EVERYTHING YOU NEED TO KNOW ABOUT THIRD-PARTY LOGISTICS

What’s 3PL? Nope - it’s not a new brand of office supplies! 3PL stands for third-party logistics, a service that allows you to outsource operational logistics from warehousing, all the way through to delivery, and ultimately enables you to focus on other parts of your business. 

Third-party logistics companies provide any number of services having to do with the logistics of the supply chain. This includes transportation, warehousing, picking and packing, inventory forecasting, order fulfillment, packaging and freight forwarding. Wondering if your business needs to use a 3PL provider?

Here’s the good

Using a 3PL provider offers lots of advantages. The biggest is that by handing over these logistics, you can focus on other aspects of your business such as sales, marketing, and product development. Outsourcing 3PL leaves you with more time and resources. Here are a few other advantages:

1.Gain instant expertise and knowledge in the field.

Especially if you’re just starting out, who better to take care of your logistics than a company that specializes in them? Fulfillment, warehousing, and shipping come with major challenges of their own, so handing it off to the experts can really make a difference in the way you function - and it leaves you to focus on increasing your overall value to your customers.

2.Get a handle on international logistics.

If you’re selling internationally, 3PLs can take care of documentation, customs, duties and other issues that come up at the borders that can delay your shipments and result in high costs if not done thoroughly. Plus, you save time trying to work out complicated rules pertaining to different countries.

3. Generate cost savings.

When it comes to warehousing, not having to maintain your own space and staff can be a big cost-saving measure. Also, companies that provide good inventory forecasting can help optimize your inventory levels and save money on inventory holding costs.

Here’s the not-so-good

However,a 3PL isn’t for every business. Here are a few drawbacks for you to consider. Would these impact your business?

1. More distance between you and your product.

The 3PL you choose may position you far away from your products, which would be an inconvenience if you run into quality control issues, or need to physically inspect your stock for any reason.

Having said all that, not all  3PL providers are equal!

There are a variety of different 3PL companies and they all offer different levels of support. Some take care of warehousing and fulfillment only, some add forecasting to their services, others focus mostly on shipping and delivery, and so on.

Some companies only take over the fulfillment and shipping of your orders and have many clients. Others offer integrated solutions and only have a few clients that they focus on exclusively to provide a much more customized, in-depth service.

Which 3PL company is right for you?

Because of the sheer number of options, choosing a final provider can be an overwhelming process. Cost and services offered aside, remember that this is a company that will be taking on a major part of your operations. You’re basically inviting them into your business - make sure they’re worthy of the invite.

Here are a few things for you to consider when making that decision:

1. Current and forecasted volumes

Choose a 3PL that can handle your current volume, but that also will be ready to handle your volume if you suddenly add a bunch of new stock, increase your stock volumes, or have a great spike in sales. You want to choose a 3PL that can handle your business now and handle it when you’re at full speed!

2. References and business performance.

Check out references from other customers that use the 3PL provider and get a report on the company’s performance over the last few years. Seek out references and information about on-time deliveries versus delays, and how they compensate businesses when there are problems. See what their customers are saying about them - customer case studies and quotes are a good indicator of how the 3PL provider has built and maintained the customer relationship.

3. Compatible technology

If you’re rockin’ a cloud-based inventory management system, you should probably choose a company that is similarly cutting-edge and ready to integrate with your system. Ensure that the 3PL provider’s technology works with how you work.

Ready for a 3PL?

Hiring a 3PL company to take care of your logistics can really improve your supply chain and increase sales. Take the time to weigh the pros and cons, and to ensure a good fit between you and your third-party logistics provider.

WHAT TO DO WHEN THE ORIGINAL BILL OF LADING IS LOST?

If a negotiable bill of lading is lost, stolen, or destroyed, a court order can be secured and this court order advises the carrier (shipping line) to deliver the goods to the actual and final receiver of the cargo. In such cases, the carrier also should receive an indemnity letter indemnifying the carrier or any person injured by delivery, against liability under the outstanding original bill. The court also may order payment of reasonable costs and attorney’s fees to the carrier.

