Terminal Handling Charges are made by operators of container terminal facilities at both ends of the journey. They are not clearly understood by many buyers and sellers, and so are the frequent cause of disputes, especially as the Incoterms 2020 rules offers limited guidance.
Terminal Handling Charges can cover a wide range of services, e.g. weighing or inspection of goods, provision of documents and so on. However we will focus here on the charges made for the movement of containers at the destination terminal, i.e. unloading of the container from the arriving vessel and its transfer to the consignee’s vehicle.
Container terminals vary in their operating practices and their complexity, but a typical procedure may involve at least two separate activities
Let’s start by considering two popular rules for container movements, CIP (Carriage and Insurance Paid to) and CPT (Carriage Paid To.)
In each case the seller arranges and pays for the transport of the container to the named place, which we will assume is the container terminal. (If the named place is elsewhere – the buyer’s warehouse, for example – then the situation is straightforward, all terminal handling charges will be paid by the seller.)
For both CPT and CIP, the allocation of costs upon arrival of the goods is determined by the contract of carriage that the seller has taken out with the carrier. For some carriers and destinations, the freight costs will include unloading of the container and subsequent transfer to the consignee’s vehicle; in other cases, it will not, and there will be charges for the buyer’s account.
So if buyers are to avoid unwelcome surprises, they will need to ask their suppliers for full details of the carriers’ charges for activities at the destination terminal – which of these are included in the freight charges and which are not? – and the place of destination needs to be specified precisely – if necessary as a location within the terminal itself.
Train your team – Introduction to Incoterms 2020 rules
Turning now to Delivered at Terminal (DAT), the situation is a bit more complicated.
Under this Incoterms rule, delivery takes place when the goods have been unloaded from the arriving vessel. So if we refer to the diagram above, costs arising from the unloading operation (A) will be payable by the seller, but if there are costs arising from further container movements such as (B), these may be payable by the buyer.
This cost allocation may not align with the carrier’s contract of carriage with the seller. So if this contract does not include unloading within the freight charges, the terminal operator/carrier will in the first instance seek to pass this charge onto the buyer, unless otherwise directed by the seller.
Again, the remedy here is disclosure of the details of the carrier’s charges in respect of terminal operations, and agreement on the precise point of delivery within the terminal. Where the carrier’s terms and conditions do not align with the agreed Incoterms rule, then the commercial agreement between buyer and seller must address the allocation of these costs.
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