Success in ocean container shipping management and meaningful logistics cost reductions depend on effective controls of detention and demurrage charges. The terms detention and demurrage are often used interchangeably. However, they describe different charges. Demurrage is usually used to describe the added expenses or per diem charges associated with delays at the dock and focus on loading and unloading cargo. Meanwhile, detention charges are assessed against extended times for returning equipment to the pier, including containers or trucks. It all depends on the individual port authority regulations and requirements. With that in mind, today’s shippers need a few tips to reduce both charges.
1. Clearly Define Shipping Responsibilities Across Your Full Freight Network
Shippers can successfully reduce their risk for detention and demurrage charges by clearly defining the shipping responsibilities across the entire freight network. This is especially important when planning drayage moves and accounting for delays or additional dwell time at inland facilities. By defining who is responsible for every leg of transport, it is easier to plan for such delays and help reduce added charges by setting clear expectations well before cargo sails.
2. Automate Processes Wherever Possible
In freight management, time is everything. And redundant, back-office processes will lead to an added risk for detention and demurrage due to human error or a lack of oversight. Therefore, shippers should automate booking, scheduling, and communications for all shipments. That helps reduce confusion and ensure everyone is on the same page, has access to the most up-to-date information, and can meet their obligations.
3. Analyze Everything With Big Data Analytics to Forecast Replenishment Needs
Using data provides more insight into current operations to help shippers reduce added charges. As noted by Inbound Logistics, “With dynamic updates on missed transits, rollovers, arrival notification, and port congestion, shippers can make decisions proactively and avoid inefficient costs due to detention and demurrage, expedited freight, and buffer stock. Furthermore, dynamic routing options in case of cargo stuck in transit or a congested port can enable shippers to have better discussions with shipping lines and forwarders and not feel helpless.” That tracks back to using data to forecast replenishment, and in turn, forecast drayage and ocean freight costs by applying real-time data.
4. Streamline Drayage Planning and Management With Integrated Systems
Shippers should also streamline drayage planning and management by using integrated systems and real-time container tracking to avoid delays deriving from siloed data. A lack of integration could amount to a failure to accept a tender for a drayage move or other issues in ocean freight management. Bringing the data silos together within a single source of truth makes it easier to streamline drayage planning and avoids delays. As such, shippers are less likely to incur detention and demurrage charges.
5. Pre-Clear Cargo for Transport With Inland Carriers When Possible
As a final step to reduce detention and demurrage charges, today’s shippers should take advantage of systems and network relationships to pre-clear cargo for transport at the port. In other words, pre-cleared cargo has already gone through a preemptive screening process with all applicable U.S. Customs and Border Protection (CBP) regulations to green-light the shipment for inland transportation effectively. Therefore, inland carriers can pick up shipments as soon as they arrive and avoid the risk of added demurrage. Furthermore, increased accountability and transit speed will naturally lead to a reduced risk for detention charges by ensuring equipment returns to the dock on time to avoid per diem charges.
Tap the Value of Collaboration to Reduce Detention and Demurrage Charges With OpenTrack
Today’s shippers have a mountain of responsibilities. And any delay or failure to communicate could lead to an increased risk for detention and demurrage charges. Fortunately, shippers that leverage a comprehensive platform like OpenTrack can increase collaboration to effectively reduce that risk with more ocean container visibility. Request an OpenTrack demo to learn more about how your team can start reducing unnecessary demurrage or per diem detention charges today.