Visibility in Logistics Impact on Detention, Demurrage, and Per Diem Rates

Visibility in Logistics Impact on Detention, Demurrage, and Per Diem Rates

Many of the issues currently faced by the ocean carrier logistics industry arise from a lack of real-time supply chain visibility. Simply put, shippers often lack access to the real-time data, updates, and other insights they need to maintain flexibility in a complex supply chain. Without complete supply chain visibility from the first movement to the last, the logistics industry will continue to face sluggish speeds and rising rates.

But some experienced industry professionals have noticed and invented tech-based, creative solutions to solve the logistics visibility issue. With an eye on the future constantly, these innovators are at the forefront of the growing visibility in logistics industry. 

John Paul Hampstead, writing in FreightWaves, noted that “the leading real-time visibility solution providers are still relatively small players in a fast-growing market that will reach $1 billion by 2024.” With the growing logistics visibility sector poised to redefine the logistics industry, it’s time for shippers to ask, what is supply chain visibility?

Types of Costs Deriving From Limited Visibility

Before answering, ‘“What is supply chain visibility?” shippers should consider the costs of limited visibility in ocean logistics. Limited supply chain visibility costs can change quickly as the industry adapts to a changing logistics landscape. Rising fuel costs mean higher transportation rates and labor issues at warehouses. For example, according to the U.S. Chamber of Commerce, the International Longshore and Warehouse Union’s ongoing contract negotiations “will set pay, benefits, work hours, and other issues for several years,” which could lead to slower off-loading times at ports. These inefficiencies can result in steep costs, which often fall onto the shoulders of shippers. Shippers can prepare for these cumbersome and inevitable issues by improving visibility in the supply chain and examining these costs more closely. Chain visibility is a tech-enabled way of preparing to face industry issues head-on and make the best decisions possible. 

What Is Detention?

Detention is one of the most common costs arising from limited chain visibility. Without logistics visibility, mistimed shipments might sit idle and take up valuable space either in or near a busy port. These wait times can often result from a drayage issue such as a driver shortage, which the American Transportation Research Institute again named the “No. 1 [industry] issue for the fifth year in a row,” according to FreightWaves. Regardless of the cause, limited visibility in the supply chain can result in long wait times for containers at ports, underscoring the importance of visibility in logistics.

Storage space surrounding busy ports is valuable, so, shippers pay port authorities per diem detention fees to compensate for this potential lost revenue. Though some companies use detention as an easy solution to warehousing shortages and supply chain issues, the pricey detention fees can quickly add up. With the ongoing labor issues affecting drayage and warehousing, more and more shippers are subject to steep detention fees. Chain visibility can help businesses organize misaligned freight assets, avoiding these costs. 

What Is Demurrage?

Like detention, demurrage arises as a cost when freight arrival and logistics timing are misaligned due to poor chain visibility. Demurrage, however, is generally charged by the terminal rather than the shipper. Another significant difference between demurrage and detention is that, unlike consistent per diem detention costs, demurrage costs tend to increase as time passes and a freight asset fails to move. When combined with detention costs, demurrage fees have the potential to tank a bottom line. Easily implemented chain visibility solutions can help businesses avoid these costs and track them closely when they occur. 

Other Costs May Arise Too

Loqate, a location intelligence service, states, “Eight percent of first-time domestic deliveries fail, costing retailers an average of $17.20 per order or $197,730 per year.”  Despite a booming e-commerce industry, the costs of lackluster customer service can often fall onto logistics partners. These costs can affect a logistics company’s bottom line. In logistics, it’s not uncommon for prices to compound; a late shipment results in missed drayage, which leads to demurrage and detention fees. Those, in turn, get added onto a higher, short-notice drayage fee. A lack of real-time supply chain visibility can result in complex costs for shippers. Improved chain visibility can stop this cascade of expenses from starting and save on headaches and the bottom line. 

