In the maritime industry, knowing how to navigate per diem charges can help you save up on extra costs and manage your operations more effectively. In this blog, you’ll get an overview of what this term means, who implements these charges, and most importantly, how you can save money.
Imagine you are the logistics manager of a bustling shipping company, entrusted with the task of transporting cargo containers for your esteemed client. Your company has a strict deadline to deliver the container to its destination within a specific timeframe, making efficient logistics management a crucial part of your job.
As the container reaches the port, you realize that due to a delay in customs clearance at the port, your carefully planned schedule is now disrupted. Many times, such unforeseen circumstances or unexpected logistical challenges can put you at risk of exceeding the allocated free time, potentially incurring per diem charges which could strain your budget.
However, by implementing proactive strategies, you can mitigate their financial impact. Remember, communication, efficient coordination, and creative problem-solving are the key ingredients to successfully navigating potential challenges in the shipping industry.
There are also SOCs to consider if you are trying to save up on shipping charges. Leasing SOC containers put you at an advantage as it gives you greater control over the logistics process, optimizes schedules, reduces delays, and ultimately minimizes per diem charges.
If you’re looking for SOC containers, you’re just a few clicks closer to securing one! Use our public search feature below and check out all the containers available in your route.
You just need to enter your pick-up and drop-off locations, the container type you’re in need of, and hit search. You’ll be spoiled for choice while browsing through the 10k+ containers that you can lease from a list of over 1500 vetted suppliers globally. Try it and see how easy it is to save on per diem charges with Container xChange!
What are per diem charges?
Per diem charges, also known as ‘detention’, is a fee that an ocean carrier or shipping line charges for each day exceeding the number of free days a container spends away from the port. This acts as a penalty for holding onto a container for too long.
Now, you might be wondering who would put this charge in place and why?
Who implements per diem charges?
When it comes to per diem charges, the main players calling the shots are shipping lines and container leasing companies. They provide the containers for shipment and dictate the terms of container usage.
When you lease a container from a shipping line or leasing company, they offer you a sweet deal known as “free time.” Think of this as a grace period. What it means is that you get a specific number of days where you can use the container without any additional charges.
Now, if you go beyond the free period and don’t return the container on time, per diem charges start to accumulate. These charges act as a gentle (or not-so-gentle) reminder that it’s time to return the box.
As the old saying goes – time is money. And in this case, it’s literally true! In fact, timing is everything in the maritime industry. Delays in returning containers can throw off the rhythm, causing imbalances and shortages. So, to keep things running smoothly, shipping lines use per diem charges as a way to incentivize timely returns. By charging customers for each extra day, they hold onto a container, they encourage them to return it promptly. It’s put in place to discourage unnecessary container detention.
The idea here is to do your best not to fall into the trap of the dreaded per diem charges. That’s where we come in. Container xChange is a neutral online marketplace for container users and buyers to interact on a global scale. We’re here to provide you with viable solutions when it comes to common shipping ‘speed bumps’ such as per diem charges. These charges might not be avoidable, but there are ways that you can save on them by utilizing our platform. Reach out to one of our experts to find out how today!
Per diem charges: Updated rates 2023
Per diem rates can vary based on several factors that influence the supply and demand dynamics in the shipping industry. In 2023, according to extensive research done by Container xChange, the average D&D drops by 25% each year, making it 14% lower than in 2020. This seems to be a sort of comeback for shippers as things seem to be returning to normalcy after the effects of the COVID-19.
However, D&D charges still pose a threat to these shippers. 11 major ports show D&D fees that are higher than in 2020. Ports such as Antwerp, Jebel Ali, Ningbo, Port Kelang and Rotterdam to name a few. So, although some things might return to normal, there are reasons why they aren’t doing so as efficiently. These include energy price increases, high labor costs, newer regulations in ports of Europe, and rules on individualizing customs clearance which no longer falls under one bill of lading.
Major shipping lines have also done their best to bring down the cost of per diem charges by allocating extra free time, whereas some have been unable to do so. Below is a list of 5 well-known shipping lines and their port charges.
|Average D&D charge at day 14 (in USD)
Trends can change overnight, so it’s important to stay informed and on top of what’s happening. Each year, Container xChange compiles a D&D benchmark report, where you can learn more about:
- New trends, port rankings and policies
- Most recent demurrage and detention/per diem charges
- Solutions and savings potential
Click on the banner below to download the full report and stay updated on the latest industry news today!
