Drowning in Drayage Fees? Here's How to Mitigate Them

Posted by Port City Logistics on Dec 16, 2022 11:03:15 AM

Let’s cut to the chase; drayage fees stink. They can seriously increase costs for shippers, and it often feels like there’s nothing you can do about them. That a short haul can rack up so many fees makes drayage even more frustrating.

It only takes one drayage domino to fall, and the rest of the line starts to fall. The dominoes fall all too often for the millions of containers coming into the country, with most having more than one drayage fee.

So what’s a shipper to do? Let’s get to know the different types of drayage fees and look at strategies that help combat them and keep them from adding up.

The 4 Drayage Fees Explained

The four accessorial charges that commonly aren’t known when the order is tendered are detention, chassis split, pre-pull, and drop fees.

Detention fees

If a driver is delayed or held up at the consignee or shipper beyond the allotted “free time,” detention fees result. The standard free time for transportation at both ends is two hours, but many providers have changed it to one hour of free time. Detention fees happen most often at ports or ramps due to congestion, and plan on an average detention rate ranging from $60 to $100 an hour.

You need to know the carrier's rate and the amount of free time they offer to help with preplanning a load, and the best way to get the information is through a call. The loading or delivery location could offer an expected time frame for the loading to take.

With the estimate, you can anticipate the risk of detention and formulate a strategy.

Chassis split fees

The trucking company may assess a chassis split if the container and chassis are located in a different place. This fee could run between $50 to $110 for the trucking company to cover the cost of picking up the chassis and taking it to the container location.

If a chassis isn’t available at the port or ramp, chassis split fees are likely because the trucker has to travel to a chassis pool before heading to the port.

Pre-pull fees

Suppose the trucker picks up a container from the ramp or port but cannot load or deliver it on the same day; pre-pull fees result. In this case, the carrier stores the container in their yard.

It is to the benefit of the shipper that the container is stored in the yard to avoid demurrage charges at the port and best serve a customer with an early morning or appointment delivery. It is essential to know when the loading or unloading is requested as a determining factor as to whether you might incur a pre-pull charge.

Drop fees

A drop fee results if a trucker drops off an FCL container to be loaded or unloaded and then picks it up afterward instead of a live load or unload. Another term for drop fee is bobtail fee.

This situation becomes necessary if the load or unload cannot happen quickly, like if it isn’t palletized or there isn’t the capacity for an immediate unload. A fee might not be charged if the delivery location is within the carrier’s drop zone, close to the port or ramp.

Check with your carrier in advance to know the carrier's policies and how the fee structure works. Negotiating this rate could be successful if you do regular business with the carrier.

How to Reduce Unexpected Drayage Fees & Overall Cost

The most crucial part of any strategy to reduce drayage fees is communication with all parties involved in the shipment. They will give you estimated timelines and potentially negotiate fees. Your strategy matters when cutting drayage fees.

Give carriers flexibility in offloads

Carrier flexibility in offloads or handling your cargo is a great starting point for negotiating better rates. Letting the freight company handle surges at a port during days of high volume or allowing them to handle day-side loads. Anytime carriers can utilize drivers during wait times, it helps avoid getting charged.

Have the technology for visibility and container milestone events

Visibility through technology lets you see critical events during the movement of your freight, and visibility helps you utilize your strategy to its greatest extent to save on drayage fees. With the visibility of each milestone event, you can help keep the container on track, facilitate communications, and reduce or eliminate drayage fees.

Container yard cut-off

At the first milestone, the container yard cut-off, the shipper must organize the gate-in before the deadline. Knowing the cut-off time frame is crucial for planning to keep the container’s journey on time.

Port loading

Moving the container from truck to vessel is the next milestone in the container journey. This milestone means the container has been loaded onto the vessel at its first marine port and is soon on its way.

Vessel departure

Milestone three is the vessel's departure from its origin port. You know it is on its way, and the ETA has been estimated and sent as an alert to the cargo owner. 

