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Wakeo Blog post: 3 Practical steps to reduce Demurrage & Detention costs
Demurrage & Detention

3 Practical steps to reduce Demurrage & Detention costs

Date Oct 29th, 2024
Time 7 min read

Demurrage and Detention (D&D) charges are a significant yet often underappreciated aspect of global logistics. These costs, incurred when containers overstay their free time at ports or are delayed in being returned, can quickly add up, resulting in substantial financial impacts. 

For companies involved overseas transportation, understanding and effectively managing D&D charges is crucial not only for reducing unnecessary costs but also for optimizing supply chain efficiency.

Understanding Demurrage & Detention

Demurrage and Detention (D&D) are two critical terms in the logistics and shipping industry, specifically concerning ocean containers.

These charges are typically calculated based on the number of days the container is used beyond the free time period allowed. For example, if a container remains in the port for three days beyond the free time, demurrage charges will be incurred for those days. Similarly, if the container is not returned within the designated time frame after being picked up, detention charges will apply.

The Role of Visibility in Managing D&D Costs

Visibility into container movements and port operations is essential for managing D&D costs effectively. Enhanced visibility allows companies to track their containers in real-time, anticipate delays, and make informed decisions to optimize the use of free time. This proactive approach can significantly reduce the risk of incurring D&D charges.

Technology & Data Analytics

Advanced technology and data analytics play a crucial role in providing the visibility needed to manage D&D costs. Wakeo’s solutions offer real-time tracking, proactive notifications, and data-driven insights, enabling companies to stay ahead of potential delays and make timely decisions to avoid additional charges.

By integrating these visibility solutions into their supply chain operations, shippers can gain a comprehensive understanding of their logistics processes, identify bottlenecks, and take corrective actions before D&D charges accumulate. This approach not only helps in reducing costs but also enhances the overall performance and reliability of the supply chain.

Cutting Through Demurrage & Detention

A guide to optimizing & reducing Demurrage & Detention costs

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3 Practical Steps to Reduce Demurrage & Detention Costs

Before D&D

  • Proactive Planning with Predictive ETA & Alerts

Effective D&D cost reduction begins with prevention. Wakeo provides highly accurate predictive ETAs at the port of discharge (POD), enabling shippers to plan transportation and drayage well in advance. Real-time alerts, as containers approach the POD and berth, prompt timely action, reducing idle time and minimizing the risk of D&D charges.

During D&D

  • Real-Time Monitoring

Once at port, Wakeo’s platform tracks containers in real-time, displaying remaining free time and highlighting those nearing extra costs with a color-coded system. This visibility allows shippers to prioritize urgent drayage, optimizing free time and avoiding unnecessary D&D fees.

After D&D

  • Post-Event Analysis and Strategic Negotiation

Wakeo's post-D&D analysis provides insights into free time usage by port and shipping line, comparing actual performance against negotiated terms. This data empowers shippers to fine-tune future contracts, balancing free time allocations to avoid excess costs while keeping freight rates optimized.