Wharfage is a common term in the shipping and maritime industry. It refers to the fee charged by the port authorities for using their wharf or dock facilities. But wharfage is more than just a fee. it’s an essential element of the shipping and logistics industry, providing the necessary infrastructure for freight transportation and other logistics services worldwide.
In simple terms, wharfage refers to fees charged by the owner of a pier or docks for using the facility by a vessel. This could be for loading and unloading cargo, tying up, or anchoring the ship at the dock. However, wharfage fees do not cover additional services such as inspection, sorting, weighing, or stevedoring charges. In several locations, port authorities and shipping lines refer to these fees as Cargo Dues (CD)
Wharfage fees vary depending on several factors, from location to services. Still, they are typically calculated based on the vessel’s size and type, duration of use, and the quantity and type of cargo being loaded or unloaded.
How Does Wharfage Work
Typically, ports have a specialized area called a wharf, where vessels are moored for loading and unloading. Ships that require any of these services can dock in this area and pay the wharfage charges as a subset of port duties to the wharf owner or port authorities.
Shipping companies, in turn, collect the same wharfage charge from shippers either as part of the base freight rate or through a separate fee category referred to as the Terminal Handling Charges (THC). Alternatively, the responsibility to pay for these charges may directly fall on shippers at the port of origin or the consignee at the destination port, depending on the payment terms.
Wharfage fees are an essential source of revenue for port authorities, as they provide funding for maintaining and improving the port’s infrastructure. Sometimes, the fee may also cover services such as mooring, pilotage, and navigational aids. Port authorities typically establish the wharfage fee for the year, and every vessel using the port is liable to pay the fee.
Who Pays Wharfage Charges
Importers or exporters looking to transport shipments by sea are responsible for paying wharfage charges, depending on the payment terms. Shippers can make wharfage payments at the origin or the consignee at the final port destination.
It’sIt’s worth noting that wharfage charges differ from terminal and handling charges, as they only cover fees charged to the vessel operator for the passage of cargo through the pier. Therefore, other costs associated with port operations, such as demurrage, detention, sorting, and string, are not part of the wharfage charge.
Types Of Wharfage
There are different types of wharfage, depending on the type of cargo being handled and the port’s location. The most common types of wharfage include the following;
- General Wharfage
Port authorities charge this type of wharfage for using their dock facilities for general cargo. It is a common type of wharfage levied on goods not containerized or bulk cargo, such as machinery, equipment, and small-sized items.
- Container Wharfage
Container wharfage is a fee charged specifically for containers. Port authorities charge this fee for using their dock facilities to handle containerized cargo shipped in standardized containers.
- Bulk Cargo Wharfage
As the name suggests, vessels pay this fee to port authorities to use their wharf for bulk cargo. In this case, bulk cargo refers to unpackaged or loose cargo usually transported in large quantities, such as grain, ore, coal, or petroleum products.
- Ro-Ro Wharfage
Vessels that handle ro-ro shipments pay this wharfage to port authorities. In this scenario, “Ro-Ro” stands for “roll-on/ roll-off” and refers to wheeled vehicles or other cargo that can be driven or rolled onto or off a ship.
How Are Wharfage Charges Calculated
Wharfage fees are usually calculated based on several factors. As we mentioned earlier, port authorities typically establish the price for the year, so the exact format for calculating these charges may vary. However, here are some prevalent factors usually considered when calculating wharfage.
- Cargo Type
The cargo type can affect wharfage cost in different ways depending on the type of cargo in transit. Port authorities usually charge a flat rate on containerized and bulk cargo based on size and weight. On the other hand, they determine charges on Ro-Ro cargo from the number of units being loaded or unloaded.
- Cargo Weight
Cargo weight is one of the most significant determinants of wharfage charges. This is because heavier cargo requires more specialized equipment, infrastructure, and labor to handle, which increases the costs incurred by the port operator. For instance, heavier shipments may require more enormous cranes or more personnel to load and unload. Port authorities also charge high wharfage fees for heavier cargo to reflect the increased wear and tear on port facilities and equipment.
- Cargo Value
The value of a shipment affects the wharfage costs in several ways. The first is percentage-based fees, where ports charge a percentage of the cargo value. So the higher the shipment’sshipment’s worth, the higher the wharfage charge. Other ports may set a minimum wharfage fee regardless of the cargo value. However, if the cargo value is high enough, the minimum cost may be negligible compared to the overall shipment’sshipment’s value.
- Vessel Size
Shipments are not the only determinant of wharfage costs; the vessel can also affect the amount charged. First, larger ships require more space at the wharf which may limit the number of vessels the port can accommodate simultaneously. They also need more specialized equipment and additional labor to handle and typically carry more cargo than smaller vessels. All these factors combine to generate the high charges associated with larger ships.
Imagine a world without wharfage – the shipping and logistics industry would be at a standstill! Without the necessary infrastructure provided by wharfage, freight transportation services worldwide would be severely limited, making it impossible to move goods efficiently and effectively.
The importance of wharfage cannot be overstated. It is the backbone of the shipping and logistics industry, ensuring cargo can be loaded and unloaded safely and efficiently. These charges also go into improving the port’s infrastructure.
However, while wharfage is undoubtedly essential, several similar charges are also levied on vessels and shipments at a port, from port charges, arrastre levies, and dockage. Understanding wharfage in detail is vital to ensure you don’t get caught out by any unexpected costs.