Shipment logistical support is a complex operation involving multiple factors. With so many variables, it is relatively easy for any goods to come across them while on the way to their destination. Setbacks such as delays, cargo being detained, and documentation issues are just some of the things that can go wrong. There are many benefits to using the services of a freight forwarder, which can be a lifesaver for cases when a shipment comes across an unexpected issue.
Risk of delays
Delays are a setback that no goods shipment is immune to. This involves a fee charged by the port terminals for goods that remain at the port after the Last Free Day (LFD), which is the last day that they can avail of free storage stipulated in the goods collection agreement.
Delay fees are based on the number of containers and days that the goods spend at the port after this deadline and it may be applied for several reasons. Examples could include a storehouse that is no longer able to continue storing the goods, where documentation is not ready on time or a strike at the port hinders their collection.
The delay length may vary depending on the port and soar during peak demand and congestion periods. On top of that, certain terminal increases their daily fee after a certain number of days, which can have catastrophic consequences for the importer. And while delays cannot always be prevented, they can be seriously mitigated through the involvement of an experienced freight forwarder and planning of the same.
One thing that may make a delay even worse is a detention penalty, also known as “per diem”. While delays are surcharges imposed by the ports for operations that are delayed, detentions are surcharges charged by the transport companies for each day outside of the stipulated period that a container is retained.
If importers retain containers for a longer period of time than they should, vessels are also retained and this has a knock-on effect on the supply chain. This is something that carriers are charged, therefore using this penalty to force containers back into circulation as soon as possible.
In short, any time delays affect all parties involved in transport, the reason for these types of taxes in order to discourage it.
Helplessness of the importer
However, it is the importer who bears the brunt. And regardless of who is at fault, the importer is liable for paying for the delay. Ironically, these charges arise from a time during the shipment during which the importer has little responsibility or margin of reaction over what happens. Good insurance may minimise certain delays arising from a strike, but this is not enough. Planning ahead, with the help of a freight forwarder is a must.
This is no trivial issue. Trade increases and ports facilities do not always grow proportionally. This results in an increased need for speed, and the consequent increasing rates of delay.
The growing role of the freight forwarder
Faced with this increasingly problematic issue for importers, the role of the freight forwarder is becoming crucial. There are several ways in which a freight forwarder may help get rid of delays and detentions, while safeguarding the logistics operation:
- Being aware of the free storage deadlines and the Last Free Day date for each shipment. This allows the appropriate actions to be taken and to be able to negotiate in the interest of the importer.
- Monitoring the progress of shipments that arrive at the port
- Providing transparency and visibility in the shipping process.
- Paying goods customs clearance fees in advance, before the shipments arrive to port.
- Being prepared to offer alternative solutions if there is a risk of delay, such as by removing the container from the port and taking it to an interim storage facility (pre-pull).