Without a good understanding of the steps involved in the complex international shipping process, you might be scratching your head as to why your ocean container drayage costs are higher than anticipated. The good news is, if you set your expectations appropriately, you can more fully understand how drayage fees are assessed.
Important: Drayage should never be quoted as an “all-in” fixed cost because of the many unforeseen changes that can occur with a round trip container move.
To begin, let’s look at the primary steps involved with round-trip container shipping. As you’ll see, it’s an involved process with many opportunities along the way that might change your originally estimated drayage costs. If you’re new to it, here’s a high-level overview of how drayage works:
- Empty the pick-up container that will carry your shipment
- Take the container to the loading location
- Return your Full Container Load (FCL) to port
- Pick up your Full Container
- Take the container to the receiving location
- Empty your container
- Return the empty container to port
Key Drayage Terms
Now that you’re more privy to (or refreshed on) the standard drayage process, we’ll cover several important drayage industry terms and how rates are derived for each key component:
- Base Rate: Pickup and delivery charge of the ocean container associated with the carrier booking.
- Free Time: The free period during which no demurrage and detention charges apply. This free period allows the merchant a realistic time for:
- The loading and delivery of an export container
- The pick-up, unloading, and return of the empty container for an import
- Detention: The charge the shipper pays for use of the container outside of the terminal or depot, beyond the free time period allowed.
- Demurrage: The charge the shipper pays for the use of the container within the terminal, beyond the free time period allowed.
Current Status of Detention and Demurrage Fees
Outside of the freight forwarder’s control, Detention and Demurrage costs have been dramatically rising over the last few years, causing the Federal Maritime Commission to open an investigation in 2018. Click here for detail regarding this issue.
Further, the U.S. West Coast has also experienced a dramatic increase in the last year due to ongoing longshoremen contract talks. After extended negotiations, longshoremen and employers at U.S. West Coast ports have reached a tentative six-year deal.
The agreement, subject to ratification by the International Longshore and Warehouse Union (ILWU) and The Pacific Maritime Association (PMA), should help ease recent port congestion and smooth supply chain issues for retailers heading into the 2023 peak season.
Additional Drayage Terms (not an all-inclusive list)
In addition to the base rate, there are ancillary line items that will affect your final drayage invoice:
- Fuel Surcharge: Variable percentage of base rate added to cover monthly fuel cost fluctuations on account of shipper.
- Clean Truck Fee (CTF): Port area pollution mitigation surcharge, charged per 20’ Equivalent Unit TEU on account of shipper.
- TMF: Traffic Mitigation Fee is a port congestion surcharge per TEU, on account of the shipper.
- Live Load/Live Unload: When the driver waits as the container is loaded/offloaded. Usually, fixed free time is allowed, with wait time accrued after free time expires, on account of the shipper.
- Wait Time: Driver hourly fee or partial thereof after free time allowance assessed on account of shipper.
- Drop and Pull: Driver leaves the ocean container and chassis at the loading / offloading location returning at a later time for pickup.
- Dry Run: Missed pickup charge due to export container not being loaded and ready for release or import container not released by the port terminal/depot even when freight, bill of lading, and customs clearance are cleared, on account of shipper.
- Dock High Loading: Matching height of warehouse dock with ocean container and chassis. In most cases, the assumption is held for standard drayage appointments.
- Terminal Appointment: Required date & time slot reservations to in-gate or out-gate containers, scheduled online in advance of trucker dispatch.
Consultation with DGX-Dependable Global Express
Choosing the right logistics partner is crucial for success. While many factors are out of control of any freight forwarder at given times, a competent provider will take the time to ensure you understand all the line items related to your drayage quote, including ancillary fees. Full transparency for all stakeholders in advance of a booking is key.
At DGX with our decades of shipping industry experience, you can be assured we will competently and thoroughly guide you through all aspects of your shipping arrangements, importantly including Drayage. Count on our expert consultants to patiently walk you through the entire shipping process, helping you make wise choices that will minimize unnecessary delays and expenses, and avoid unneeded headaches for all stakeholders.
As part of the personalized attention provided to every customer, DGX assigns you a dedicated sales agent at the front end of your shipment planning. For more information, call us at (888) 488-4888 Ext. 2011, or email us.
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