Demurrage and Detention Management

Posted on: August 11, 2021

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Demurrage and Detention are now the two newest exceptional expenses to hit the ocean shipping market as a result of the Pandemic Freight Surge. Demurrage and Detention have gone from being a nuisance that could be negotiated away, in most cases, to being a substantial cost issue.

Tracking containers has never been easy but now it has become crucial. Just signing up for tracking is not enough to address this situation. Ocean carrier 315 tracking messages are often incomplete and are even less reliable for IPI and MLB shipments moved inland by the US Rail Carriers. Let’s look at a strategy to address this issue.

Trade Tech has set up a program to address the Demurrage and Detention issue. It has eight components:

1) Make a carrier e-Booking

2) Make a Security Filing for the same shipment record

3) Tracking exception report

4) Off-Shore Back-Office manual tracking

5) Tracking electronically with the railroads directly

6) Automate Demurrage and Detention calculations

7) Easy access to the container tracking data records

8) Carrier performance reports

Let’s look at each one.

Ocean carrier automated tracking messages are often incomplete because the carrier staff don’t use the right customer code when they set up bookings in the carrier’s system. This means that the automated 315 tracking messages will not be triggered properly.

The first step to resolve this issue is to make an e-Booking with the carrier. The system-to-system connection registers the customer directly into the carrier’s system with the right code the first time. This is a major step forward but does not provide 100% resolution of the problem.

The second step is to go ahead and make the AMS or e-Manifest Security Filing from the same shipment record used to do the e-Booking. Make the Security Filing even when the booking cannot be made directly with the carrier. For example, when a shipment is moving through a booking agent in China or with a Co-Loader. This ensures that all shipments are in the same system so that an Exception Report can be run to see if the carrier is sending 315 tracking messages.

The third step is to send an API query to the carriers for each container that is not receiving automated 315 tracking messages. Many carriers support this and we are working with those that do not support this function to put it in place.

This still means that there will be containers that do not receive system-to-system tracking data. These containers need to be tracked manually via the carrier’s web site. So, there is a second Back Office Exception Report to list out just the containers that are still missing system-to-system tracking data. Trade Tech can provide the back-office support for this tracking or our customers can provide their own.

This set of solutions provides 100% visibility for Detention, tracking the Container Empty Return, and for Demurrage on all Port-to-Port shipments. IPI and MLB shipments moving inland via rail require inland rail tracking. The railroads are the base source of the data relative to the arrival of the train, and more importantly, when the container is off-loaded from the train. The off-load event is the proper trigger for rail demurrage.

The biggest discrepancy we have seen with our customers is that the ocean carriers tend to start charging rail demurrage when the train arrives and not when the container is off-loaded. This used to be the same day, but today, there can be a one or several day difference. This makes a big difference when demurrage is calculated on a large volume of containers. We are making these EDI messages and dates easy to access and easy to identify discrepancies so that correct billing can be addressed with the ocean carriers.

Many of our customers have been just paying the carrier’s invoices because it is too hard to get to the data. We want to make that easy so that you only have to pay what is properly owed. That is why we are building into this program automated calculations for Demurrage and Detention based on the carriers’ published tariff rates.

This could also be useful in the future with the Surface Transportation Board and FMC’s investigation of Demurrage billing called for by the Biden Administration. Having quick access to the data on each container movement could have a large impact on what will eventually be charged or refunded due to the congestion issues in the main rail terminals today.

Lastly, we are setting up carrier performance reports to show how well each carrier is performing relative to providing automated tracking data and how their tracking dates match the railroads’ data. These reports will be an important step in working with the carriers going forward on ways to improve this critical function.

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