Port Tariff Structures

Port Tariff Structures: Wharfage, Dockage, Pilotage, and Port Revenue Mechanics

U.S. ports generate revenue through a complex tariff structure that evolved over more than a century of maritime commerce regulation. Unlike airports, which have more standardized pricing models, ports employ a menu of per-unit, per-vessel, and facility-based charges that vary widely by port type (container, cruise, bulk, break-bulk) and geographic location. For bondholders and credit analysts, understanding these tariff components—wharfage, dockage, pilotage, craneage, and the rate covenants that protect them—is essential to assessing port credit strength and revenue stability.

Disclaimer: This article is AI-generated and is not investment, financial, or legal advice. Consult qualified professionals before making decisions based on this content.

Changelog
2026-02-23 — Initial publication.

Introduction to Port Tariff Structures

A port's tariff schedule is its official list of charges for cargo handling, vessel services, and facility use. These tariffs are the foundation of port operating revenue, which is pledged to service revenue bonds. Unlike airport landing fees, which are regulated by the FAA and often subject to federal review, port tariffs are largely self-regulated by port authorities and reflect competitive discipline from neighboring ports and alternative routing options.

The two largest U.S. container port authorities—Port of Los Angeles (POLA) and Port of Long Beach (POLB)—generate roughly $685M and $760M in annual operating revenue, respectively. Of that, the majority flows from tariff-based charges on containers, vessels, and cargo. Understanding how tariff flexibility influences credit ratings, debt service coverage, and long-term financial stability is critical for bond investors and credit analysts.

Port tariffs fall into several categories:

• Wharfage: Per-unit or per-ton charges on cargo crossing port wharves
• Dockage and berth fees: Per-vessel fees based on vessel size or berth occupancy time
• Container and craneage charges: Per-TEU or per-lift fees for container handling and crane use
• Pilotage and harbor services: State-regulated pilot fees and port-provided tug/line services
• Terminal leases and throughput fees: Long-term agreements with terminal operators or commodity-specific throughput charges
• Cruise and special facility fees: Per-passenger and berth fees for cruise operations, plus specialized charges for bulk and liquid cargo

Wharfage: The Core Revenue Engine

Wharfage is the oldest and most fundamental port charge, dating to the colonial era. It is a fee for the use of the wharf—the pier or loading platform—to load, unload, or transfer cargo. Wharfage is typically calculated per ton of cargo or per container (TEU for containerized traffic).

Wharfage Pricing Models

By commodity type:

• Containerized cargo: $15–$60 per TEU, depending on port and market conditions. POLA and POLB wharfage rates fall in the $30–$50/TEU range for loaded containers; empty containers may carry reduced or no wharfage.
• General cargo (break-bulk): $1.00–$3.50 per ton, depending on commodity and handling complexity.
• Dry bulk: $0.50–$2.00 per ton for grains, ores, coal, and similar commodities. Rates tend to be lower due to high volume and simple handling.
• Liquid bulk (petroleum, chemicals): $0.75–$2.50 per barrel or per ton, depending on storage and environmental handling requirements.
• Vehicles (RoRo): $10–$40 per vehicle, depending on size and market.

Rate structure variations:

Some ports apply differential wharfage—higher rates for exports, lower rates for imports, or vice versa—to encourage desired traffic flows. Others use volume-based discounts: bulk shippers or terminal operators receive lower per-unit rates in exchange for throughput guarantees. These discounts are often embedded in long-term terminal lease agreements rather than published tariff schedules.

Wharfage is frequently embedded in terminal tariffs rather than charged separately by the port authority. In this structure, the terminal operator collects wharfage from shippers and remits a portion to the port as part of the terminal lease payment. This makes it difficult for external analysts to isolate wharfage from other handling charges in published financial statements.

Wharfage vs. Terminal Handling Charges

A critical distinction: wharfage is the port's fee for wharf use; terminal handling charges (THC) are the terminal operator's (or ocean carrier's) charges for moving cargo on/off the vessel and onto the dock or into storage. In some cases, ocean carriers charge THC directly to shippers; in others, the terminal operator collects it as part of the dwell fee or storage charge. The port may not see THC revenue at all—it flows to the terminal operator and ocean carrier instead.

