Welcome to Drayage 101; our blog series where we breakdown and define the basics of drayage. For our first installment, we decided to tackle the ever aggravating fees associated with demurrage and detention - sometimes referred to as Per Diem.
What is Demurrage?
Demurrage is a fee that a loaded container acquires if the container is not pulled from the terminal on time. The loaded container will have a set date known as the Last Free Day. The Last Free Day is the final date that the container will be available to pull without incurring demurrage fees A container can fall into demurrage for various reasons, including:
Terminal Operations: Sudden terminal closure or issues with terminal equipment such as crane services can cause delays. Further, the availability of terminal appointments is constantly changing. If you are unable to get an appointment before the Last Free Day, you will start to incur demurrage fees.
Limited Pool of Pool chassis: Inventory at the ports for chassis is constantly changing and is based on a first come, first served. If a driver cannot secure a chassis at the port, the demurrage falls on the shipper.
Unsuccessful Pull: if a shipper has an urgent container that one of their truckers was unable to successfully pull, the loaded container may fall into demurrage before a new trucker can get it. In this case, the demurrage would be the responsibility of the original trucker or the shipper.
Trucker Complications: Last minute issues may arise where a trucker cancels a job or runs into some truck issues while on the job. These sudden occurrences will always fall on the trucking company to cover the demurrage.
Holds on Containers at Outgate: If there is a hold on a container, that limits the ability for a trucker to pick up
What is Detention (aka Per Diem)?
Detention is a fee that an empty container accumulates if not returned by the specified date given. The number of days you have to return that empty container can also vary by steamship line, so keeping track of which steamship line provided the container is important. Some shippers have specific contracts with the steamship lines which can grant them more days to return an empty container without the fees accumulating. However, unexpected delays can always happen. Here are the top reasons an empty container can fall into detention:
Dwell at the Consignee: if your warehouse has slow turn times, this can affect when the container is emptied and Ingated. If the container is emptied past the return date, fees would start to accumulate.
Limited Appointments: Depending on the container type and size, these containers can be easier or more difficult to terminate. Terminal empty receiving schedules are constantly changing which can cause some containers to fall into detention. If proof of termination schedules is captured, this can help fight the detention bill.
Delays at Outgate: When the entire drayage process is delayed from the beginning, it has a trickle down effect and may cause the empty container to push closer to that detention date.