Local Charge refers to the group of surcharges incurred at the port of loading or port of discharge – on top of the main freight cost – that most import-export businesses encounter. Many newcomers to the trade are caught off guard when they receive a logistics quotation: ocean freight may be only a few hundred USD, yet the total Local Charges can be double or even triple that figure.
Understanding what Local Charges are, how each fee is calculated, and how they are declared will help businesses control costs, negotiate contracts more precisely, and avoid unexpected expenses. The article below is a comprehensive overview compiled by 3W Logistics covering the most common Local Charges in Vietnam’s import-export industry today.
1. What Is a Local Charge?
What is a Local Charge? A Local Charge is a local surcharge incurred at the port of loading (origin) or port of discharge (destination), collected by the shipping line, its agent, the seaport, or the relevant authority – separate from the Ocean Freight or Air Freight.
In other words, the freight rate is simply the cost of moving cargo from the port of origin to the port of destination. All costs involved in getting cargo onto the vessel at the origin and collecting cargo at the destination fall under Local Charges – including handling, documentation, customs inspection, warehousing, container storage, and many other fees.
Where do Local Charges arise?
- Origin Local Charges (OLC): Surcharges at the port of export, collected from the exporter – including THC, EBS, B/L Fee, VGM Fee, Seal Fee, etc.
- Destination Local Charges (DLC): Surcharges at the port of import, collected from the importer – including THC, D/O Fee, Demurrage, Detention, CFS Fee, etc.
Who bears Local Charges? This depends on the Incoterms conditions in the sales contract:
| Incoterms | Origin Local Charge (OLC) | Destination Local Charge (DLC) |
|---|---|---|
| EXW | Buyer bears all charges | Buyer bears all charges |
| FOB | Seller bears charges (until cargo is on board the vessel) | Buyer bears all charges |
| CFR / CIF | Seller bears all charges | Buyer bears all charges |
| DDP | Seller bears all charges | Seller bears all charges (including duties and customs clearance) |
Important note: When negotiating prices with overseas suppliers or buyers, it is essential to clearly determine which party bears the Local Charges under the agreed Incoterms. Many commercial disputes arise simply because both sides have different understandings of who is responsible for THC or D/O fees at the destination port.
2. Common Types of Local Charges in Import-Export
Below is a comprehensive overview of the most common Local Charges in Vietnam’s import-export operations, grouped by function:
2.1. Port Handling and Terminal Charges
| Charge Name | Abbreviation | Description | Unit of Measure |
|---|---|---|---|
| Terminal Handling Charge | THC – Terminal Handling Charge | A port-levied fee for loading, unloading, and moving containers within the terminal; applies at both origin and destination ports; the most universal and mandatory Local Charge | Per container (20’/40’/40’HC) |
| Container Freight Station Fee | CFS – Container Freight Station Fee | Fee for stuffing and stripping LCL cargo at a CFS warehouse; includes labor, equipment, and short-term storage costs during cargo consolidation or deconsolidation | Per CBM or per W/M |
| Empty Container Lift On/Off | Lift On / Lift Off (LO/LO) | Fee for lifting empty containers onto or off trucks and yard equipment when picking up or returning containers; some shipping lines include this in THC, others bill it separately | Per container |
| Container Cleaning Fee | Cleaning Fee | Fee for cleaning an empty container upon return to the depot; incurred when the container is dirty, odorous, or still contains cargo residue | Per container |
2.2. Documentation and Bill of Lading Fees
| Charge Name | Abbreviation | Description | Unit of Measure |
|---|---|---|---|
| Bill of Lading Fee | B/L Fee – Bill of Lading Fee | Fee charged by the shipping line to issue the Bill of Lading (B/L) for the shipment; incurred once at the origin port; mandatory for every sea export shipment | Per B/L |
| Delivery Order Fee | D/O Fee – Delivery Order Fee | Fee charged by the shipping line or its agent for issuing a Delivery Order (D/O) at the destination port; a prerequisite for the importer to release cargo from port | Per B/L |
| Documentation / Admin Fee | Documentation Fee / Admin Fee | Fee for processing paperwork, printing, and document confirmation at the shipping line or agent; incurred at both the origin and destination ports | Per B/L or per shipment |
| Telex Release / Surrender Fee | Telex Release Fee / Surrender Fee | Fee incurred when the seller wishes to surrender the original B/L and authorize cargo release electronically, so the buyer can collect goods without a paper original | Per B/L |
| Amendment Fee | Amendment Fee | Fee incurred when corrections are needed to the B/L after issuance (wrong cargo description, address, container number, etc.); charged per amendment | Per amendment / per B/L |
2.3. Container and Cargo Storage Fees
| Charge Name | Abbreviation | Description | Unit of Measure |
|---|---|---|---|
| Port Container Storage Fee | Demurrage | Fee incurred when a container remains in the port yard beyond the free time allowance (typically 3–7 free days); calculated per day on an escalating tier basis; the most financially damaging Local Charge if left unmanaged | Per container / day (escalating tiers) |
| Off-Port Container Storage Fee | Detention | Fee incurred when a container has left the port but has not been returned to the shipping line’s depot within the free time allowance; calculated similarly to Demurrage | Per container / day (escalating tiers) |