A 2022 survey analysis in Talk Business revealed that “real-time visibility was ranked higher than factors such as customer service, safety record, and geographical coverage.” Visibility in logistics is a priority for logistics businesses. Despite this, most companies have yet to embrace real-time supply chain visibility solutions. By partnering with an API-enabled logistics visibility solutions provider, shippers with advanced chain visibility can stand out to potential customers in a crowded logistics marketplace. 

What Is Supply Chain Visibility & How Can It Prevent Those Costs?

Once businesses understand how chain visibility solutions can help them, they can then understand what supply chain visibility could mean to their customers and how they could best integrate an API into their existing visibility in logistics solutions. 

The primary benefit of implementing high-tech logistics visibility solutions is immediate access to a vast wealth of visibility in logistics data and insights previously inaccessible to shippers. This chain visibility data can reveal the underlying structure—from driver productivity to the time freight spends at the port to fuel efficiency and cost insights—so that the business can focus on making their logistics run more efficiently. 

In a logistics ecosystem burdened by high-fuel costs and sluggish supply chains, this visibility in logistics insights can help businesses bolster their bottom line and provide more effective customer service. 

In a fully globalized, 21st century economy, this chain visibility data needs to be available to many logistics partners. By partnering with a logistics visibility API enabled visibility in logistics provider, businesses can easily access the logistics visibility, metrics, and tracking benefits they need and quickly share them with their business partners. 

Groundbreaking logistics visibility API technology, developed by experienced chain visibility industry professionals, can help businesses form ongoing partnerships; by embracing the chain visibility technology of today, companies can build better relationships for tomorrow. 

Another value of logistics visibility solutions, and one not to be taken lightly, is 21st Century exception management. The inevitable happens: containers are lost or compromised in bad weather, and trucks are occasionally susceptible to theft. 

Regardless of the reason, freight exceptions do occur. With an integrated logistics visibility API, shippers no longer have to worry about missing data or information. The wealth of data provided by the latest chain visibility technology means that shippers have easy access to a detailed tracking account of a freight asset’s complete logistics journey, ensuring that shippers are ready to face any exception that occurs with enhanced visibility in logistics. 

Additional Benefits of Visibility in Logistics

In addition to the benefits listed above, chain visibility technology offers a nearly endless supply of other assets and insights to shippers. With data enrichment add-ons, a business API can evolve alongside its business needs. Logistics visibility data like vessel verification, customs data, and advanced locations can allow businesses the real-time supply chain visibility they need to fine-tune their logistics. 

  1. More strategic planning. With a logistics visibility API, businesses can ensure that freight sticks to its schedule—no more lost time in transit. 
  2. Less risk of rolled cargo. Better visibility in the supply chain means load makes it onto its transport, which helps bolster business relationships and a bottom line. 
  3. Better relationships with carriers. With more options than ever, consistent service is one way to ensure that return time and time again. 
  4. Less confusion over downstream activities. With better visibility in logistics and container tracking, businesses can effortlessly track freight throughout the logistics process and reap the benefits of better logistics. Never lose sight of the destination with improved container tracking. 
  5. Reduced risk of spoilage or cargo damage. Better logistics visibility software means fewer asset exceptions. With time-sensitive freight on board, a shipper must ensure that their assets arrive when needed. 
  6. Improved understanding of total landed costs. Data can reveal the underlying structure of a business. By making charges clear, data insights can show a company how to develop a more efficient cost structure through visibility in logistics. 
  7. Streamlined document sharing through digital means. In a connected world, an API can help businesses share information more efficiently than ever in a connected world. A streamlined, expertly designed logistics visibility API can help enterprises to help each other. 

Enable Real-Time Visibility in Logistics with VIZION API

In today's competitive ocean logistics marketplace, shippers must have easy access to the data insights and analytics they need as quickly as possible. By partnering with Vizion, businesses gain instant access to a vast wealth of assets. Schedule a demo with Vizion today to see what visibility in logistics can do for you. 

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