When importing products overseas, you must hear about port charges. These fees can have a significant impact on the overall product sourcing costs. Therefore, it’s crucial to understand the various port charges to save you costs. Today’s blog is right for you.
What are port charges?
Port charges include the fees associated with using a port for various maritime activities. Ports provide essential infrastructure and services for the loading and unloading of cargo, as well as other operations.
The specific charges can vary between countries and even among different ports within the same country. Charges imposed on various shipping companies and freight forwarders may also differ for the same port. It’s hard to calculate the exact cost for each item; typically, providing a rough estimate proves to be the most practical approach.
However, some charges are mandatory, such as wharfage, terminal handling charges, import fees, and customs duties. On the other hand, some fees like storage, demurrage, and detention are avoidable.
Follow me to explore the common 12 types of port charges in the order of goods entering the origin port to reaching the destination port.
Booking fee
Booking fee refers to the charge associated with freight forwarders assisting in reserving cargo space with a shipping company or airline. The varied fee structures among different shipping companies and airlines lead to discrepancies in the quotes provided by freight forwarders.
Wharfage charge
The wharfage is the fee incurred when any goods are loaded onto or unloaded from a ship through a port. Typically collected by port management authorities or terminal operators, the wharfage is payment for the use of the wharf or anchoring area, which are man-made structures onshore to facilitate ship berthing or docking.
Wharfage charge is also known as cargo dues. Regarding this fee, some terminal operators separately itemize and collect it, while others choose to merge it with the terminal handling charge as a consolidated fee.
Terminal handling charge (THC)
As the name suggests, Terminal Handling Charge, abbreviated as THC, is a fee levied by terminal operators for container handling, storage, movement, and maintenance. The handling fee at the port of origin is referred to as OTHC. If your container requires transshipment, the transshipment port will also charge a terminal handling fee.
Prices vary depending on the terminal and container type. For instance, in Ningbo Port, the THC charge for a 40-foot High Cube container is about $180 (exchange rate 7). Please note that different freight forwarders may quote a difference of around $30 (exchange rate 7).
Port storage charges
Port storage charges are fees imposed by the port for the storage of containerized cargo. Typically, ports provide a certain period of free storage, often ranging from 3 to 7 days. Once this designated time elapses, a storage fee arises. Delays in export customs clearance or port congestion are common reasons that may lead to incurring port storage charges.
Container demurrage fees
Upon the container’s arrival at the port, the shipping company provides a grace period known as free demurrage days, allowing time for customs clearance. If the containers exceed the agreed-upon time at the port, demurrage charges will be incurred. The charges are assessed on a per-container, per-day basis, and the longer the overrun, the higher the associated costs.
Early arrival or late entry fees
Ports operate on strict schedules. If containers arrive before the yard is open, causing additional workload for the port management, you are subject to paying an early arrival fee.
Likewise, if containers arrive later than the planned time, and the designated yard is already closed, resulting in extra work for port workers, the port will charge you a late entry fee.
Customs declaration fee
It refers to a freight forwarder or customs broker processing customs clearance procedures. This fee is not tied to the value of the goods and is assessed at a certain fare. For instance, in China, the customs declaration fee ranges from $21 to $50 (exchange rate 7). In the United States, the clearance declaration fee is approximately $100 to $200.
Document fees
Document fees refer to the costs charged by a freight forwarder for handling various documents and certificates, including invoices, packing lists, bills of lading, etc. Any document amending will generate additional charges.
Furthermore, special products require extra testing reports and certificates, such as commodity inspection certificates, fumigation, inspection and quarantine certificates, MSDS, etc. These requirements result in additional operational fees.
Other fees at the departure port
Manifest fees
Manifest mainly lists the cargo information and is an important document issued by the shipping company or agent to customs. Different countries require submitting a manifest to the different customs systems. It’s common to see:
AMS filing, also known as Automated Manifest System filing. This applies to all goods destined for the US or transiting through the US to other countries or regions. AMS filing is required 24 hours before loading at the port of departure.
ACI filling (Advance Commercial Information filling). This applies to all goods destined for Canada or transiting through Canada to other countries. It must be declared to Canadian customs 24 hours before loading at the port of departure.