This distinction matters for credit analysis: a port that relies on wharfage has direct revenue control; a port that relies on terminal lease percentage-of-revenue agreements is exposed to fluctuations in total cargo handling volumes and terminal operator profitability.

Competitive Pricing and Rate Constraints

Wharfage rates are constrained by competition from neighboring ports. A shipper routing cargo to Los Angeles can choose POLA or POLB, or reroute to Long Beach/POLB if POLA rates rise. Rates are further constrained by transcontinental rail alternatives and inland port competition. This competitive discipline means wharfage rates, while discretionary, cannot be raised arbitrarily without losing traffic.

However, during high-demand periods (e.g., the 2024 front-loading surge ahead of tariff changes), ports may raise wharfage rates with minimal traffic loss, as the cost of rerouting exceeds the rate increase. This pricing power is one reason 2024 saw exceptional revenue growth at POLA and POLB despite modest TEU volume gains.

Dockage, Berth, and Vessel Fees

Dockage and berth fees are per-vessel charges, separate from cargo-based wharfage. They compensate the port for the cost of maintaining vessel berths, navigation channels, and port infrastructure used by the ship.

Pricing Methodologies

By vessel size (Gross Registered Tonnage):

Traditional tariffs base dockage on GRT, with rates escalating by vessel class:

• Small vessels (under 1,000 GRT): $0.15–$0.50 per GRT per day
• Panamax containerships (50,000–65,000 GRT): $5,000–$15,000 per day
• Post-Panamax / Neo-Panamax (8,000–14,000 TEU): $15,000–$30,000 per day
• Ultra-large container vessels (20,000+ TEU): $25,000–$50,000+ per day

By length-over-all (LOA):

Some modern tariffs use LOA instead of GRT, as LOA is a more direct measure of berth occupancy time. A 400-meter vessel occupies the berth longer than a 300-meter vessel even if both are fully loaded.

By time at berth (shifting basis):

Berth time is often segmented: free time (first 24–36 hours, included in base dockage), then per-day or per-hour charges for extended occupancy. This incentivizes rapid vessel turnaround, a key port efficiency metric.

Dockage as a Secondary Revenue Source

For container ports, dockage is typically a smaller revenue source than wharfage. A 13,000-TEU vessel calling at POLA stays 2–4 days; at $20,000/day dockage, that generates $40,000–$80,000. If the vessel carries 10,000 loaded TEUs at $35/TEU wharfage, the wharfage revenue is $350,000—significantly larger. However, for ports handling many vessel calls (POLA handles 500+ calls/year), dockage revenue aggregates into tens of millions annually.

For cruise ports, dockage is more prominent, as cruise vessels are larger (100,000–150,000+ tons) and occupy berths for 1–2 days with relatively low cargo (passenger luggage only). A large cruise vessel may generate $25,000–$100,000+ in dockage depending on the port and tariff.

Penalty Dockage and Incentive Structures

Modern tariffs often include:

• Congestion dockage: Extra charges if a vessel cannot berth on its scheduled arrival due to port congestion, incentivizing shippers to spread arrivals and encouraging port infrastructure investment.
• Off-peak discounts: Reduced dockage for vessels arriving during low-demand windows to smooth port utilization.
• Loyalty discounts: Reduced dockage for carriers committing to minimum annual call volumes.

Pilotage and Harbor Services

Pilotage and harbor services include mandatory ship guidance, towage, and line handling—essential services for safe port entry and vessel maneuvering. Unlike wharfage and dockage, pilotage is often provided by state-regulated harbor pilots or federal entities, not the port authority itself.

Pilotage Regulation and Pricing

State harbor pilots:

Most U.S. ports use state-licensed harbor pilots employed by semi-autonomous pilot associations, not the port authority. For example:

• San Francisco Bar Pilots: Provide compulsory pilotage for San Francisco Bay and Delta approaches; rates set by state tariff ($1,500–$5,000+ per transit depending on vessel and route).
• New York Pilots: Provide Hudson River and New York Harbor pilotage; rates similarly set by state tariff.
• Mobile, Alabama: State-regulated Mobile Pilots Association sets rates for Alabama port access.