| Cargo Storage Fee | Storage Fee / Demurrage (LCL) | Fee for cargo stored in a CFS warehouse or port warehouse beyond the free storage period; applies to FCL cargo remaining in the yard after unstuffing as well as LCL cargo | Per CBM or per ton / day |
2.4. Conditional Transport Surcharges
| Charge Name | Abbreviation | Description | Unit of Measure |
|---|---|---|---|
| Verified Gross Mass Fee | VGM Fee – Verified Gross Mass | Fee for declaring and verifying the total gross mass of the container (cargo + tare weight) under SOLAS regulations; mandatory for all sea export shipments since 01/07/2016 | Per container |
| Seal Fee | Seal Fee | Fee for supplying and affixing a customs seal (lead seal) to the container before departure; typically collected at the origin port | Per container |
| Port Congestion Surcharge | PCS – Port Congestion Surcharge | Surcharge levied by shipping lines when a port is congested (often during the year-end peak season or before Tết); not a fixed charge – shipping lines typically give a few weeks’ notice | Per container or per B/L |
| Dangerous Goods Declaration Fee | DGD Fee – Dangerous Goods Declaration | Fee for declaring and handling dangerous goods (chemicals, lithium batteries, flammable liquids, etc.); incurred in addition to standard Local Charges | Per container or per shipment |
| Out of Gauge Surcharge | OOG – Out of Gauge Surcharge | Surcharge for cargo exceeding standard container dimensions; covers special equipment, oversize transport permits, and port supervision costs | Per container / shipment |
| US Automated Manifest System Fee | AMS Fee – Automated Manifest System | Fee for submitting cargo data to the US Customs and Border Protection (CBP) system before the vessel arrives at a US port; mandatory for all shipments imported into the United States | Per B/L |
| US Importer Security Filing Fee | ISF Fee – Importer Security Filing | Fee for filing US import security information (10+2 rule); must be submitted at least 24 hours before the vessel departs the last foreign port; mandatory for all ocean freight shipments into the United States | Per B/L |
| EU Entry Summary Declaration Fee | ENS Fee – Entry Summary Declaration | Fee for the mandatory pre-arrival security declaration before cargo enters the EU; required under EU Customs regulations (Import Control System – ICS2) | Per B/L |
“In our experience advising clients, Local Charges typically account for 30–50% of the total logistics cost of an import shipment, particularly on short-haul intra-Asia routes. A clear understanding of each fee helps businesses negotiate better rates and avoid being surprised when the invoice arrives.” – Ms. Apple, CCO, 3W Logistics
3. Regulations and Declaration of Local Charges
3.1. Legal Framework Governing Local Charges in Vietnam
Local Charges are not taxes or state-levied fees; they are commercial charges collected by shipping lines, freight forwarders, and seaports under service agreements. However, certain fees are regulated by law:
| Charge / Regulation | Details |
|---|---|
| THC and Port Charges | The THC tariff framework at Vietnamese seaports is regulated by Circular 54/2018/TT-BGTVT and its amending instruments issued by the Ministry of Transport; shipping lines may collect THC within the prescribed tariff band |
| Surcharge Publication | Under the Maritime Code of Vietnam 2015 (Article 148) and Decree 169/2016/NĐ-CP, shipping lines and their agents must publicly publish all surcharges and service fees applicable to import-export cargo handled through Vietnamese ports |
| VGM – Verified Gross Mass | SOLAS (Safety of Life at Sea) regulations made VGM mandatory from 01/07/2016; exporters are required to declare the VGM before the container is loaded onto the vessel; non-compliance may result in the container being refused for loading |
| AMS / ISF (US-bound cargo) | Mandatory under regulations of the US Customs and Border Protection (CBP); AMS must be filed at least 24 hours before the vessel departs the port of loading; ISF must be filed at least 24 hours before the vessel departs the last transshipment port or 24 hours before arrival at a US port; penalties may reach USD 5,000 per violation |
| ENS (EU-bound cargo) | Mandatory under the EU Customs Import Control System 2 (ICS2); declaration must be submitted at least 24 hours before the vessel departs the port of loading for FCL (full container load) shipments |
| VAT on Local Charges | International transport services and certain Local Charges directly linked to international transport are subject to 0% VAT under Article 9 of Circular 219/2013/TT-BTC; some ancillary domestic services are subject to 10% VAT – it is important to distinguish clearly between the two when issuing invoices |
3.2. Declaring Local Charges in Customs Documents and Accounting Records
Local Charges have a direct bearing on customs dutiable value and corporate accounting. Key points to note:
For customs purposes: Under the GATT/WTO Customs Valuation Agreement (implemented in Vietnam via Circular 39/2015/TT-BTC), the dutiable value for import duty purposes is the CIF value (Cost + Insurance + Freight – i.e., including freight and insurance to the destination port). Local Charges arising after cargo arrives at the destination port (Demurrage, D/O Fee, destination THC, customs declaration fees, etc.) are not added to the CIF value and are not subject to import duty. However, costs arising before the destination port (freight, insurance, origin loading charges, etc.) are included in the CIF value.
