The ever-present shipping fees remain some of the most frustrating of all the hassles and obstacles that shippers must contend with regularly. Keeping up with rising supply chain shipping fees and expenses and finding ways to manage costs and expenses without sacrificing services must prioritize shipping service providers. Aside from everyday expenses such as driver pay and fuel costs, shippers must also contend with the 3D’s of logistics — detention, demurrage and per diem. As the New York Times pointed out in an early 2022 article, “the very concept of a return to normalcy has given way to a begrudging acceptance that a new normal may be unfolding. Cheap and reliable shipping may no longer be taken as a given, forcing manufacturers to move production closer to customers.” Overcoming the unique company-specific expenses means carefully considering current processes and optimizing processes for improved shipping cost control.
All manner of expenses, including demurrage shipment fees, per diem expenses, and detention shipping charges, impact the services, optimization, and availability of shipping services. As highlighted by SupplyChainDive, persistent supply chain bottlenecks over the last two years have influenced shipping demands and services in crucial ways. Shipping expenses are part of the shipping and delivery processes. However, improving 3D visibility can help shippers manage these fees and accessorial charges, so they have less impact on bottom line profitability.
Why Do Shipping Fees Exist in the First Place?
Shipping fees and expenses are a necessary evil as they come with the rising demand and volume seen along many shipping lanes and markets today. Additionally, the nation’s sheer reliance on trucking and shipping service providers further adds to the need for personalized and optimized shipping cost control. Based on findings presented in a June 2022 report from Digital Journal, “Trucking is responsible for most of the overland freight movement in the United States, with the market being worth 732.3 billion U.S. dollars in 2020…[with] over 902,000 truck drivers employed in the U.S., which is less than the industry requires.” The more
demand there is and the harder it is to find drivers, containers, and availability at ports and distribution centers, the more shipping fees and expenses are likely to become. Keeping a focus on improving end-to-end operations and ensuring strong 3D visibility and real-time insights is the supply chain’s real problem when it comes to shippers maintaining a competitive advantage.
Effective shipping cost control often comes down to close monitoring of highs and lows in shipping expenses and profits throughout all market updates and trends. Many fees and expenses levied on shipping loads and services come down to protecting the end-to-end flow and sustainability of the supply chain. Delays are common and can cause massive problems for shippers, carriers, and other third-party players. This only adds to shippers’ already mounting expenses when planning routes, accepting loads, and making shipments. The average going rates for trucking per mile in 2022, according to Method, are between $2.30 and $2.86 for dry vans and trucks, $3.19 for reefer trucks, and $3.14 for flatbeds. Costs per mile are even higher for oversize, overweight, hazardous, and other specialty loads. Fees added to these rates drive prices up for customers and cut into profits for shippers.
Many fees exist to help encourage shoppers to stay on track, remain as productive as possible, and help keep the network moving effectively. This is where 3D visibility makes all the difference. These shipping fees and expenses are an example of preventative management practices. The hope is that by leveling shipping fees and other charges, shippers will be more on top of their game when loading and unloading containers, returning equipment, and moving through their delivery routes. Managing detention, demurrage, and per diem fees and reducing costs while clearing up congestion and backlogs is easier with the right approach.
Why Shipping Fees and Expenses Continue Rising
There are numerous reasons why shipping fees seem to increase regularly, and shipping expenses continue to climb. Many factors impact shippers’ ability to continue overcoming obstacles and manage general supply chain logistics, so costs must increase to offset them. These include rising fuel costs, longer drive times, higher driver wages, more expensive fleet construction and repairs, increasingly expensive regulations, changing driver dynamics, and more. These additional shipping fees and expenses result from delays, errors, and the mishandling of orders during loading, unloading, and shipping. Understanding why these fees occur and finding ways to reduce frequency and severity are essential to effective shipping cost control in the modern supply chain network.
Delivery routes, delays, and inefficiency can be controlled and addressed. However, shippers must deal with shipping fees and expenses as best they can. Fuel costs and vehicle maintenance expenses are prime examples of this. On June 6, 2022, LogisticsManagement released a report that showed “the spread between diesel and gasoline is nearly $1 a gallon—$5.53 per gallon for diesel with gasoline at $4.62 nationwide… according to the Department of
Energy’s on-highway weekly fuel survey. Diesel has risen more than $2.30 a gallon from a year ago.” Managing, tracking, and controlling shipping fees and expenses requires a keen insight into supply chain logistics and 3D visibility.