Because pilots are state-regulated and not under port control, pilotage revenue does not flow to the port authority's general fund. Pilots retain this revenue to pay their staff and cover operating costs. However, if a port operates its own in-house tug and line services, that revenue does accrue to the port and is pledged to bonds.

Tug and Line-Handling Services

Many ports provide (or contract out) tug and line-handling services—pulling vessels into berths, holding them steady, and pushing them away from dock. These services are essential and can be provided by:

• Port-operated tugs (revenue to the port)
• Private tug companies contracted by the port (revenue splits vary)
• Vessel operators' own tugs (no revenue to the port)

Typical tug fees: $1,000–$5,000 per assist (entry or exit), depending on vessel size and distance. For a large container vessel requiring tugs for entry and exit, tug fees may aggregate $10,000–$15,000 per call. Over POLA's 500+ annual calls, this represents $5M–$7.5M in annual tug revenue.

Harbor Maintenance and Dredging Assessments

Some ports assess all vessels for harbor maintenance and dredging costs. These are often small per-vessel fees ($50–$500) bundled into dockage or as a separate line item. Federal ports (those receiving Corps of Engineers dredging) may have lower maintenance assessments because the federal government subsidizes dredging.

Terminal Handling and Stevedoring

Terminal handling encompasses all labor and equipment costs for loading/unloading cargo from vessels: ship-to-shore crane operators, longshoremen, yard equipment operators, and documentation processing. These costs are typically borne by the terminal operator or the ocean carrier, not the port authority.

How Terminal Handling Revenue Flows to the Port

Ports typically do not collect terminal handling charges directly. Instead:

Model 1: Terminal Lease with Fixed Rent

The port leases terminal land/berth to a terminal operator (e.g., APM Terminals, Cosco Shipping, DP World) for a fixed annual rent plus percentage-of-revenue. The terminal operator collects terminal handling charges from shippers/carriers and retains them. The port's revenue is the base rent and the percentage-of-revenue split.

Model 2: Terminal Lease with Throughput Guarantee

The terminal operator commits to handling a minimum number of containers (e.g., 2M TEUs/year) and pays the port a per-TEU fee if throughput exceeds the guarantee. The port's revenue is the per-TEU fee on volume above the guarantee.

Model 3: Port-Operated Terminals (Rare)

A few ports (e.g., Port of Oakland, some smaller ports) operate their own terminals and collect terminal handling charges directly. In this case, all stevedoring revenue accrues to the port's general fund and is pledged to bonds.

Impact on Port Credit Analysis

For POLA and POLB, terminal lease revenue is the dominant source of operating income—roughly 90%+ of port revenue at POLB comes from terminal operator leases, not cargo tariffs. This creates a revenue concentration risk: if terminal operators face cost pressures (labor, automation, fuel), they may default on lease agreements or request renegotiations, directly impairing port revenue.

In contrast, a port with diversified wharfage and dockage revenue has less exposure to terminal operator financial stress, though it has greater exposure to shipper rate sensitivity.

Special Facility Charges: Cruise, Bulk, Liquid

Cruise Tariffs

Per-passenger fees: Cruise ports typically charge $5–$15 per embarking or disembarking passenger, collected by the cruise operator and remitted to the port. At PortMiami, which handled 8.23M cruise passengers in 2024, even a $10/passenger fee generates $82M+ in annual revenue—a major component of the port's $257M operating budget.

Cruise dockage and berth fees: A large cruise vessel (150,000 tons) may pay $20,000–$50,000 in dockage for a 2-day call, much higher per-day rates than comparable-sized container vessels, reflecting the premium nature of cruise operations and the dedicated berth infrastructure required.

Terminal lease revenue: Many cruise ports lease dedicated cruise terminals (with passenger facilities, parking, security) to cruise operators on long-term agreements. Port Everglades' agreement with Carnival Cruise Line, for example, commits Carnival to 700,000+ annual passengers and includes minimum annual payments to the port.

Parking revenue: Cruise terminal parking is often operated by the port or a concessionaire. PortMiami generates approximately 28% of its revenue from parking—roughly $72M annually based on the 8.23M passengers. This represents a significant and often-overlooked revenue stream for cruise-dependent ports.

