

In response, the VNSC has proposed several measures, including adding THC to the list of declared charges for container shipping services by sea and imposing special consumption taxes on excessive profits. They have also called for a review and revision of existing regulations to align them with international standards and practices, learning from the experiences of neighbouring countries in managing foreign shipping companies.

Visaba has echoed similar concerns. They have emphasised that the lack of regulations governing shipping routes and the arbitrary imposition of fees by foreign shipping companies, including THC, have detrimentally affected the interests of Vietnamese importers and exporters, as well as the country's ports and logistics sector.

Visaba reports that shipping companies impose roughly 10 surcharges at ports, including those for loading and unloading, documentation, fuel and container cleaning. These fees are unilaterally determined by the companies without customer agreement. Additionally, companies can adjust fees without inspection or explanation 15 days prior to the change.

Visaba has estimated that Việt Nam's container market is valued at around 25 million TEUs, with 15 million TEUs related to import and export activities worth about US$3 billion in revenue. They have warned that the unchecked increase in fees by foreign shipping companies could significantly raise logistics costs and reduce Việt Nam's competitiveness.

Three logistic associations have called on the Vietnamese government to take prompt action to address these issues and enhance the management of shipping fees and charges to safeguard the interests of Vietnamese importers and exporters, as well as the country's ports and logistics sector, and to ensure fair competition in the market.

Earlier, industry insiders raised concerns that shipping companies might leverage the rise in base price for loading and unloading containers, a substantial component of THC fees and a benchmark for foreign shipping companies' rates, to increase THC fee, adding to existing pressures on import-export businesses.

According to statistics from the Vietnam Maritime Administration, Việt Nam has about 38 foreign container shipping companies, which handle over 90 per cent of the import-export cargo volume.

Source:Custom News