ENS (Entry Summary Declaration) refers to the EU 24-hour Advanced Manifest Regulation. This is required for all goods entering the EU or passing through EU ports.
VGM fee
VGM Fee, short for “Verified Gross Mass Fee”, refers to the cost associated with verifying the gross weight of a container, covering the total cargo weight, the container’s tare weight, plus shelf/pallet weight. In China, VGM fees typically range from $5 to $30 (exchange rate 7). There can be significant variations in quotes from different freight forwarders, with some not charging this fee at all.
In addition, there are container SEAL fees, port security charges, equipment management fees, etc. These fees are usually minimal and can be disregarded. Some of them may not even be explicitly presented in the freight forwarder’s detailed fee list.
In general, for full container load shipment, port charges are fixed and won’t vary significantly. For example, at Ningbo Port, port charges for a 20-foot GP container are about $330, and for a 40-foot HQ container, port charges are about $480. Here the exchange rate is 7 and the export customs declaration fee is $50.
However, for the less-than-container load shipment, port fees are charged on the basis of the specific cargo volume and are not fixed. This leads to confusion in LCL shipment port charges. Chances are that some forwarders may collect port fees arbitrarily.
Destination terminal handling charge (DTHC)
When containerized cargo arrives at the destination port, the process of unloading containers from the vessel or aircraft onto the ground, be it a warehouse or a terminal yard, incurs terminal handling charges. This fee is referred to as DTHC (terminal handling charge).
Demurrage and detention fees at the destination port
After containerized cargo is unloaded from the vessel, it can be stored free of charge in warehouses or terminal yards at the destination port for a certain period, awaiting customs clearance and pickup from the port. Suppose the shipping company sets the free time limit as 7 days but your container is still in the port after 7 free days. Then, you need to pay demurrage charges from the 8th day until the day your container leaves the port.
Once the containerized cargo is cleared by import customs and leaves the port, there is a stipulated time frame for returning empty containers to the container yard. If this time limit is exceeded, detention fees are imposed.
Import customs clearance charges
A series of fees related to import customs inspections and clearance of goods.
Usually, your customs broker will assist you in declaring the accurate details of the goods to the local customs and will pay the corresponding duties and taxes. Customs will review the submitted documents, conduct random on-site inspections to verify the consistency with the declared information or inspect the goods through methods like X-ray. Only after confirming compliance will the goods be released.
All the fees incurred in this process are known as customs clearance charges.
Typically, import duties and taxes are the most significant cost.
Customs duty
It refers to the taxes that need to be paid to the customs when goods are imported into a country. In the US, customs duty is levied on any imported goods with a value of $800 or more. The UK customs levies import duty on goods worth more than £135, including gifts. Each country has different policies, and the rates of duty vary based on the type and value of goods and the country of origin.
Value Added Tax
Merchandise Processing Fee (MPF) — calculated at 0.3464% of the declared value of the goods, with a minimum fee of $27.2 and a maximum fee of $528.33.
Harbor Maintenance Fee (HMF) — calculated at 0.125% of the sea freight shipment value. Note it does not apply to air freight shipments.
Federal excise tax — only for particular items like alcohol, tobacco, etc.
Usually, your customs broker will pay all customs fees in advance and invoice you for the actual amount. Of course, you’ll also need to pay the agent fee, which is generally not very high.
The bottom line
Reading here, I believe you’ll get a general overview of varied charges at the departure and destination ports. If you have any questions, please comment below.
We are JingSourcing, a leading sourcing company in China. Having served over 4000 clients, we specialize in helping businesses source and ship a wide range of products from China.
Be sure to contact us when importing from China. In addition to finding reliable suppliers for you, we have long-term cooperated fleets to transport goods from suppliers’ warehouses to departure ports at good prices. Moreover, we prepare all necessary documents and certificates to facilitate the export customs clearance, ultimately saving you on port charges in China.
Furthermore, we can arrange shipments to your destination at the best shipping rates, thereby helping you cut down on shipping costs—the most significant expense in the entire overseas sourcing process.