Bulk and Liquid Cargo Tariffs

Dry bulk (grains, ores, coal): Tariffs are typically low ($0.50–$2.00/ton) because volumes are large and handling is relatively simple. Annual revenue depends on annual tonnage: a port handling 10M tons of dry bulk at $1.00/ton generates $10M.

Petroleum and liquid chemicals: Tariffs range from $0.75–$3.00/barrel or $2.00–$5.00/ton, depending on commodity type, storage requirements, and environmental handling. Liquid cargo often requires specialized tank farm facilities, which the port may lease separately.

Throughput guarantees: For liquid and bulk cargo, ports often structure tariffs as per-barrel or per-ton minimums. A major refiner committing to 200M barrels/year of throughput may negotiate a $0.50/barrel rate. If throughput falls below 180M barrels, the shipper still pays for 180M at the tariff rate. This provides revenue stability but can create shipper resentment if market volumes decline.

Rate Setting, Regulation, and Covenants

Federal and State Regulation

No federal tariff approval requirement: Unlike airports (subject to FAA consent decree rules) and utilities (subject to Public Utilities Commission review), port tariffs are largely unregulated at the federal level. The federal government does not approve or disapprove port rate increases.

Limited state oversight: Most states do not directly regulate port tariffs. A few states (e.g., California) have general authority over port authorities' fiscal practices but do not typically review individual tariffs.

Interstate compact ports (e.g., PANYNJ): These are bound by their founding compact, which may include rate covenants or approval requirements from the other signatory state/entity.

This regulatory vacuum means port authorities have substantial pricing freedom—a key credit advantage over utilities but a potential governance risk if a port lacks financial discipline.

Rate Covenants in Bond Documents

Port revenue bonds typically include rate covenants that constrain the port's ability to set rates below certain thresholds. The most common covenant is the Debt Service Coverage Ratio (DSCR) covenant.

Typical DSCR covenants:

Port	Legal DSCR Covenant	Internal Policy Target
Port of Los Angeles (POLA)	2.0x (net revenue)	—
Port of Long Beach (POLB)	1.25x (senior lien)	2.0x (all obligations)
Port Houston	1.25x (all lien)	3.0x (first lien)
Port of Seattle (Facility Lien)	1.35x	—
Port Everglades (EVG-P)	1.25x (senior); 1.10x (all-in)	—
Virginia Port Authority (VPA)	1.25x	1.5x–1.8x

How the covenant works: If net operating revenue divided by annual debt service falls below the covenant threshold (e.g., 1.25x at POLB), the port must take corrective action: raise rates, reduce expenses, or issue a rate increase notice and increase rates within a defined timeframe (typically 12 months). Failing to meet the covenant is an event of default on the bonds, potentially triggering redemption or requiring bondholder consent for additional borrowing.

Covenant flexibility: A higher covenant (e.g., POLA's 2.0x) is more restrictive—it requires the port to maintain higher coverage, limiting rate flexibility. A lower covenant (e.g., POLB's 1.25x senior lien) gives the port more room to lower rates or tolerate revenue declines without covenant violation. However, a lower covenant also means less buffer for bondholders if revenues unexpectedly decline.

Rate-Setting Process and Competitive Benchmarking

Port authorities typically set rates following a benchmarking process:

1. Compare to peer ports: Analyze tariffs at competing ports (e.g., POLA vs. POLB vs. Oakland).
2. Assess market demand: Evaluate shipper sensitivity, carrier profitability, and potential traffic losses from rate increases.
3. Calculate required revenue: Determine the revenue needed to meet operating expenses, debt service, and capital reserves (DSCR covenant).
4. Model rate scenarios: Project traffic elasticity—what percentage of traffic will be lost for each 5%, 10%, 15% rate increase—and select the rate that maximizes revenue.
5. Announce and implement: Publish the new tariff schedule and implement (typically after 30–60 days' notice to users).

During high-demand periods (e.g., 2024), this process yields significant rate increases with minimal traffic loss. During oversupply periods (e.g., 2023 post-pandemic normalization), ports often hold rates flat or offer discounts to retain volume.

Credit Implications for Bondholders

Tariff Flexibility as a Credit Strength

The ability to raise tariffs without federal approval is a significant credit advantage for ports compared to regulated utilities. If a port's revenues decline due to economic downturn or shipper rerouting, management can raise tariffs to restore coverage of debt service costs. This flexibility limits the severity of a credit deterioration and makes port bonds inherently less risky than utility bonds in a recession.

