Government mulls changes in THC regulations
The government is considering some changes in regulations promulgated to abolish the (port) terminal handling charges (THCs) and other surcharges levied by the container lines from January this year, official sources said.
This was a result of two rounds of talks between Treasury Secretary Dr. P.B. Jayasundera and representatives of stakeholders of shipping industry.
Although the Extraordinary Gazette on Terminal Handling and Other Charges has already been published, the Finance Ministry will explore the possibility of arriving at an amicable understanding on the THC issue and other auxiliary charges, with the consent of Dr. Jayasundera, official sources revealed.
Representatives of shipping agents, freight forwarders, non-vessel operating common carriers, container operators and consolidators of cargo have brought to the notice of the Treasury Secretary that regulations are affecting shipping lines as per issue of bill of lading .SSS
The government or anybody for that matter has no legal right in respect of the issue of a bill of lading, a representative of the shipping industry said.
It is a legal contract between an exporter, shipping line and the importer and is governed by the terms and conditions of bill of lading, he added.
By trying to interfere with same, the government has got into a complicated situation and now having to police it and add further rules and regulations etc, he pointed out.
Shipping lines will take their own decisions to recover their loss, so will the exporters/ importers of other countries, he said adding that in the end the result will be worse.
Since THC is a cost recovery, shipping lines will have to recover it by some other means otherwise their margins will be affected or it becomes unprofitable and unsustainable to provide the service.
The regulations clearly state that THC and other charges must be included in the freight and the shipping lines can charge more than what they were charging prior to these regulations, he pointed out.
Shipping lines can increase their freight charges to recover the full amount of THC. If they are successful, the foreign trading partners of Sri Lanka importers and exporters will have to pay more trading with Sri Lanka.
As a result, these foreign traders may either re-negotiate their prices with Sri Lankan parties or re-contract with traders from another country, he predicted.
The Treasury had only consulted the apparel industry and certain persons of the advisory council of the Director General Merchant Shipping who have no knowledge on the issue, he said.
But now the authorities have changed their attitude and expressed willingness to discuss the matter to arrive at an amicable solution by making some changes in the regulation, he disclosed.
A continuing dialogue between the various stakeholders, as directed by the Supreme Court in its wisdom and full implementation of all the recommendations by the mediation committee will serve Sri Lanka’s overall interest and help achieve maritime hub status for Sri Lanka.
The Government’s recent proposal to prohibit the cost recovery of Terminal Handling Charges (THC) by the shipping lines in Sri Lanka has been lauded by some as a strong initiative to improve export competitiveness.
At the meeting chaired by Treasury Secretary, shipping industry representatives have made a strong case as to why this move of abolishing THC is counter -productive to the Government’s vision of gaining maritime hub status.
The proposed prohibition was against a Supreme Court decision in 2007 giving legal effect to the THC with effect from 1/7/2008 through the mechanism of a mediation committee.