In shipping and cargo movement, a lead time is the total time taken for the ship or cargo to go from point A to point B (origin to destination), expressed as the total number of days. Accurate forecasting is essential, especially for those companies that utilize just-in-time inventory models. A stockout can be devastating to maintaining customer satisfaction levels. Inventory forecasting includes sales data, stocking levels, and transportation times to ensure demand can be met. The most significant variable is transportation, which has a tremendous potential to deviate from planned timelines.

Vessel port call without container discharge

Along the container’s journey, there could be times when the vessel stops at other ports. This stop creates a milestone event called “vessel port call without container discharge.” It indicates that the vessel has stopped at a non-destination port with no transshipment or discharge expected.

A vessel port call without container discharge alert allows the BCO, shipper, or forwarder to manage an exception and ensure it is communicated to each party for inventory management.

Transshipment port

If the vessel stops at the transshipment port and the container is expected to be discharged and loaded on a new vessel, this is a critical milestone for freight management. The cargo owner will be notified if the result is an ETA change.

This ETA change alert lets the importer communicate to all stakeholders, plan for any issues the delay will cause, and modify the strategy to get the goods where they need to be on an adjusted ETA.

Vessel arrival at destination port

The container is getting closer to its destination when the vessel arrives at its destination port and is awaiting berth, meaning this milestone is crucial to meeting that freight strategy.

The visibility of these milestones makes essential communication proactive and effective, enabling the importer to keep customers updated at each leg of the journey.

Discharged at the destination port

Just as milestones follow the natural order of events, discharge at the destination port is the logical next event, indicating a container is now berthed and discharged.

Discharge kicks off the demurrage fee clock for the cargo owner, hours now count. Demurrage needn’t be an expectation, as it is controllable to keep these fees from increasing.

To explain demurrage, if a container has three free days, it could have  $100 a day demurrage fees for the next three; those fees could grow to $200 for days four through nine and $300 for days ten and beyond.

That means 14 days - 3 free = 11 days of demurrage. The equation becomes:

($100 x 3 days) + ($200 x 6 days) + ($300 x 2 days) = $2100 per container

With greater visibility into vessel arrivals and discharges at the destination port, using the Vizion API enhances your freight management policy to reduce those expensive demurrage and detention charges.

Detention and demurrage fees add up fast, and visibility offers the ability to be proactive and keep them down.

Gate out full from the destination port

At the gate out full from the destination port, the container has left the port to be de-stuffed or unloaded. The demurrage fee clock has ended, and the detention fees clock has started.

The assessment of detention fees encourages the prompt return of empty containers to the port, and there are two categories.

  • Per diem: Charges are assessed at a fixed rate per container per day.
  • Driver detention: These are the hourly charges assessed when the driver’s wait time exceeds the allotted free time. If the driver’s free time is a standard one to two hours and detention fees range from $50 to $100 after that free time, these can add up fast.

Gate in empty return

The final milestone in the journey is gate in empty return. The container has traveled thousands of miles to its destination and is now empty and returned to the steamship line. The detention fee clock has ended, and the container’s journey is complete.

Work With a Drayage Service Provider That Offers More

Drayage has the potential to add substantial fees, kill margins, and delay crucial inventory. It's challenging to manage so many milestones, many changing your freight strategy along the way. 

Working with a professional drayage service provider takes the responsibility of managing and communicating off your plate. Letting professionals handle the entire container journey reduces the chances of expensive fees. 

Drayage, warehousing, and inland distribution handled by an expert freight brokerage firm save money and gets freight where it needs to go with as little disruption as possible. Port City Logistics has a track record of saving shippers money and getting freight to its destination on time.

The company invests in the latest tech to manage the entire container journey. Our tech investments improve yard efficiency, localize warehousing, and provide analytics that optimizes efficiency and predict market changes. Streamlined freight management saves you money.

If you are frustrated with drayage fees that add up and freight timelines that disrupt inventory planning, contact Port City today and have your freight expertly managed.

Topics: Drayage Fees