WAKEO Blogpost : Avoid high demurrage and detention charges with real-time visibility
Cost management

Avoid high demurrage and detention charges with real-time visibility

Date Feb 2nd, 2021
Time 3 min read

Import and export are increasing while the situation remains strained in many ports, especially in the US and China. This article explains why this situation can cause a significant increase in your detention and demurrage charges and how Wakeo can help you cut this cost with real-time visibility.

What are demurrage and detention charges?

Demurrage charges are due when the containers are held in ports or terminals beyond the allowed free days offered. Detention charges (also known as per-diem fees) are due when the containers held outside the terminal for unpacking are returned to the terminal after the allowed free days period.

Why controlling demurrage and detention is so important?

Demurrage and detention costs vary according to shipping companies and ports. Average demurrage fees can reach $150 to $400 per container per day. The longer the cargo remains at the terminal, the more the rate increases. The average detention charges range is between $50-$100 per container per day. You can easily double or triple the total transportation costs and reach several thousand dollars of charges within a few days if you have a high volume of containers waiting at the port.

In 2020, many shippers reported a historically high level of detention and demurrage charges. At the end of 2020, members of a coalition of truckers, shippers, and customs brokers in the US reported that they, as of November 2020, “have paid well over $150 million in unreasonable detention and demurrage charges in the twin Southern California ports and the Port of New York and New Jersey.”

How this current situation will impact demurrage and detention charges?

In the US, a dramatic rise in good demand leads to an increase in import volumes. For instance, LA and its neighboring port of Long Beach have been facing record import volumes. Within the week before Christmas, volume was 94% higher, year on year, and imports have remained high into the new year. The same situation will occur in China since the end of the Chinese New Year will cause additional pressure on exportation.

The problem is that increased volume without extended capacity creates a bottleneck. The port congestion in many areas of the world coupled with COVID-19 related workforce constraints has led to significant delays with many vessels waiting at anchorage to berth. As containers remain longer in the yard, shippers face increasing detention and demurrage surcharges by ocean carriers and marine terminals.

How Wakeo can help you reduce demurrage and detention costs?

Real-time visibility for more transparency

What happens in the ports and terminals are usually a black box for shippers. Detention and demurrage charges are often an unpleasant surprise. Wakeo provides up-to-date status information for all shipments, on all shipping lines. With real-time visibility, you can benefit from a transparent view of your container's status and be less disappointed when you receive your invoice.

Dedicated dashboard and alerts to limit extra charges

Demurrage and detention dashboard enables you to keep an eye on standing containers compared to negotiated free-time and alert you when extra charges occur. This real-time visibility on your container status will help you proactively take action and find a solution with your freight forwarder. You will be able to prioritize the expedition of containers that are overpassing free-time allowance.

Historical database to control costs and better assess free-time requirement

Wakeo transparent data will provide accurate information on time spent at port compared to your billing. A reliable and objective database will help you to accurately measure the service level provided by your forwarders and your carriers compared to your free-time allotment. Analyzing your past performance will help you identify trends, request extended free-time, and optimize your operations.

Getting around port congestion might be impossible, but Wakeo supply chain visibility software will help limit their impacts by helping you anticipate or quickly react.

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