Or in some cases, certain lines accept the indemnity if it is signed by a bank who would then take joint liability to return the original bills of lading (if found).
The indemnity generally has wording as below. Please note that this is a “generic” format and most lines have their own requirement.

“To the Owners and/or Charterers and/or operators and/or carrier and/or Agents and Masters of M.V.
In consideration of your issuing at my/our request a duplicate set of Bills of Lading for the goods mentioned below, viz.:

Goods: …………………………………………

No. of pkg.: …………………………………………

Description: …………………………………………

Marks: …………………………………………

Bill of lading or other contracts of carriage: …………………..

Due to the fact that the original set has been lost I/we hereby agree and undertake to indemnify you and each of you from all consequences of so doing, and I/we undertake to hold you and each of you harmless and indemnified against any claims, liability, losses, costs, charges, fine damages and expenses (including any kind of legal expense) arising from in consequence of or in any way connected to anybody claiming delivery of the goods as owner or assignee or as the holder of any Bill of Lading originally issued for these goods.

1. In this connection I/we especially undertake to hold you and each of you harmless and indemnified against any loss on account of differences in rate of exchange or depreciation of currency and/or depreciation of value and/or loss caused by currency restrictions or exchange restrictions issued by any authority. Furthermore, I/we undertake to produce and deliver to you or each of you not only the duplicate set of Bills of Lading but also all Bills of Lading which were originally issued if these should, later on, be found.

2. In the event of any proceedings being commenced against you or any of your servants or agents in connection with the delivery of the goods as aforesaid to provide you or them from time to time with sufficient funds to defend the same.

3. If the vessel or any other vessel or property belonging to you should be arrested or detained or if the arrest or detention thereof goods as aforesaid to provide you or them from time to time with sufficient funds to defend the same.
 
ISSUANCE OF DUPLICATE BILL OF LADING IN CASE ORIGINAL LOST

4. as soon as all original Bills of Lading for the above goods shall have arrived and/or come into our possession, to produce and deliver the same to you whereupon our liability hereunder shall cease.

5. The liability of each and every person under this indemnity shall be joint and several and shall not be conditional upon your proceeding first against any person, whether or not such person is party to or liable for this indemnity.

6. This indemnity shall be construed in accordance with English law and each and every person liable to this indemnity shall at you request submit to the jurisdiction of the High Court of Justice of England. (This clause may be amended to show another jurisdiction where appropriate).

7. Where this indemnity has been joined in and countersigned by a bank, the issuer and the bank shall be jointly and severally liable hereunder.

Signature …………….

We hereby join in the foregoing undertaking:

Signature of the bank …………………”

UNDERSTANDING THE FREIGHT RATE SHEET

Deciphering freight rate sheets can be a daunting task for those with little or no experience in the shipping industry. However, it is crucial that shipping customers understand the information they contain, especially when they will benchmark their ocean freight prices. Therefore, we have compiled a list of common terms and abbreviations that may be found on a freight rate sheet.

Accessorial Charges - Charges that are applied to the base tariff rate or base contract rate, e.g., bunkers, container, currency, destination/delivery.

Aden War Risk Surcharge - A surcharge on goods transiting the Gulf of Aden used to compensate shippers for additional costs including crew risk compensation, cancellation of economical speed, and redeployment of vessels.

Ad Valorem - A term from Latin meaning, “according to value.” An import duty applied as a percentage of the cargo’s dutiable value.

AI - Abbreviation for “All Inclusive.” The total price to move cargo from origin to destination, inclusive of all charges (limited to transportation costs).

Arrival Notice - A notification by carrier of ship’s arrival to the consignee, the “Notify Party,” and – when applicable – the “Also Notify Party.”

BAF - Abbreviation for “Bunker Adjustment Factor.” Used to compensate steamship lines for fluctuating fuel costs. Sometimes called “Fuel Adjustment Factor” or FAF.

Base Rate - The cost of shipping a container from one point to another. Rates fluctuate frequently based on a number of different factors.