For accounting purposes:
- Destination Local Charges (D/O Fee, THC, Demurrage, Detention, etc.) are recorded under cost of goods purchased (Account 1561/1562) or selling expenses, depending on the transaction.
- Freight forwarder fees and customs declaration fees are recorded under outsourced service costs.
- Original source documents (surcharge invoices from the shipping line/forwarder) must be retained in full for VAT input reconciliation and audit purposes.
- Local Charges subject to 0% VAT and those subject to 10% VAT must be correctly differentiated when preparing tax reports.
Tip when comparing Local Charge quotations: Shipping lines and freight forwarders may present Local Charges in different ways – either bundled into a single “All-in” figure or broken out line by line. When comparing quotations, always request an itemized breakdown to cross-check each charge individually and avoid situations where a low headline rate conceals additional fees buried elsewhere.
FAQ – Frequently Asked Questions About Local Charges
Question 1: What is a Local Charge and how does it differ from freight (Freight)?
Ocean Freight (or Air Freight) is the cost of moving cargo from the port of origin to the port of destination. Local Charges are all the surcharges incurred at the origin and destination ports to handle, load and unload, document, and manage containers. Together, the two make up the true total transport cost of a shipment.
Question 2: If goods are imported under CIF terms, who bears the Local Charges at the destination port?
Under Incoterms CIF, the seller covers freight and insurance to the destination port, but all Destination Local Charges (DLC) – including THC, D/O Fee, Demurrage, Detention, etc. – are borne by the buyer (importer). This is a point that many first-time importers misunderstand, often leading to a budget shortfall at the time of cargo collection.
Question 3: What is THC and why is it charged at both the origin and destination ports?
THC (Terminal Handling Charge) is the fee for handling containers within a port terminal. At the origin port, THC covers moving the container from the yard to the ship’s crane. At the destination port, THC covers moving the container from the vessel to the yard. These are two separate operations at two different ports, so two separate THC charges are entirely consistent with international shipping practice.
Question 4: What is the difference between Demurrage and Detention?
Demurrage is the fee for containers that remain inside the port yard beyond the free time allowance – i.e., the container has not yet been removed from the port. Detention is the fee for containers that have left the port but have not yet been returned to the shipping line’s depot within the free time. Businesses can incur both charges simultaneously if they are delayed in both customs clearance and returning the empty container.
Question 5: Do AMS Fee and ISF Fee apply only to exports to the United States, or also to imports from the United States to Vietnam?
AMS Fee and ISF Fee are US Customs (CBP) requirements that apply to all cargo imported into US territory, regardless of origin. Therefore, when a Vietnamese company exports goods to the United States, these two fees are borne by the US importer (or whichever party bears them under the agreed Incoterms). Conversely, cargo imported from the United States into Vietnam does not attract AMS/ISF fees.
Question 6: Are Local Charges subject to VAT?
It depends on the nature of each individual fee. International transport services and fees directly linked to international transport (origin THC, B/L Fee, etc.) are eligible for 0% VAT under applicable regulations. Domestic support services (inland warehousing, domestic trucking, customs declaration, etc.) are subject to 10% VAT. Businesses should require their forwarders and shipping lines to specify the applicable VAT rate on each line of the invoice to ensure correct tax filing.
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Ms. Apple is the CCO (Chief Commercial Officer) at 3W Logistics, with over 10 years of experience in sales and business operations management.
At 3W Logistics, Ms. Apple is responsible for commercial strategy, corporate customer development, managing a team of more than 50 sales professionals, and improving business performance in the logistics sector.
With practical experience in sales management and market development, Ms. Apple shares professional insights on business logistics solutions, international transportation, freight forwarding, customer management, trade lane development, and growth strategies in the logistics industry.