It can be challenging to pinpoint why fees continue to rise with many shipments and modes. However, as a general consideration, the speed, efficiency, and success of drayage shipments and final deliveries can directly impact the costs of per diem expenses, detention shipping charges, and demurrage shipment fees, among other shipping and transportation costs. The most challenging aspect of shipping cost control and expense management is financial considerations that lie outside the control or influence of shippers themselves. Regardless of the exact reasons, costs are rising, and these expected fees add more to routine shipping and transportation costs. Understanding these three everyday expenses can help shed light on when they occur and what shippers can do to reduce their impact. Here’s what shippers need to know about detention, demurrage, and per diem fees.
How Much Do Container Detention Fees Cost?
Contain detention fees are to be expected when delays occur, but the key to reducing this shipping expenses is to employ real-time tracking and monitoring metrics. This approach ensures that delayed containers take priority and avoid excessive buildup of late fees. The Journal of Commerce Online stated, “the average detention charge for containers of all types reached $1,219 by March 2021, a 104 percent increase from the level seen a year earlier.” Controlling these shipping fees and expenses is key to improving 3D visibility and insight.
What Are Demurrage Shipping Fees?
A demurrage shipment fee is another example of shipping fees and expenses commonly seen. Shippers and transportation service providers often encounter these additional expenses when cargo sits unclaimed and unmoved at the dock, port, or other facilities for too long. When shippers take too long to work through containers and move cargo, it slows down the line for other shippers waiting their turn and adds to the supply chain issues. Demurrage shipment fees are a common example of shipping fees and expenses that quickly add up in a short period.
When Does Container Demurrage Apply?
Essentially, demurrage shipment fees work much like a late fee. When goods are not cleared out so other containers can be brought in and additional ships loaded or unloaded, they incur this extra cost. Reasonable shipping cost control is more manageable with clear 3D visibility and monitoring of containers. Knowing what containers are close to the deadline and which are experiencing issues and delays that could lead to demurrage charges can help shippers employ better TMS management and reduce these shipping fees and surcharges.
How Much Does Demurrage Cost?
Like most shipping fees and expenses that get levies against container shipments, demurrage shipment fees can vary depending on current market trends, supply chain congestion, and other factors. According to the current FreightRight analysis, “The cost of demurrage charges vary depending on carriers, terminals, and contractual agreements. However, they tend to be anywhere between $75 to $300 per container/ per day.” The wide range of possible expenses makes this a shipping expense shippers cannot afford to ignore when planning budgets.
What Are Per Diem Expenses?
Per diem expenses is a specialized type of detention fee where a fixed rate gets assessed per container per day that remains away from the port or in use by the shipper. Every day, set shipping fees and expenses are added to an order’s costs until the equipment gets returned to the port or container yard. Many terminals use per diem expenses to keep shippers moving, reduce dwell time, boost shipping cost control, and clear out potential bottlenecks and backlogs. Improving 3D visibility makes it easier to keep up with per diem fees.
When Do Per Diem Fees Apply?
The most common situation shippers find themselves in where per diem costs apply is in the loading and unloading portion of the container shipping process. Taking longer than expected to move goods out of containers or to load containers for shipping compounds these shipping fees and expenses. An increase in per diem expenses increases the costs
shippers incur for that container load, which usually means an increase in customer shipping fees or a reduction in bottom line profits as shippers have to eat that additional expense.
How Much Do Per Diem Fees Cost?
This can be one of the most challenging fees. Many factors contribute to the shipping fees and expenses included with per diem expenses and surcharges. UWL highlighted that “Per diem detention fees are typically calculated based on when the containers leave the port, terminal or depot through the time they get returned there. They range from $50-$100 per container per day on average.” Shipping expenses, additional charges, and unforeseen fees remain expected but can be controlled with close monitoring.
Tips to Reduce Risk of Demurrage, Detention, and Per Diem Costs.
Demurrage shipment fees, detention shipping charges, per diem expenses, and a host of other standard shipping fees and expenses can be reduced and avoided in some cases with simple reworking and reconsideration of current shipping services and processes. Much has changed over the past five to ten years, and even the previous two years have seen unprecedented levels of disruption and change. As the demand for fast and reliable shipping grows, fueled by the continuing popularity of e-commerce, online sales, and digital platforms, shippers must respond accordingly to this new supply chain problem.
