UNDERSTANDING DEMURRAGE AND DETENTION CHARGES

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Jan 22, 2024

Understanding Demurrage and Detention Charges

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In the fast-paced world of container shipping, demurrage and detention charges can quickly add up. It is important for shippers to be aware of these charges, and how they can impact overall transportation expenses. In this blog, we cover the essential aspects of demurrage and detention charges and explore their impact on the maritime supply chain. Get ready to unlock a deeper understanding of these charges and how they can affect your shipping operations.

1. What are Demurrage and Detention Charges?

Demurrage refers to fees imposed by shipping lines when containers are held at the port beyond the allocated free period. For containers imported into the U.S., they are typically allotted a number of “free days” at the port. After the Last Free Day (LFD) if the container remains at the port, then demurrage fees will begin. It essentially is a storage fee for the container at the port. Prior to leaving the port, the container demurrage fees typically must be paid.

After the container is pulled from the port, containers continue to be on the clock. Once product is unloaded from a container (unless you own the container), the empty shipping container needs to be returned back to the port. All empty shipping containers must be returned to ports.  Detention relates to charges incurred when containers are retained by shippers or consignees outside the port beyond the allowed time limit. For shippers, this becomes critical to make sure containers are unloaded quickly and returned. For shippers with warehouses or unloading locations far from a port, sometimes these containers will be transloaded or cross-docked to a different shipment, so the empty container does not have to travel as far. Understanding the difference between these charges is critical to understanding your import fees, but also where you can mitigate these charges.

2. The Purpose of Demurrage and Detention Charges

Steamship lines and Ports employ demurrage and detention charges to ensure efficient container turnaround and encourage timely return or pickup of containers. Over the years with high import volume and port congestion, these charges have become even more critical (and challenging to navigate). These charges act as incentives to maintain a smooth flow of containers, reducing congestion and promoting the availability of equipment.

3. Who is Responsible for Paying Demurrage and Detention Fees?

For U.S. imports, the responsibility for paying demurrage fees varies. It typically depends on the shipment’s incoterm, which sets the terms of sale and outlines payment obligations for buyers and sellers at different stages of the shipment’s journey. Demurrage fees usually fall under destination and terminal charges, which are part of every incoterm.

Just like with demurrage, the responsibility for paying container detention fees depends on the agreed terms. It can be the importer or the exporter who takes on these charges. However, it’s generally recommended that the party in charge of arranging the container’s drayage and unpacking handles these fees because they have greater control over the container’s movement.

4. Addressing the Issue: Best Practices 

We believe in finding solutions to industry challenges. Hence, we explore the best practices proposed by the International Federation of Freight Forwarders Associations (FIATA) to streamline the charging of demurrage and detention. These practices advocate for clear communication, standardized documentation, and fair dispute resolution mechanisms. By adopting these best practices, you can minimize unnecessary costs, ensure fairness, and promote an efficient supply chain.

5. The Way Forward 

Moving forward, collaboration with both Steamship Lines and transportation partners becomes critical in managing demurrage and detention charges effectively. By fostering cooperation between shipping lines, transportation partners and understanding any nuances with ports, you can make better decisions regarding your shipping solutions.  Increased data sharing and transparency throughout the maritime supply chain will help streamline processes and enhance accountability.

As your trusted shipping partner, we want to equip you with the tools you need to avoid demurrage and detention fees. By following these four expert tips, you will be well on your way to optimizing your shipping operations and improving your overall supply chain efficiency.

  1. Plan Like a Pro: Freight is on the ocean for weeks and months, so plan ahead. Trying to dispatch freight and having a plan well ahead of your Last Free Day will help mitigate demurrage fees.
  2. Have a Backup Plan in Place: Being prepared for the unexpected is key to avoiding demurrage and detention fees. Whether it is having a backup dray provider or finding carriers at new ports if freight gets diverted and more, having a Plan B can save you from unnecessary headaches and costs.
  3. Know Thy Contracts Inside Out: Knowledge is power! Take the time to research and fully understand your contracts and the regulations and customs duties processes. Steamship Lines typically update contracts in the May/June timeframe, so review these and understand any changes and the impact on your freight costs. By understanding your obligations, you can avoid potential pitfalls and ensure a smooth sailing process.
  4. Transloading and Cross-docking: If your warehouse or final destination is far from your Port of Entry, consider a transload or cross-dock solution, so you don’t have to worry about detention charges and empty miles.

Conclusion:

In the fast-paced realm of container shipping, understanding demurrage and detention charges is essential to reduce unnecessary freight spend.  successfully. By comprehending their purpose, staying abreast of developments, and embracing best practices, you can optimize your shipping operations, minimize costs, and enhance your overall supply chain efficiency. We are committed to equipping businesses like yours with the knowledge and insights needed to thrive in the evolving container shipping landscape.

