Along with demurrage fees, detention fees can quickly drive-up shipping costs far above what you expect without a plan to prevent them. While sometimes unavoidable, you can often avoid detention charges and fees with the right tools and a little advanced planning.
To help you mitigate the impact that detention charges have on your organization's bottom line, let's look at what these charges are and what causes them before diving into four proven tips for reducing their likelihood.
What Are Detention Charges?
Detention charges get levied when an importer picks up their freight and does not return the empty container to the nominated depot within the agreed free time. In most cases, ports allow a container three to five days of free storage. After these free days have passed, the port will charge per-day fees for every day the container isn't returned.
Types of Detention Charges
It's first important to keep in mind that if your container sits on a chassis, you will be charged a per-day fee for the chassis as well. In many cases, this per-day fee for an unreturned chassis is even higher than detention charges for a late container.
Detention fees can apply to both imports and exports. Exporters who pick up a container for loading will have a pre-determined number of days before they must return the loaded container to the port terminal for export. In contrast, importers will have a pre-determined number of days to return their empty containers after picking up and unloading their freight.
What Causes Detention Charges?
Detention fees are levied when containers and other equipment are not returned on time, but there are myriad reasons why this might happen, including:
- Circumstances beyond your control – These issues, such as bad weather, labor strikes, terminal congestion, and truck shortages, can all create delays that lead to detention charges.
- Customs clearance delays – Having your shipment held up by customs can often make it impossible to return the container on time.
- Delays due to incorrect or incomplete documentation – Incorrect or incomplete shipping documentation must be amended, which usually takes considerable time.
- A late receipt or loss of documents – Documents that are lost or arrive late (such as documents that are sent late by the exporter) are just as prone to creating delays as incorrect or incomplete documentation.
- Sailing delays – A delay in vessel departure could lead to your container being held at the terminal for longer than your allotted free time.
- The late release of shipment at the destination.
- Delay because cargo receiver can’t be reached – It's rare, but there are cases where cargo is abandoned and never picked up by the receiver.
Factors That Can Lead to Detention Charges and Fees
We've covered the specific circumstances that can lead to delays in returning a container and, thus, detention fees. Now it's time to look at the issues that make these circumstances more likely. Here are some factors that could increase your organization’s risk of detention charges.
Poor Supply Chain Visibility
Poor supply chain visibility means that carriers cannot anticipate when a container will arrive at the terminal, causing delays in unloading and returning the container to the shipping line.
Lack of Real-Time Notifications
Without real-time alerts regarding a shipment's status and location, consignees are often unable to anticipate and plan for unloading, leaving them unable to return the container to the shipping line on time.
Global Port Congestion
Skyrocketing demand for ocean freight shipping has led to port congestion worldwide, creating delays in cargo unloading that lead to detention charges.
Tips to Reduce Detention Fees
As an importer, there will inevitably be instances where detention fees are unavoidable. With that said, you can prevent detention fees in most cases with the right technology and data-based approach. Here are four practical tips for reducing the likelihood that your shipments will incur detention fees.
1. Utilize Actionable and Accurate Data
Accurate shipping data, such as real-time container tracking data, ensure that all involved parties know when a shipment will arrive so they can prepare for speedy pickup and unloading.
2. Have Container Tracking
With VIZION's industry-leading container tracking API, importers can receive detailed, standardized, and accurate real-time tracking data on every shipment and effortlessly share that data with their partners. Given the unreliability of carrier ETAs, this is a vital capability to ensure that cargo gets picked up on time.
3. Negotiate Terms Well
Supply chain visibility allows you to better estimate arrival and container transfer time. If you are likely to need more time beyond the free days provided by the shipping line, you can negotiate for additional days. At the very least, it doesn't hurt to ask, and arranging as many free days as possible will enable you to build a buffer of time for when delays occur.
4. Make Use of Historical Data
Analyzing past carrier performance using tracking reports and data analytics tools will help you choose carriers with a proven record of on-time deliveries, helping ensure you avoid detention charges due to delays caused by your carrier.
Mitigate Detention Fees With VIZION's Real-Time Container Tracking API
VIZION helps eliminate the delays that would otherwise lead to demurrage and detention charges by providing importers with the most complete, detailed, and standardized container tracking data available today. To see how VIZION can help your organization mitigate the impact of demurrage and detention fees, sign up for a demo today!