Shipping cost control and mitigation require it, especially considering that an early 2021 report from SupplyChain247 highlights that “before the pandemic, consumers made 32% of their purchases online. During the pandemic, that number shot up to 58%. And much of this increase is likely to be permanent.” So, how can shippers improve 3D visibility and manage shipping fees and expenses in the digital day and age? Here are some tips for managing demurrage, detention, and per diem fees more accessible, even in the face of ongoing port congestion and obstacles.
Increase Supply Chain Visibility and Insights in Real-Time
Visibility is critical to maintaining a balance in shipping expenses and charges. But far too few shippers have the insight and visibility to make this work. According to recent surveys, only 6% of companies report complete visibility into current shipping fees and expenses. Additionally, nearly 70% said they lack total visibility, while 57% believe they get a competitive advantage from such an approach. The first step in monitoring and controlling fees and expenses is improving real-time visibility.
Track and Monitor Container Movements With Innovative Software
Knowing when rolled cargo, disruptions, delays, and other issues are likely to occur can help shippers shift focus and head off significant delays, shipping fees, and expenses sooner rather than later. As highlighted by Statista, “the global supply chain management market was worth roughly 16 billion U.S. dollars in 2020. Over the last decade, supply chain management software and procurement market expanded more than twice.” Keeping on top of 3D visibility is easier with innovative software and container tracking.
Take Advantage of Unifying Technology to Enable Notifications
Strong lines of communication, contextual messaging, and real-time discussions are essential to keeping cargo moving. Fast and reliable communication helps offset the most costly shipping fees and expenses related to container shipping and holdups. Everything from returns and reviewer logistics to delays and backlogs is easier to overcome. According to a National Retail Federation survey, returns for U.S. sales in 2020 were 10.6% for brick and mortar stores and 18.6% for online sales. Shipping cost control is more manageable with unified technology in place.
Focus on Predictive Planning and Team Member Coordination
Factors beyond the shipper’s control influence many shipping fees, as evidenced by 2020 reviews from Procurement Tactics: “The global supply chain market is expected to experience a CAGR of 11.2% from 2020 to 2027. That means a market value increase from $15.85 billion in 2019 to $37.41billion in 2027. And, this number has continued to hold, despite the pandemic.” Accessorial shipping fees and expenses don’t have to be severe when managed through effective coordination and predictive planning.
Follow Through to Ensure Improvements Yield Results.
Taking stock of lessons learned, using data to improve, and ensuring past mistakes continuously are not duplicated can helps shippers reign in their cots and get a hold on shipping fees and expenses. As e-commerce activity hits peak season highs, shippers feel ill-prepared and feel improvements need to be made, according to 65% of respondents to a Reverse Logistics Association survey. Shippers must follow through and ensure shipping expenses are not impacting their bottom lines or damaging customer relationships.
Improve Shipping Cost Control and Optimize Shipping Processes With Port X Logistics
The one constant for shipping service providers, regardless of their niche market and size, is the need to deal with shipping fees and expenses. It is an ongoing challenge that can often separate successful shippers from those that struggle to keep up with volatile markets and shifting consumer demands. Adjusting quickly to unanticipated changes and disruptions, including increased shipping fees, is vital for ongoing success. According to Quickbase’s recent Supply Chain Resiliency Survey, shipping and transportation companies are reacting to unexpected changes in the supply chain services, shipping expenses, and disruptions on a weekly (43%) and daily (36%) basis. Successful shipping services come down to effective shipping cost control and improved visibility and insights without exacerbating port congestion concerns.
The true solution is to find the right partnerships and providers that can track cargo from origin port to destination port, through transloads and with GPS to track all downstream movements. Port X Logistics has that capability, helping your company to save on the soft costs of demurrage, detention and per diem by planning everything and leaving nothing to chance. Port X Logistics can put the resources in place for drivers, yard managers, warehousing, equipment, packaging and labor together weeks before cargo ever arrives. In turn, your company can reduce the risk of incurring the 3 D’s of logistics by simply partnering with Port X Logistics. Contact Port X Logistics to get a handle on shipping fees and expenses and improve 3D visibility today!