BL Fee - “Bill of Lading Fee.” A fee charged by the shipping line for the processing of the bill of lading on behalf of the client.

BUC - Abbreviation for “Bunker Charge.” An extra charge sometimes added to steamship freight rates; justified by higher fuel costs. Also known as Fuel Adjustment Factor or FAF.

CAF - Abbreviation for “Currency Adjustment Factor.” A charge expressed as a percentage of a base rate that is applied to compensate ocean carriers of currency fluctuations.

Cargo Data Declaration Fee - A surcharge assessed for the additional costs of declaring cargo information in advance to the European Union authorities as required for authorities to evaluate any potential security and safety threats.

Carrier - Any person or entity who, in a contract of carriage, undertakes to perform or to procure the perfor­mance of carriage by rail, road, sea, air, inland waterway or by a combination of such modes.

CBM (CM) - Abbreviation for “Cubic Meter.”

CFS - Abbreviation for “Container Freight Station.” A shipping dock where cargo is loaded (“stuffed”) into or unloaded (“stripped”) from containers. Generally, this involves less than containerload shipments, although small shipments destined to the same consignee are often consolidated. Container reloading from/to rail or motor carrier equipment is a typical activity. These facilities can be located in container yards or off dock.

Chassis Utilization Surcharge - A fee imposed for the use of a chassis in conjunction with the shipping container to facilitate overland transportation.

CL - Abbreviation for “Container load”.

COD - Abbreviation for “Collect (cash) on Delivery.”

Congestion - The term used for situations where ships have to queue up and wait for a spot so they can load or offload.

Container Yard (CY) - A materials–handling/storage facility used for completely unitized loads in containers and/or empty containers. Commonly referred to as CY.

CSF - Abbreviation for “Carrier Security Fee.” Charges for the security of cargo during the shipment.

Customs - A government agency charged with enforcing the rules passed to protect the country’s import and ex­port revenues.

Customs Filing Fee - A fee paid to the customs broker for arranging your customs clearance.

Customs Formalities - Requirements referring to customs regulations including documentation, security, information and physical inspection responsibilities.

CYRC - Abbreviation for “Container Yard Receiving Charge.”

DDC - Abbreviation for “Destination Delivery Charge.” A charge, based on container size, that is applied to many tariffs to cargo. This charge is considered accessorial and is added to the base ocean freight. This charge covers crane lifts off the vessel, drayage of the container within the terminal and gate fees at the terminal operation.

Demurrage - A penalty charge against shippers or consignees for delaying the carrier’s equipment or vessel beyond the allowed free time. Demurrage applies to cargo; detention applies to equipment. If you store a container at the port beyond free days, then demurrage and detention apply. If you keep a container for too long on any other premise (not on the port’s premises), then only detention applies.

Destination – The place to which a shipment is consigned or the place where the carrier actually turns over cargo to the consignee or his agent.

Detention - A penalty charge against shippers or consignees for delaying carrier’s equipment beyond allowed time. Demurrage applies to cargo; detention applies to equipment. If you store a container at the port beyond free days, then demurrage and detention apply. If you keep a container for too long on any other premise (not on the port’s premises), then only detention applies

DTHC - Abbreviation for “Destination Terminal Handling Charge.”

Dutiable Value - The amount on which an Ad Valorem or customs duty is calculated.

EBS - Abbreviation for “Emergency Bunker Surcharge.” A surcharge added to the cost of freight to cover fuel costs.

EIS - Abbreviation for “Equipment Imbalance Surcharge.” A surcharge on an ocean freight rate, imposed by shipping lines, to recover costs related to removing large quantities of empty containers from a country or countries where there is no export use for those containers that had been previously imported into those places. The charge is usually a flat rate per container, and it is not necessarily applied in all trades or at all times, rather it is only applied when such trade imbalances necessitate large expenditure on shifting empty containers from one place to another.

ENS - Abbreviation for “Entry Summary Declaration.” An ENS is an electronic declaration of goods being carried into the customs territory of the community.