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WINTER SHIPPING PROTECTION: SAFEGUARDING YOUR FREIGHT WITH PROTECT FROM FREEZE SERVICES

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Nov 10, 2023

Winter Shipping Protection: Safeguarding Your Freight with Protect from Freeze Services

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As the winter season approaches, it’s crucial to prioritize the protection of your valuable freight. Fortunately, many carriers understand the importance of preserving temperature-sensitive products, offering a valuable solution known as Protect from Freeze services. These services, commonly utilized in Less Than Truckload (LTL) shipping, ensure your goods remain safeguarded from extremely low temperatures during transit. In this blog post, we cover the benefits and essential measures to consider when opting for Protect from Freeze services.

Safeguarding Your Freight with Protect from Freeze

Protect from Freeze services offer peace of mind by minimizing the risks associated with temperature fluctuations during transportation. By implementing specific measures, carriers take proactive steps to prevent your items from freezing, particularly in colder regions and throughout the winter months.

Temperature Monitoring

Carriers that offer Protect from Freeze services employ advanced temperature monitoring systems. These systems enable them to accurately track and maintain optimal temperature conditions within the trailers, ensuring that your goods remain unaffected by extreme cold temperatures.

Blankets and Temperature-Controlled Trailers

To provide an extra layer of protection, carriers utilize blankets during transit to insulate and shield your freight from freezing temperatures. Additionally, some carriers employ temperature-controlled trailers, which offer precise climate control to maintain the ideal conditions for your temperature-sensitive products throughout the journey.

Designated Areas for Idle Time

While not in motion, carriers allocate designated areas or rooms on their docks for freight that requires protection from freezing. These areas are carefully controlled to maintain the appropriate temperature and prevent any possible damage to your precious cargo.

Time Constraints for Faster Transit

To further reduce exposure to cold weather, carriers offering Protect from Freeze services prioritize faster transit times. By minimizing the time spent in freezing temperatures, they ensure that your goods arrive in pristine condition, unaffected by the harsh winter climate.

Booking and Communication Tips

When booking your shipment with a third-party logistics provider (3PL), it’s essential to select the appropriate Protect from Freeze service to avail yourself of the correct pricing. Make sure to communicate your requirements clearly and use the bill of lading (BOL) provided by the carrier to ensure they are aware and able to adhere to the necessary precautions throughout the shipping process.

Conclusion

As winter approaches, safeguarding your freight becomes paramount. Protect from Freeze services offer reliable protection for temperature-sensitive products, ensuring they reach their destination intact and unharmed by extreme cold temperatures. By partnering with carriers that prioritize temperature monitoring, employ blankets and temperature-controlled trailers, designate specific areas for idle time, and prioritize faster transit, you can confidently ship during the winter months. Prioritize the protection of your freight and experience worry-free shipping even in the harshest of winter conditions.

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2023 CHANGES TO FREIGHT CLASS EXPLAINED

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Nov 03, 2023

2023 Changes to Freight Class Explained

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National Motor Freight Classification (NMFC) is an essential element of the shipping industry that plays a significant role in determining the appropriate classification of goods for transportation.  

On December 2, 2023, there will be changes to several freight classes including the following 

  • BARRELS GROUP 
  • BOILERS, FURNACES, STOVES AND RELATED ARTICLES GROUP 
  • BURIAL CASE GROUP 
  • DENTAL, HOSPITAL, MEDICAL OR SURGICAL SUPPLY GROUP 
  • FLOOR OR WALL COVERINGS AND RELATED ARTICLES GROUP 
  • FOODSTUFFS GROUP 
  • FURNITURE GROUP 
  • GRAIN PRODUCTS GROUP 
  • INSULATION OR INSULATING MATERIAL GROUP 
  • MACHINERY GROUP 
  • PLASTIC OR RUBBER ARTICLES GROUP 
  • SAFES OR SAFE OR VAULT PARTS, FIRE OR BURGLAR PROOF 
  • VEHICLES, MOTOR 
  • VEHICLES, OTHER THAN SELF-PROPELLED 
  • WALLBOARD GROUP 
  • WASHERS; GASKETS; OR PACKING DEVICES, FORMS OR SHAPES, OTHER THAN PACKAGING 

With recent changes in NMFC, it is crucial for businesses to understand the benefits of proper classification and how it can positively impact their shipping experience. In this blog post, we will explore the advantages of National Motor Freight Classification and why it is essential for businesses to adhere to the correct classification. 

Ensuring Accurate Shipping Fees: 

One of the primary benefits of proper classification is ensuring that businesses pay the right shipping fees. By accurately classifying their goods, companies can avoid overpaying or underpaying for shipping services. This allows for more precise cost analysis and budgeting, contributing to overall operational efficiency and cost savings. 

