Port charges and their impact on business

Written by
Start a trial of Unleashed software
Written by
3 Minute Read
Share Blog:

Globalisation provides businesses with easier access to international markets. It affords companies the ability to readily purchase goods from international suppliers or to export to foreign buyers.

This means, that ocean freight is now a significant part of the many factors affecting inventory management. Competition in the global logistics industry is fierce and substantial investment is required for the construction, up-keep and operation of port facilities to successfully manage ever increasing cargo volumes.

Port charges

Port charges are imposed on shipping companies to recover the cost of construction and maintenance of harbour facilities, ensuring the efficient transfer of inbound and outbound freight.

Also referred to as port dues, cargo dues, or cargo charges, these are the service fees imposed by the various port authorities at each destination. They cover the infrastructure, operations and the upkeep of buildings and equipment within the harbour precinct. As well, they cover as the salaries for the staff necessary to undertake the strategic and operational management of these port facilities.

The associated costs that help to facilitate efficient port operations is one of the factors affecting inventory management that is often overlooked by some businesses.

Common charges

Port authorities charge for the use of their facilities and the movement of freight through them. Charges are incurred for all ships entering the port and accumulate relative to the duration of time spent in port. The charges cover such things as piloting and navigation, loaders, conveyors and hydraulic lift equipment as well as docking, terminal and storage costs. Other cargo-based charges and levies include:

    • Harbour dues: generally charged by tonnage or volume, this fee is for the use of the ports shipping channel.
    • Port access: designed to recoup the cost of capital projects, the port access charge is levied on specific commodities to facilitate port access and growth.
    • Security charge: is a charge applied to port users to recover the costs of installing security systems and any ongoing security measures the port operator undertakes. These measures may also include adherence to any relevant maritime regulations.

Port charges don’t just impact those businesses importing large container loads. Small orders can also incur numerous charges that significantly impact your bottom line. Take for example a recent case where a $500 steel BBQ, shipped from China incurred $230 in port related charges even before customs and quarantine fees were applied.

Facilities and service

Ultimately, port charges are what you pay for the use, or indirect use, of port facilities and services. Ensuring the efficient running of all aspects of harbour operations, to meet the expectations and demands of customers, suppliers and government stakeholders. Whether you are importing of exporting goods, it is important for cargo to move efficiently through port facilities to assist timely delivery of goods to you customers.

Of the many factors affecting inventory management, freight and shipping trends and charges need to be fully understood. Taxes or surcharges levied on a ship or cargo container will generally be applied to downstream logistic providers and supply chain channels. These often unexpected charges can have a significant impact on a company’s bottom line.

For companies involved in the import and export of goods and materials, any rise in port charges or any infrastructure surcharge levied by port authorities will impact the cost of doing business.

More about the author:
Share Blog:
Melanie - Unleashed Software

Article by Melanie Chan in collaboration with our team of Unleashed Software inventory and business specialists. Melanie has been writing about inventory management for the past three years. When not writing about inventory management, you can find her eating her way through Auckland.

More posts like this
Subscribe to receive the latest blog updates