Environment Fee Destination - Environmental surcharges imposed by the destination port. Covers various contingencies such as hydrocarbon spill cleanup costs and other mandated fees.

ERR - Abbreviation for “Emergency Rate Restoration.” A surcharge added to the cost of freight to cover increases in shipping costs.

ERS - Abbreviation for “Equipment Repositioning Surcharge.” A fee imposed when a shipper requests that the carrier makes empty containers available that must be moved from one location to another

ETA - Abbreviation for “Estimated Time of Arrival.”

ETD - Abbreviation for “Estimated Time of Departure.”

ETR - Abbreviation for “Estimated Time of Readiness.”

ETT - Abbreviation for “Estimated Time to Travel.”

FCL - Abbreviation for “Full Container Load.”

Forwarding Fee - A fee charged for the services of a freight forwarding company.

Freight Forwarder - A person whose business is to act as an agent on behalf of the shipper. A freight forwarder frequently makes the booking reservation. In the United States, freight forwarders are now licensed by the FMC as “Ocean Intermediaries.

FS - Abbreviation for “Fuel Surcharge.”

GAS - Abbreviation for “Gulf of Aden Surcharge.” Used to compensate shipping lines for additional costs incurred due to transiting the Gulf of Aden.

GRI - Abbreviation for “General Rate Increase.” Used to describe an across–the–board tariff rate increase implemented by conference members and applied to base rates.

Handling Fee - A fee for transporting, storing, or packaging goods.

Hazardous Surcharge - A surcharge imposed for shipping hazardous materials or goods.

HC - Abbreviation for “High Cube.” Containers that are 9 ft 6 ins high instead of usual 8 ft 6 ins.

ISF - Abbreviation for “Importer Security Filing.” A US Customs and Border Protection (CBP) regulation requiring importers and vessel carriers to provide data electronically to CBP for inbound ocean shipments. Also known as 10+2.

ISPS - Abbreviation for “International Ship and Port Security Code.” It is an amendment to the Safety of Life at Sea (SOLAS) Convention (1974/1988) on minimum security arrangements for ships, ports and government agencies. Having come into force in 2004, it prescribes responsibilities to governments, shipping companies, shipboard personnel, and port/facility personnel to “detect security threats and take preventative measures against security incidents affecting ships or port facilities used in international trade.”

LCL (LTL) - Abbreviation for “Less than Container Load” or “Less than Truck Load.” The quantity of freight which is less than that required for the application of a container load rate.

MT - Abbreviation for “Metric Ton.”

NBC - Abbreviation for “New Bunker Charge.”

NOx - Abbreviation for “Nitrogen Oxides.” Refers to the gasses NO and NO2 produced from the reaction of nitrogen and oxygen gasses in the air during combustion.

Ocean Rate - See Base Rate

Origin - Location where shipment begins its movement.

OWS - Abbreviation for “Over Weight Surcharge.”

Piracy Surcharge - A charge assessed to compensate shipping companies for increased costs associated with avoiding piracy and hijacking.

POD - Abbreviation for “Port of Destination.”

POL - Abbreviation for “Port of Loading.”

Port Dues - Fees charged by the harbor authority on ships using the port`s facilities.

Port of Entry - Port where cargo is unloaded and enters a country.

Port of Exit - Place where cargo is loaded and leaves a country.

PSS - Abbreviation for “Peak Season Surcharge.”

Release Fee - A fee charged by the destination port to release cargo for further movement or action.

SCS - Abbreviation for “Suez Canal Surcharge.” Used to compensate shipping companies for additional costs incurred due to transiting the Suez Canal.

Sea Freight Rate - See Base Rate

SES - Abbreviation for “Special Equipment Surcharge.”

Shipper - The person or company who is usually the supplier or owner of commodities shipped. Also called Consignor.

Surcharge - An extra or additional charge.

Surtax - An extra or additional tax.

TAD - Abbreviation for “Transit Accompanying Document.” A document accompanying uncleared goods during transit from one authorized location to another.

THC - Abbreviation for “Terminal Handling Charge.” Sometimes referred to as Capatazia, in particular in Brazil.