Difference between demurrage, detention, per diem & storage charges
Shipping charges and terms can often be confusing and overwhelming, but don’t worry! In this section, we’ll break down the differences between demurrage, detention, per diem, and storage charges.
|Demurrage charges come into play when you exceed the allowed free time for unloading or picking up cargo from the terminal. It’s like a late fee, compensating for the extra time a container occupies space at the port.
|Detention charges occur when you retain a shipping container for too long outside the port or terminal. It’s like overstaying your welcome. Shipping lines and container leasing companies provide a specific free time period, and if you surpass it, detention charges apply.
|Per diem charge
|Per diem charges, like detention, is a fee that an ocean carrier or shipping line charges for each day exceeding the number of free days a container spends away from the port. The goal is to encourage timely container returns and prevent unnecessary delays in the logistics chain.
|Storage charges come into play when you need to store goods or containers at a port or terminal for an extended period. These charges encompass the cost of occupying storage areas or yards owned by port or terminal operators. Rates can vary based on cargo size, storage duration, and specific pricing established by the port or terminal.
By understanding the differences between demurrage, detention, per diem, and storage charges, you can navigate the world of shipping expenses more effectively now.
3 ways to save on per diem charges
Careful planning and coordination of shipments minimize the time containers spend at ports or terminals. By streamlining operations and optimizing schedules, you can reduce the chances of incurring per diem charges. Coordinate with all parties involved, including suppliers, freight forwarders, and customs agents, to ensure smooth and timely container movements.
Try to negotiate favorable terms regarding per diem charges. You could extend the free time for containers or secure lower per diem rates based on your shipping volume or business relationship. Negotiating can help reduce costs in the long run.
⚡Monitor and track your box
Keep a close eye on the movement of containers and their return deadlines. You can do this through efficient tracking systems where you can monitor your box in real-time and stay informed. Timely awareness of container status allows you to manage returns and save on unnecessary per diem charges.
Save on per diem charges with Container xChange
Regardless of whether you’re experienced within the industry or just starting out, a key factor to streamlining your container logistics is to stay informed and on track with the ebb and flow of the market. There are innovative ways of doing so, and Container xChange happens to be exactly that. We are an online platform that connects shipping container users with trustworthy, vetted suppliers. This makes it easier and more cost-effective to find containers for whatever suits your needs best.
Here, you’ll be introduced to a world like no other. We have an exclusive platform dedicated to simplifying your container operations and saving on extra costs wherever possible. Not only are you able to find the container types you’re looking for at affordable rates, but you also gain wide access to other benefits such as:
- Digital container monitoring and tracking
- Easy payment handling
- 100% market transparency
- Trustworthy business interactions
How does this help you cut down on per diem charges? The answer is simple; by tracking your shipment, you’ll be able to plan your logistics more effectively and ensure timely return of containers after use. This helps you avoid unnecessary delays that could lead to extended container usage and potential per diem charges.
Our tracking system also allows you to monitor your containers in real-time. So, you can track the duration of container stays at various locations, ensuring that your box is not unnecessarily held for extended periods.
Check out the platform in action by clicking on the banner below. Our team of experts will help you understand the marketplace and answer any queries you might have.
Per diem charges: Common FAQs
What are per diem charges?
Per diem charges are fees imposed on shipping containers for extended usage beyond the allotted free days. They are additional charges calculated based on a daily rate.
How do I calculate per diem charges?
Per diem charges are typically calculated by multiplying the daily rate set by the shipping line or container provider by the number of days a container is held beyond the free days. The total amount is then determined by this daily rate multiplied by the number of excess days.
What’s the difference between per diem and detention charges?
When the container is still being used by the shipper or What is a consignee? When transporting freight (by ocean, air, or land), there are two parties involved — one who is shipping and the other who is receiving the freight. The recipient of the goods b... More after the last free day, a detention fee is imposed. Per Diem refers to a daily price for holding the container until it can be sent back to the port, based on a predetermined amount per container. However, both are frequently used synonymously within the industry.