Container unloading at Quy Nhon Port. Photo D.T.D

* General background

According to experts in marine services, THC is a kind of ashore expenses for goods transported by containers at ports of unloading and loading. In the container transportation. The Far Eastern Freight Conference (FEFC) has separated the THC from the transport charge in Singapore, Hong Kong, and Taiwan since 1990. The separation has been, then, applied for many Asia countries and China recently.

Since 1994, the Intra-Asia Development Agreement (IADA) has many times proposed to collect THC in Vietnam but the collection hasn’t been carried out. In late April, 2007, IADA and FEFC announced that they would collect THC in Vietnam. The IADA’s THC level will be $60/20-foot container and US$90/40-foor container as of June 1, 2007, and the FEFC’s THC level would be $65/20-foot container and $98/40-foot container as of May 1, 2007.

This is an important matter, influencing the Vietnamese enterprises’ rights. Vietnam Maritime Department’s statistics show that in 2006 there were 3.42 mil 20-foot containers of imports and exports (TEUS) going through Vietnam’s ports. If the statistics are considered as a basis for the THC level of $60/TEU, Vietnamese import-export enterprises have to pay foreign shipping firms an additional fee of nearly $200 million annually. The most influenced sectors will be agricultural products, woodwork, garment, pottery and porcelain products, and plastic.

On May 17, 2007, the Vietnam Chamber of Commerce and Industry (VCCI) and representatives of the domestic enterprises’ association officially negotiated with foreign shipping association for the application of THC.

* What did container agents and import-export enterprises in Binh Dinh say?

There have been currently 18 shipping branches and agents in Quy Nhon city in which nearly ¾ works as container transportation and representatives for 36 foreign shipping firms. Most of them said that they had sent reports to their client about this issue. Some have collected THC since May 1.

They added that they did this as requested by shipping firms. It means that they only help these firms to collect THC. Some firms demanded that the agents had to take their own money to pay if they didn’t collect THC. However, these firms also noted this a kind of “sensitive” fee, so when collecting THC, the agents need to pay attention to the clients’ reaction. An agent said that many clients had seriously reacted when being asked to pay THC, but they finally had to pay to be issued the bill of lading for imported and exported goods.

According to the provincial Trade Department’s statistics, there are 78 import and export enterprises in Binh Dinh in which most of them are export ones. The majority of enterprises export timber, and other ones export agricultural products and garments. The output of good transported by containers at Quy Nhon port from May 1-22 was 2,521 TEUS. If the agents had applied the THC collection from May 1, the THC payment which import-export enterprises at Quy Nhon port had to pay under the price of $60/TEU would have had $151.260 – a large amount of money. These enterprises, therefore, have worried when THC is applied.

In an interview with Binh Dinh newspaper’s reporter, chief of PISICO Corp.’s planning department said that in 2006 PISICO Corp.’s enterprises had imported and exported about 2,000 FEUS (40-foot container). If the THC collection is applied, they have to spend a large number of expenditure and if THC is added to products’ cost, the enterprises’ competition will be badly affected, especially enterprises producing low-cost products.

* The outcome of the negotiation

According to Vietnamnet – a newspaper online, at a press conference held in Hanoi on May 21, Hoang Van Dung, Deputy Chairman of the VCCI, announced that the council in charge of negotiating for THC payment had reached an agreement with the IADA on the issue. The prominent outcome of the meeting between IADA and the negotiating council was the two sides agreed to separate THC from shipping fees. This would help make the THC payment, which has been depending on the market of ashore services, become more transparent, thus helping exporters and importers define selling and purchasing prices effectively.

Nguyen Tuong, a member of the negotiating council, explained that separating THC from shipping fees aimed to clarify the fees of different kinds (shipping fees and ashore expenses). Shipping fees are always calculated in US dollars, and depend on the number of ships and volume of goods on ships, and always fluctuate. Meanwhile, THC is calculated in local currency (VND) and fixed for a certain time. IADA took an example: they have had to pay $150 for every container shipped from Hai Phong port to Hong Kong, which includes $90 in shipping fees and $60 in THC. The total number isn’t changed.

Vietnamese enterprises, therefore, must follow international practice in paying shipping fees and THC. When signing contracts with foreign businessmen, the two sides should reach an agreement on who will pay THC. There will be three scenarios: First, foreign businessmen will pay all. Second, foreign and Vietnamese businessmen will pay together. Third, according to international practice, THC will be paid by the businessmen of the merchandise receiving countries. IADA’s shipping firm members will negotiate directly with goods owners about the concrete THC levels.

However, the negotiating team announced that IADA would not accept delaying the THC collection to January 1, 2008 as proposed by the Vietnamese side. IADA insists on the THC collection as of June 1, 2007 as previously announced. The THC level to be applied in the first period would be $50/20-foot container and $75/40-foot container. As of January 1, 2008, the fee levels would be raised to $60 and $90 respectively.

• Written by Thuy Vi
• Translated by Hong Quang