Voyage Cost: Port Charges
Maritime related port charges are described below. This article is part of an ongoing series on voyage cash flow analysis (VCF).
Introduction
Port related charges “represent a major component in voyage costs and include [fees] related to use of facilities and services [within a port].” (Stopford, 2009).
Port charges vary. Cost of labor, geography, particulars of cargo / vessel, and length of stay are factors. For a long-haul bulker from Europe to Australia port and canal costs could amount to hundreds of thousands of dollars and account for upwards of $3 of a per-metric-ton freight rate (Stopford, 2009; calculator.net/inflation-calculator, 2024).
One of the biggest challenges for vessel operators is to understand if port costs are justified. Some ports publish rates, while others are less transparent. Typically larger companies use port cost disbursement software such as DA-Desk that add a layer of scrutiny to proforma costs.
In most cases use of disbursement software is advantageous for the owner and charterer. However use of disbursement software can be hard on honest ship agents, and could cause agents to justifiably pad expenses due to the additional burden.
Breakdown of Costs
For cost breakdown I lean heavily on Aydin Mammadov’s excellent response to a thread in MagicPort.
Note: Estimated cost below may change based on geographic location and various other factors such as ship type and amount of cargo to load or discharge. Operators will need to look up actual charges on tariff/rate sheets for the relevant port, if available.
Port Dues
“Port dues can range from $0.50 to $10 per gross ton (GT) or net ton (NT) of the vessel” (Mammadov, 2023).
Port dues may also be based on cargo volume or weight. This is a basic and justifiable fee: most of not all ports are subject to administrative overhead.
Pilotage
Generally a vessel is required to have a pilot for inbound transit. This is either from the sea buoy which is directly outside of the port to a berth, anchorage or layby berth.
In the States, pilotage can amount to thousands (USD $1,000s) of dollars and can be one of the highest cost items within a port call. The high cost is a result of a legal monopoly that many pilot agencies enjoy.
Berth Dues
“Berth charges are usually calculated based on the vessel’s size, duration of stay, and specific berth location within the port. Average estimates can range from $100 to $500 per day” (Mammadov, 2023).
Berth charges cover maintenance of the berth. The cost is generally justified, as vessels move and warp alongside berths, and can cause damage. It is not unusual for a berth to undergo inspections semi-annually and recondition their fendering system every 5–10 years.
Berth costs are per berth called, therefore if a vessel calls multiple berths within a port multiple cost items will accumulate on the proforma statement. This is the same for many other cost items, such as wharfage and agency fees.
Wharfage
Wharfage and berth dues are not the same. “Wharfage is the charge assessed against the cargo” (Port of San Francisco, 2021).
In other words, wharfage is a charge for the right to pass cargo over the rail of a vessel. Exceptions include crew luggage and stevedoring equipment. In some cases concurrent backloading of cargo may be exempted from wharfage.
Rates are usually expressed in dollars per ton of cargo. Rates could be as low as a couple of dollars to upwards of $10 dollars per metric ton of cargo (Port of San Francisco, 2021).
Anchoring
Anchorages occasionally require dredging and some degree of administrative oversight, thus the charges are generally justified. In Singapore, anchorage fees are USD $4 per 100 GT for stays of less than five days. So for a 10,000 TEU container ship the cost to anchor in Singapore is roughly USD $4,000 per day.
In order to berth on arrival and avoid anchorage fees some vessels will opt to do a round turn enroute to the port or drift just outside of the pilot station. This has the benefit of avoiding dues and possibly saving on fuel.
Tugs
“Tug assistance fees are determined by the number of tugs required and the duration of their services. On average, tug fees can range from $300 to $1,000 per tug per hour” (Mammadov, 2023).
Tug costs are based on the size of tug, the area of operation, and the length of time the tug is needed.
In some cases, cost may be reduced if there are competing tug agencies. In many cases however, tug owners may work together in a port for purposes of ensuring coverage, therefore no rate reduction may be implied.
Port Security
“Port security charges can vary significantly. They can range from $50 to $200 per vessel call, depending on the port and the security measures in place” (Mammadov, 2023).
Security costs are generally justified. In some cases, security may include onboard security or gun boats (i.e. piracy waters), which would serve to dramatically increase the security fee.
Waste Disposal Fee
“Waste disposal fees are typically charged based on the volume or weight of waste generated by the vessel. Average estimates range from $100 to $500 per call” (Mammadov, 2023).
For liquid bulk vessels slops disposal can be a requirement and can often be handed by the terminal the vessel is calling. Quotes should be obtained prior to the port call.
Waste is categorized in MARPOL: for example slops is Annex I / II and garbage is Annex V. On commercial vessels, sewage (Annex IV) is usually processed onboard. Different rates will apply to different categories of emissions.
Though not relevant to port fees, heavy fines can be levied on an Owner for mismanagement of waste disposal, especially vapor emissions-type waste, mismanagement of ballast water, or excessive biofouling.
