To understand demurrage fees, shippers and beneficial cargo owners (BCOs) need a firm understanding of the rationale behind them. The world of shipping works on tight schedules and protocols that help create the delicate balance of the supply chain. The various penalties and fees levied against ocean freight carriers for failure to abide by such rules are collectively known as demurrage fees. Demurrage occurs when freight BCOs cannot abide by contractual timelines and take longer than necessary to load and unload cargo. These fees can quickly add up and lead to significant problems for freight transportation providers. Increasing ocean freight visibility and adaptability can reduce fees and demurrage rates across the board.
Why Ocean Freight Visibility Challenges Contribute to a Higher Risk for Demurrage Fees
The demurrage charges vary and are established based on individualized agreements between ports and ocean freight carriers. It is common for costs to incur per container per day and can become quite costly when an entire shipload of containers gets landed with demurrage fees. According to Trade Finance Global, improved visibility throughout the ocean freight supply chain enables managers to detect potential problems sooner. With timely identification and automated responses, issues can be resolved and significant delays become easier to manage and overcome. If delays are unavoidable, the shorter the wait, the better. This will result in lower fees and less severe disruption for the ocean freight shippers.
Increased Visibility Means Better Planning for Drayage
Drayage requires a much more specialized focus than standard shipping procedures. For example, a shipper who is familiar with long-haul techniques may struggle to handle drayage services. Delays will happen, and demurrage fees will be unavoidable in certain situations. However, with improved end-to-end visibility and a complete, convenient overview of ocean freight, these issues can be avoided in the majority of cases. Container tracking to reduce turnaround time is critical if businesses are to prevent or reduce these charges.
Additional Ways Ocean Shipping Visibility Promotes Supply Chain Collaboration
Ocean ports and shipping lines have strict policies and protocols in place that keep things balanced. Collaboration between shippers, dock managers, truckers, and port management remains critical to avoiding demurrage fees and other surcharges. Collaboration and the ability to take swift action when warranted also play a crucial part. Collaboration and visibility within the ocean freight supply chain improve performance through real-time features that share information, effectively boost collaboration, and offer the following benefits:
- Lower overhead expenses and a more manageable budgeting process.
- Less risk of rolled cargo and damaged cargo due to mishandling.
- Better customer satisfaction and improved delivery success rate.
- Fewer errors with handling, loading, unloading, and delivery.
- Less hassle for shippers throughout the loading and unloading process.
- Less detention risk and reduced liability for shipping issues.
- More timely payment to carriers and improved budgeting.
- Lower accessorials and less risk of additional corrections to invoices after arrival.
- Reduced demurrage fees and improved response time from drayage truckers or service providers.
Enhance Accountability in Ocean Freight Movements With the Right Technologies and Resources
The intricate balance of ocean freight shipping relies on adherence to schedules, routines, and contractual agreements. Every delay or deviation can have a significant impact on dock operations and shipping schedules. Demurrage fees help ensure compliance is maintained as often as possible. With technological tools, automated processes, and improved accountability, ocean freight transportation can continue to operate successfully. Book a demo or sign up for a free trial with OpenTrack today.