However, this flexibility is constrained by:

• Competitive discipline: Neighboring ports and alternative transport modes limit rate increases to 3–7% annually in normal times.
• Shipper sensitivity: Very large shippers (e.g., major ocean carriers) have bargaining power and may reroute or demand rate concessions if tariffs rise too far.
• Terminal operator agreements: Long-term lease agreements often lock in rates or include shared revenue caps, limiting the port's ability to raise tariffs unilaterally.

Revenue Per TEU as a Credit Metric

Credit analysts typically examine revenue per container as a proxy for tariff adequacy and competitiveness:

Port	Operating Revenue (Fiscal Year)	Annual TEU Volume	Revenue per TEU
Port of Los Angeles	$685M (FY2024)	10.3M	~$66
Port of Long Beach	~$760M (budget)	9.65M	~$79
Port of Savannah (GPA)	$699M (FY2024)	5.6M	~$125
Port Houston	$635M (FY2024)	4.14M	~$153
Virginia Port Authority	~$768M (FY2024)	3.5M	~$219
Port Oakland	$408M (FY2024)	~900K	~$509

Key observations:

• POLA and POLB have lower revenue per TEU (~$66–$79) because they operate in a highly competitive market (each other, plus Oakland) and benefit from massive scale. They rely on volume and terminal operator leverage.
• Inland/secondary ports (Port Houston, VPA, Oakland) have significantly higher revenue per TEU ($150–$500+) because they have less direct competition and can extract higher per-unit tariffs from shippers. However, lower volumes mean lower absolute total revenue.
• An increase in revenue per TEU reflects either rate increases or a shift toward higher-margin cargo types (e.g., higher-value containerized goods vs. empty containers).

Gross vs. Net Revenue Pledge: Flow of Funds Implications

Net revenue pledge: Most ports use a net revenue pledge, where revenues minus operating and maintenance (O&M) expenses are available for debt service. This is more common and gives the port discretion to control expenses and thereby protect coverage.

Gross revenue pledge: POLB uses a senior lien gross revenue pledge—all revenues, before deductions, are pledged to senior lien bondholders. This is extremely rare and provides maximum protection to senior lien holders. Junior lien holders (subordinate bonds) receive only net revenues after senior lien debt service.

For credit analysis, a gross revenue pledge is stronger for senior bondholders but creates multi-tier structures where junior lien bonds have markedly lower coverage and ratings. POLB's senior lien bonds are rated AA+, but subordinate lien bonds may be rated A or lower.

Debt Service Coverage in Practice

Historical DSCR performance at major ports demonstrates the strength of tariff flexibility:

• POLA: Exceptionally high DSCR (~8.5x projected), reflecting strong tariff revenue and very modest debt levels. POLA holds $1.5B+ in reserves, exceeding its total outstanding debt.
• POLB: Consistent DSCR of ~3.0x over the past 13 years, despite COVID revenue disruption and major capital programs. Rate increases and tariff discipline maintained coverage.
• Port Everglades (cruise-dependent): DSCR collapsed to 0.91x in COVID FY2020 (passenger cruise ceased), but recovered to 2.89x senior / 2.36x all-in by FY2024 as cruise rebound drove tariff revenue recovery. This demonstrates the vulnerability of cruise ports but also the rapid recovery potential when demand returns.

Capital Program Impact and Debt Issuance

Ports with aggressive capital programs (e.g., $3B–$4B over 10 years at POLB, GPA, Port of Seattle) must balance rate increases to fund debt service with competitive pressure to keep tariffs within market ranges. A port that cannot fund its capital program through debt issuance and existing cash flow will either:

1. Raise tariffs (and risk shipper rerouting)
2. Defer capital projects (and risk competitive disadvantage, channel silting, or equipment deterioration)
3. Seek federal or state grants (limited availability)
4. Impose stricter liquidity or capital reserve policies

Credit-rated ports typically maintain 300–600 days of cash-on-hand (COH) to buffer revenue volatility and fund capital surprises. A port's ability to maintain this reserve during economic downturns and fund its capital program without compromising liquidity is a key credit strength factor.

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