Mooring and Unmooring Fees
“Mooring and unmooring fees, if applicable, can range from $100 to $300 per call, depending on the port and the level of assistance required” (Mammadov, 2023).
Line crews generally only handle lines, as such they are their own cost department. Within the States, union line handlers can be expensive ($50 / hour per handler or more) or the terminal may have in-house line handlers or 3rd party line handlers. Within Northern California, non-union linehanders generally make around $20-$25 / hour.
Port Agency Fees
“Port agency fees are negotiated between the vessel owner/operator and the port agent. These fees can vary based on the services provided and are typically a percentage, around 1–3% of the vessel’s port expenses” (Mammadov, 2023).
Field agents are oftentimes paid very little. The agency owners press their employees while taking an oversize cut of revenue and pressing counterparties.
However, some agency owners are honest. As an operator, I would sometimes switch agents to see different service levels and proforma statements. This is healthy to do as a vessel owner once in awhile.
Additional Fees
“The costs of additional services such as fresh water supply, provisioning, repairs, and shore personnel assistance can vary significantly depending on the specific requirements of the vessel. It’s best to inquire about these services individually as per the vessel’s needs” (Mammadov, 2023).
As an operator, I feel like I’ve seen hundreds of line items that are not easily categorized. For example, surcharges based on national events or festivities, various cryptic port charges (typically in countries with little governmental oversight), and required donations to various entities such as seafarer’s well-being. Some of these costs are scant, but in the end may just be the cost of doing business. Operators can shake these costs out by occasionally hiring competing agencies.
Environmental fees are fast coming online. Surcharges on conventional vessels will soon be standard, if they are not already in some ports.
Canal Dues
Canal dues are out of the scope of this article, however canal dues can be an outsized cost item and is worthy of high attention. As an example, the Panama Canal has an excellent user interface that explicitly outlines canal costs.
Concessions
Discounts on port charges may include the following:
- Low emissions vessel.
- If the vessel frequents the same port.
- Discount for a vessel whose function is important to the area in which the vessel operates. For example a dredge.
- Short stays.
- Humanitarian vessel.
Who Pays Port Charges?
Port charges are detailed in a charter party (CP). Below are general rules of thumb, but operators must always consult the CP if assigning disbursements to counterparties.
Owners
During a voyage charter, port costs are paid by the vessel owner. The owner may adjust freight rates based on port costs however, thus passing on cost to charterer.
Charterers
During a time charter, port costs are handled by the charterer.
Agents
Agents behave as a pass-through entity, and generally disburse payments within the port for the Agent’s account, and pass on cost to Owners or Charterers minus agency fee.
Conclusion
As a vessel operator, the best approach to mitigate port fees is to 1. check the port tariff sheets and / or 2. compare proforma costs among multiple agents within a port.
If further unpacking is necessary with regard to cost, and funding is available, it is beneficial to visit the port and meet with the agents.
Disbursement software will result in reduction of cost, as there is an additional layer of scrutiny, and presumably the disbursement software contains a data element that can affect comparative analysis for the benefit of a vessel operator.
To learn more about how Shipping Intel could help in your maritime tech journey please contact info@shippingintel. You are welcome to contact me (Jordan Taylor ) directly though LinkedIn.
References
(n.d.). DA-Desk: Disbursement account shipping. Retrieved July 6, 2024, from https://www.da-desk.com/
About us and our team | DA Desk. (n.d.). DA-Desk. Retrieved July 6, 2024, from https://www.da-desk.com/about-da-desk/
CHECK SHEET FOR TARIFF PAGES AND SUPPLEMENTS. (2020, December 30). SF Port. Retrieved July 6, 2024, from https://sfport.com/sites/default/files/Maritime/Docs/Tariff/Tariff%202021.pdf
Forward Flat Rate Inflation Calculator. (n.d.). Calculator.net. Retrieved July 6, 2024, from https://www.calculator.net/inflation-calculator.html
Mammadov, A. (2023, June 19). Fees and costs during port call — Vessels. MagicPort. Retrieved July 6, 2024, from https://community.magicport.ai/t/fees-and-costs-during-port-call/1125
Maritime Labour Convention, 2006 | International Labour Organization. (n.d.). ILO. Retrieved July 6, 2024, from https://www.ilo.org/international-labour-standards/maritime-labour-convention-2006
Port Dues Concessions | Maritime & Port Authority of Singapore (MPA). (n.d.). Maritime and Port Authority of Singapore. Retrieved July 6, 2024, from https://www.mpa.gov.sg/finance-e-services/tariff-fees-and-charges/ocean-going-vessels/port-dues-concessions
Prevention of Pollution by Sewage from Ships. (n.d.). International Maritime Organization. Retrieved July 6, 2024, from https://www.imo.org/en/OurWork/Environment/Pages/Sewage-Default.aspx
Shipping Intel. (2024). Shipping Intelligence. Retrieved from https://www.shippingintel.com/