THC Destination - Terminal Handling Charges incurred at the destination port.

THC Origin - Terminal Handling Charges incurred at the port of origin.

Terminal Charge - A charge made for a service performed in a carrier’s terminal area.

Terror - The threat of terrorist acts against the shipping and port industry.

TEU - Abbreviation for “Twenty-foot Equivalent Unit.”

Wharfage - A Charge assessed by a pier or dock owner against freight handled over the pier or dock or against a steamship company using the pier or dock.

3PL - Abbreviation for “Third Party Logistics.” A company that provides logistics services to other companies for some or all of their logistics needs. It typically includes warehousing and transportation services. Most 3PL’s also have freight forwarding licenses.

Did we miss any or was anything unclear? Let us know!

Want to know how Logical Maritime Services can help you discover savings in your ocean freight? Contact us on +233 24 302 6201.

TIPS ON HOW LTL SHIPPING CAN WORK FOR YOU

Tips on How LTL Shipping Can Work For You

If you have a shipment that is too large to be sent as a parcel, but too small to require an entire truck, less-than-truckload (LTL) shipping is likely your solution. Hundreds of thousands of dollars are overspent each year by large manufacturers who use a full truck (i.e. full truckload shipping or FTL) to ship small loads.

Utilizing the common-sense approach of filling an unfilled truck via LTL carriers is a way for all businesses – distributors, manufacturers, and wholesalers – to reduce the cost of their trucking needs. Combining your company’s shipment with that of others is an efficient way to get your shipment where it needs to be at a fraction of the cost of using a full truck.

However, shipments larger than six pallets can often still be shipped with an LTL carrier. Larger shipments like these are generally considered volume moves and are spot quoted. Regardless of your business or shipment sizes, here are a few things to help you understand LTL shipping:

Base rates

Price comparing can be a challenge. All LTL carriers establish their own base rates which vary from one carrier to the next, however, it’s helpful to know that base rates for LTL shipping are quoted per 100 pounds and by freight classification. Other factors such as the distance and origination (postal code) are also taken into consideration to determine your final rate.

Freight of all kinds

It may prove very helpful for a business to construct an FAK – freight of all kinds – agreement. This type of agreement is between a carrier and customer that allow multiple items with different classes to be shipped and billed at the same freight class. This can prove extremely beneficial for businesses that ship diverse products.

Regardless of which method or classification you fall in, LTL truckload shipping is a win-win solution for all. It’s a more efficient, reliable and cost-effective way to schedule and ship freight.

HOW TO AVOID EXTRA CHARGES IN FREIGHT SHIPPING

For small and medium-sized business, warehouses, manufacturers, distributors, and importers, controlling freight shipping costs can be essential to maintaining the profitability of product lines, or even the success of the business itself. Please find several essential steps to help reduce surprise charges.

1. Always get fixed cost quotes in writing

Before you allow the carrier or broker to dispatch the truck, be sure you have written terms of them that describe in full the load and include all fees. You will need this written document (clearly from them, in the form of an email, quote, or approved purchase order) in the event they overcharge you when invoicing. You never want to be in a position where any part of the pricing was based on a phone call or your notes alone. How can you prove the carrier promised to deliver the load, all in, for the price you agreed to pay?

2. Have correct measurements and weight

The key to a valid fixed cost quote is accurate length, width, height and weight measurements. If the carrier shows up and your load is larger or heavier than anticipated, you will immediately pay more.

3. Understand your pickup and delivery locations, and any limitations

Make sure that the truck type you are ordering can reach the pickup and delivery locations. Can a 53′ truck make the turn in front of your facility? Can they pick up from your dock? Check yourself to make sure the carrier cannot classify either pickup or delivery as residential. Don’t misrepresent a residential location as commercial and hope the carrier won’t notice. Residential pickup or delivery will always cost more. You want to include this information in the original quote request so you find a carrier that offers the best rate for this special service as part of the original quote.

