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Question from a reader: One of the freight forwarders I use is billing me for wharfage charges. Another freight forwarder we use does not bill us for wharfage. We are importing into Thailand from various foreign sources. Our contractual agreements do not specify who should pay for wharf fees. So who should pay for it?
What is wharfage/wharf charges?
A wharf charge or wharfage fee is leived by the terminal or port operator for utilization of the port’s wharves either as a temporary storage or staging area or to facilitate cargo movement to another location through the wharf. This charge does not include fees or costs for other activities like sorting, inspecting, marking, surveying, loading, unloading, and demurrage or in yard container handling. Such costs are typically included in the terminal handling costs.
Who should pay for wharfage costs/fees?
Regardless of which country you are importing into or exporting out of – who should bear costs for wharf fees and charges depends on the Incoterm used for the shipment. Keep in mind that wharf charges are always incurred on both inbound and outbound shipments so there are 2 separate questions to address.
- EXW: Buyer pays both outbound and inbound wharfage
- DDP: Seller pays both outbound and inbound wharfage
- FOB: Seller pays for outbound wharfage, but not inbound wharfage
- FCA (Seller’s premises): Buyer pays for both outbound and inbound wharfage
- CIP: Seller pays outbound wharfage but not necessarily inbound wharfage
- CPT: Seller pays outbound wharfage but not necessarily inbound wharfage
To avoid any misunderstandings, cost elements in any international trade sale contract should be broken down with clear definition of allocation of costs. While the guidelines in the Incoterms are useful, these do not always provide clear answers.
Some other areas to consider regarding wharfage costs:
- It should not be assumed that wharf charges will/will not be included in terminal handling costs.
- Carriers do not really consider or care about the Incoterms involved in a transaction between buyer and seller. Hence, unless otherwise authorized or instructed they will usually bill all charges back to the shipper who engaged them.
- When validating freight invoices, traders should request for clear cost breakdowns to be sure of exactly what they are paying for and to ensure they are not paying unnecessary mark ups on components that should be pass through costs instead.
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