The state of landed transportation costs and the risk for detention, demurrage, and per diem charges depend on the balance between drayage truck turnaround, or turn times, and port activity. As explained by Michael Angell of JOC.com, a recent report found that US imports might be subject to detention and demurrage charges in excess of $2,500. That’s more than triple the global average and, depending on the port, the charges might vary significantly. And these detention charges in shipping increase with demand.
For instance, Angell noted how the global average detention and demurrage charges rose 104% by March 2021 compared to March 2020. These problems are not going to simply vanish. They will recur and come with greater severity as ports try to reopen in the weeks leading up to and after Chinese Golden Week (Oct. 1-7). Essentially, added pressures to move more ocean freight will result in increased demands on US ports to streamline drayage and reduce turn times. Let’s take a look at what detention charges in shipping mean, how drayage services combined with local warehousing can help, and what shippers need to do now to achieve lower transportation spend through faster turn times and lower per diem fees.
What Are Detention Charges in Shipping
Understanding detention charges can be difficult. Detention charges in shipping, per diem charges and demurrage are often used interchangeably. Each is a charge associated with recapturing lost costs due to delays in transport. Demurrage is specifically used to describe fees assessed by a carrier when it’s not picked up within a set number of days. On the other hand, detention charges are those assessed due to excess time spent outside of the port. Specifically, detention charges in shipping might result from extended transport times to distant warehouses or keeping other equipment away from the port (per diem) charges. This represents a significant supply chain hurdle to keeping transportation spend in check. Detention fees also serve another purpose. They encourage shippers and transporters to speed up the processes of loading, unloading, and returning containers to the port. Therefore, faster turn times for equipment and containers lessens the risk for detention charges.
Better Warehousing and Storage Locations Amount to Faster Turn Time
To avoid detention charges in shipping, shippers must find a way to reduce the turn times for equipment. The key variables are better (in other words, “closer”) warehousing and efficiency at storage locations. When everything is running smoothly, it is easier to keep a close eye on the time it takes for the loading and unloading. Advanced dock planning, reviewing storage requirements, and keeping tabs on the container’s real-time location in transit can help. That’s where having a port drayage service provider that also offers short-term storage in local, nearby warehouses adds tremendous value. Securing warehousing can be achieved through planning in advance, including the offloading schedule, and getting an overview of the container’s status.
Tips to Lower Risk for Detention and Per Diem Charges
Nobody wants to pay extra fees when it is not necessary, especially detention charges in shipping. When it comes to money, the last thing any business or person wants to do is waste it, but far too often, detention charges are deemed acceptable by BCOs. That’s simply not true. There are a wide variety of aspects to look at in every industry. However, shippers can make many improvements by understanding when they might need a freight broker, and taking a few added tips to reduce the risk:
- Avoid long hauls from ports, and have a plan for nearby storage to reduce risk.
- Ensure your drayage provider has ample equipment and capacity to move freight faster, reducing the risk of incurring added charges.
- Keep your warehouse workforce ready to roll, minding the dock schedule and considering third-party warehousing needs to reduce stress on ports.
- Eliminate uncertainty with digital scheduling and management, knowing what freight is where, when it will arrive, and what your service provider is doing to keep added costs in check.
- Keep everyone on the same page with real-time data.
Improve Turn Time by Partnering With Port City Logistics
The steps to lowering risk for both demurrage and detention charges in shipping go back to how well your service providers can move freight from the port and return equipment on time. While they may seem disconnected, remember that they are both sides of the same sword. Delays that result in added per diem costs mean it will take longer to get freight off the dock, which increases your risk for demurrage. It’s impractical to think you can have one without the other. However, working with Port City Logistics, an expert in drayage and short-term, nearby storage facilities, will go a long way toward reducing added expenses’ risk. Take the next step toward fewer detention charges in shipping by contacting Port City Logistics today.