4. Understand if you need any special services, and make sure they are included in the quote

Special services include residential delivery/pickup, tailgate, scheduled time for pickup or delivery (as opposed to anytime during the specified pickup or delivery day), hazardous goods, shipment in bond, and others. Understand what each one means and make sure it is included in the original quote request. If you are not clear about the special services needed, the carrier will provide it anyway and bill you an uncontrolled rate. You want to know in advance exactly what special services you need so make sure they are included in the quote. Special services fees vary by carrier and you will use this information to get the best rate from the beginning.

5. If you are shipping cross border, get all customs paperwork prepared and forwarded to the carrier at the time of booking

Be sure to have a customs broker that can clear goods going into the country of delivery and get all paperwork complete before you contact the carrier or broker to arrange pickup. Ask your carrier or broker for a recommendation in advance if you don’t have a customs broker yet. You don’t want to leave this to the day of the shipment, because the load can be hung up in customs, costing you extra charges, delay and lots of stress.

6. Make sure you have pickup and delivery dates in writing

Part of the cost of each shipment is how fast it will be delivered. Don’t let brokers or carriers make promises only over the phone. Get the delivery dates as a firm part of the rate quote in writing. Also, have a fallback plan in case weather or other events delay your shipment. Don’t plan for key displays for a trade show, for example, to arrive the morning of the show, or even the day before. Wherever possible build in an extra day or two for time critical shipments so an unexpected delay will not seriously hurt you.

7. Make sure all taxes and fuel surcharges are included in the quote

When you get your fixed cost quote, is it “all in”? Be sure that taxes and fuel surcharges are clearly stated, otherwise, the final bill can easily be 20-40% higher when the carrier adds in these charges.

8. Make sure you have the insurance coverage you need

If you are shipping valuable freight, be sure to get extra insurance, and make sure all quotes clearly state this coverage and what it costs. Also, check in advance with third parties to make sure the carrier or broker has a history of paying claims. Too many carriers and brokers have a policy of automatically denying any insurance claims, forcing shippers to sue in the event of damage. Make sure you are correctly covered by an insurance company, carrier or broker that will honor your claim.

9. Correctly package your load

Be sure to securely crate, package, plastic wrap or otherwise protect your load in advance. Most freight damage can be prevented by correct packaging, and you don’t want the stress and wasted time of damaged freight and the claims process. Take the time in advance to package the load correctly.

10. Get credit from your broker or carrier, but pay your invoices promptly when due

Most carriers and brokers offer credit terms. Ideally, you should use these terms to finance your freight shipping, collecting from your customers for each load before you need to pay the freight bill. But be sure to pay the freight costs promptly when invoiced to avoid finance or collection fees.

11. Describe the load carefully so you get the correct trailer type

Be sure to carefully describe what you are shipping to the carrier or broker, so they dispatch the correct equipment. You don’t want them to show up with a van when you need a step-deck, for example, and you cannot be sure you are getting the best rate unless you know what equipment type you need. Just because a carrier has an excellent rate for one equipment type does not mean they have the best rates for any other.

12. If you need temperature control, be sure to state it upfront

If your shipment must remain frozen, is perishable, or cannot freeze, don’t be tempted to cut costs, ship it in a van, and hope for the best. You don’t want your customers complaining of damaged goods because several weeks later they realize a perishable item was damaged in transit due to lack of climate control. Be sure to state your temperature control needs in writing, make sure the quote includes this service and make sure this requirement is clearly stated on the Bill of Lading so all drivers understand and deliver this service.

13. Always check Google reviews on your carriers or brokers, and only work with highly rated companies

Unfortunately, problems frequently occur during freight shipping, even by the best companies, and you need customer support that answers the phone, cares about you, and will immediately help you get the load delivered on time despite any setbacks. Google reviews are the best indicator of how the carrier or broker will treat you if something goes wrong. 

14. Be ready when the carrier shows up for pickup or delivery

This should be obvious, but is still a common cause of extra charges. If your load is not ready when the truck arrives, or you are not available to accept the shipment on the day it is planned for delivery, you will frequently pay extra charges for driver detention or the need to reschedule delivery. Wait until the load is completely ready to go before booking the shipment, and be sure the person responsible for receiving the freight has scheduled to have staff on site to the delivery day.