Obtaining Accurate Price Quotes and Avoiding Unexpected Charges: 

Correct classification enables businesses to receive accurate price quotes from carriers upfront. This prevents any unpleasant surprises in the form of unexpected charges or adjustments to the shipping costs. By having accurate price estimates, businesses can effectively plan their logistics and budget accordingly. 

Preventing Improper Handling and Protecting Cargo: 

Proper classification plays a crucial role in ensuring that goods are handled appropriately throughout the transportation process. By accurately describing the nature, fragility, and handling requirements of the cargo, businesses can minimize the risk of damage or mishandling. This protection of goods helps maintain the integrity of the products and reduces potential financial losses. 

Avoiding Fines and Compliance Issues: 

Correct NMFC classification is essential, especially when dealing with hazardous materials or goods that require special handling. Failure to classify these items appropriately can result in fines, penalties, and compliance issues. By adhering to the correct classification, companies can avoid legal troubles while maintaining a responsible and safe shipping environment. 

Building Trust with Carriers: 

Maintaining accurate and proper classification builds trust between businesses and carriers. When carriers can rely on the accuracy of classification, they can efficiently plan and execute shipments. This trust forms the foundation of long-term partnerships, ensuring consistent and reliable transportation services. 

For a full list of Freight Classifications click here

The National Motor Freight Classification system offers numerous benefits to businesses in the shipping industry. Proper classification ensures accurate shipping fees, provides accurate price quotes, prevents improper handling, minimizes fines, and helps build trust with carriers. By understanding and adhering to the correct classification, businesses can optimize their shipping processes, enhance operational efficiency, and foster stronger partnerships within the industry. 

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THE ULTIMATE GUIDE TO SELECTING THE BEST LTL SHIPPING PROVIDER

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Oct 27, 2023

The Ultimate Guide to Selecting the Best LTL Shipping Provider

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LTL shipping is very different than shipping full truckload. Choosing a less-than-truckload shipping provider that can deliver your goods on time and without damage is essential for success.

In this blog post, we’ll take a deep dive into the top factors you should consider when shipping LTL, also leveraging data from Mastio’s recent survey for LTL carriers. By focusing on on-time pickup and delivery, product safety, carrier responsiveness and bill accuracy, you can be confident in choosing the ideal LTL shipping partner.

Time Pickup and Delivery: Meeting Your Deadlines with Confidence 

On-time delivery is a crucial factor in maintaining customer satisfaction and smooth operations. According to Mastio’s survey, businesses should prioritize LTL carriers that have a proven track record for on-time pickup and delivery. Look for carriers that offer reliable and accurate shipment tracking, allowing you to stay informed throughout the shipping process. When LTL carriers prioritize on-time delivery, you can meet your deadlines with confidence, keeping your customers happy and satisfied.

Product Safety: Ensure Your Goods Arrive Intact

Product safety is an essential consideration when shipping goods. According to Mastio’s survey, damaged products were the most common complaint from customers. To avoid these mishaps, ensure that your chosen LTL carrier has the necessary safety measures in place to protect your products during transit. Consider carriers that use secure packaging, proper loading techniques, and provide insurance coverage in case of damage.

Carrier Responsiveness: Building Relationships for Continued Success

Carrier responsiveness is an often-overlooked aspect of selecting an LTL shipping provider. According to Mastio’s survey, businesses should prioritize carriers that prioritize relationships with their customers. Look for carriers that have a reputation for excellent customer service, provide clear communication channels and respond promptly to your inquiries or concerns. With responsive carriers, you can build a strong relationship that will foster continued success in the long term.

Bill Accuracy: Trustworthy and Transparent Business Deals

Billing accuracy is the foundation of trustworthy and transparent business deals. According to Mastio’s survey, businesses should prioritize LTL carriers that provide accurate and transparent billing information. Or find a broker (like NTG) who will audit the invoice for an additional level of accuracy.  Look for carriers that provide clear and concise invoices, provide detailed information on shipping costs, and offer competitive pricing. By selecting a carrier with precise billing practices, you can be confident that you’re receiving the best possible value for your investment. 

Conclusion

Choosing the right LTL shipping provider is a critical component of your business success. Using a brokerage with LTL capabilities can ensure you are using carriers that are vetted and have more options than going to an LTL carrier directly.

By focusing on the factors mentioned above like on-time pickup and delivery, product safety, carrier responsiveness, and bill accuracy, you can be confident that you’re partnering with a provider that supports your business goals. NTG currently works with all the carriers that were named as 2023 Carrier Customer Value & Loyalty carriers including: Averitt Express, A. Duie Pyle, AAA Cooper, ABF, Central Transport, Daylight Transport, Dayton Freight Lines, Dohrn, Estes, FedEx Freight, Midwest Motor Express, Oak Harbor Freightlines, Old Dominion, Peninsula, Pitt Ohio, R&L Carriers, Roadrunner, Saia, Southeastern Freight Lines, TForce Freight, Ward Trucking and XPO Logistics.

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