15. Make sure the rate quote is in your currency

Depending on the exchange rates, the rates can be much better (or worse) that they seem at first. Make sure that the quote is guaranteed in your currency. Otherwise, you can be in for a bad shock when you get the bill and have to pay the fluctuating exchange rate, which can make the rate 40% or higher than you expected.

DEMURRAGE, DETENTION AND PER DIEM - WHAT IS THE DIFFERENCE AMONG THEM?

Importers and Exporters can get confused by the often interchangeably used terms demurrage, detention, per diem and storage. These terms don’t all necessary mean “storage”; such as per diem, as mentioned below. Storage charges accumulate at ports, inland rail ramps and rail yards, airline terminals, and bonded warehouses when import or export cargo or containers remain at the site beyond the allowed free time provided by the shipping line, airline or warehouse.

The fee is intended to compensate the facility for the use of their space and/or their equipment. All carriers and warehouses grant different amounts of free days and storage charges per day. Depending on the carrier or warehouse and your volume with them, you can get more beneficial free time for these various charges. If the service is through your freight forwarder, then it depends on what volume they have with the carrier or warehouse. Many times, especially during times of congestion where pulling out import containers becomes difficult, importers have to pay demurrage charges even though it is out of their hands. This is an unfortunate and frustrating part of international trade.

Demurrage is charged by steamship lines and airlines for the use of their shipping containers (some air freight is containerized). A limited number of free days, which varies depending on the carrier and location is granted, after which demurrage charges will be incurred for each additional day. This fee is intended to discourage the use of the carrier’s equipment for storage purposes and to compensate the carrier for the use of their equipment. Demurrage charges generally increase per day after a certain amount of days. The actual charges vary considerably from carrier to carrier and from port to port. Demurrage charges must be paid in full before you can pick up your container.

Detention has two definitions – 

1) In domestic trucking, detention is a charge invoiced by a drayman/trucker for excess use of their time for loading or unloading cargo. It is billed hourly by the trucker or sometimes pro-rated, depending on the trucker. Normal detention free time is 1-2 hours for loading or unloading a container (depending on if it is a domestic, import or export shipment). Truckers also charge detention while waiting to pick up an import container at a port or when delivering an export container back to the port, this is usually enforced during times of extreme port congestion. 

2) When you store the container at the terminal beyond the set amount of free time, carriers can call this charge “detention” charge – but it is more often known as per diem which is described below.

Per Diem is charged by the steamship lines and airlines for use of their equipment, whether ocean containers, chassis or air unit load devices (ULD’s). Carriers grant a certain amount of free days with their equipment before charging per diem. Per diem applies to cargo that leaves the arriving terminal (on an import) or leaves the departing terminal (on an export) for loading and is charged until the equipment is returned to the terminal (whether it is a port, rail yard or airline). Many people use per diem interchangeable with detention and demurrage which can confuse the billed party.

Tips on How to Avoid Demurrage Charges

1. Know in advance how many free days your freight forwarder has been granted.
2. Make sure to pre-clear your cargo as soon as possible. Logical Maritime Services can clear your cargo at the earliest possible time so long as all documents are received in a timely manner.
3. If you have volume shipments, request for an extended free time from your freight forwarder and/or carrier. Volumes need to be close to a 1,000 containers/year to warrant extended free time.
4. Make sure your trucker can pick up the cargo within the allotted free time and that a trucker has been assigned to your shipment. Have a backup or alternate trucker in case your initial trucker cannot pick up your cargo in time.

Tips on How to Avoid Detention and Per Diem Charges

1. Make sure your facility is prepared to load/unload cargo. This allows the trucker to arrive and depart in a timely manner and puts you in a good light so they provide you service in the future. Truckers don’t like waiting!
2. Setup the delivery schedule well in advance with your trucker or freight forwarder. That way you aren’t scrambling last minute to set up the trucker and not have your facility ready to load or unload the cargo.