When are Port Storage Fees Charged?
While shipping carriers store & transport products, storage is not charged the entire time. Indeed, there exist certain spots in the supply chain, where products are subject to storage charges. Most frequently, these storage phases occur once products arrive at port. The port offers 3-7 free days of time to move your products expeditiously to their final location. However, port space is at a premium. As such, port storage fees apply after free time is exhausted. Choose a freight forwarder who keeps products moving to their destinations. Otherwise, a port can charger storage fees to your freight forwarder. In turn, those charges are passed to you. If left unchecked, port storage can add up and impact your bottom line. But don’t worry – this 5 minute read to prepare you for any and all scenarios where storage fees occur in your supply chain!
Where are Port Storage Fees Charged – An Overview:
What is Free Time?
Your cargo receives a certain amount of Free Time in different stages of the supply chain from different logistics partners.
What is Last Free Day?
The Last Free Day is the final day of free time offered by a logistics partner to use their space or equipment. Free Time offered by a port is different from Free Time offered by a carrier.
A port’s Last Free Day is a cargo consignee’s last day of a ‘grace period’ to store a container inside port, before incurring port storage fees.
A carrier’s Last Free Day is also a cargo consignee’s last day of a ‘grace period’ to use a shipping container, before incurring demurrage (equipment rental) fees.
What is Pre-Pull?
A Pre-Pull is defined as when a trucker picks up your shipping container from a port yard before the port’s Last Free Day expires. Pre-pulling a container moves it from the port yard to the trucker’s yard for cheaper storage.
What is Demurrage?
Demurrage is a penalty charged by shipping carriers to the cargo consignee for using equipment (i.e. their shipping container) for a period longer than the proffered amount of free time. Demurrage occurs when a carrier’s equipment is not returned after the containers free time expires.
What are Detention Days?
Detention days refer to time a container spends occupied outside of the port. Alternatively, Driver Detention fees are applied to containers which exhaust their allotted free time out of port or on a delivery.
What is a Bonded Warehouse?
Bonded warehouses offer storage for freight forwarders, once cargo is moved out of port.
What is Free Time Before Port Storage Fees Start?
Your cargo receives a certain amount of Free Time in different stages of the supply chain from different logistics partners. The following logistics partners all offer different timelines to the amount of time they offer for storage:
- Sea Port
- Air Port
- Rail Yard
- Container Freight Station
Alternatively, Free Time applies to:
- Shipping Carrier (the actual boat and container owner)
Shipping carriers offer Free Time to use their container (i.e. their equipment, not their space). As such, Free Time is a general phrase that refers to the amount of time needed for a freight forwarder to expeditiously move a container through the supply chain, without impeding the flow of traffic in any stage for any logistics partner.
Free Time in Shipping Explained
Free time is the grace period of time, provided by a carrier, to use a carrier’s equipment (i.e. a container) at the port. No demurrage or detention fees will be charged during your allotted free time.
How Much Free Time Before Port Storage Starts?
Free Time varies between ports. There is no industry standard. Just speak directly with your freight forwarder. They will know on how much free time your goods receive at port or from the carrier
What is Last Free Day?
Free Time offered by the port is independent of Free Time offered by a carrier. They both offer different sets of Free Time and therefore different timelines to their respective Last Free Day.
A port’s Last Free Day is the cargo consignee’s last free day to store a container inside port, before incurring port storage fees. This is effectively renting space at the port.
A carrier’s Last Free Day is also the cargo consignee’s last free day to use a shipping container, before incurring demurrage fees. This is effectively renting equipment from the carrier.
What is Demurrage?
Demurrage is a penalty charged by carriers against the consignee of cargo (i.e. the freight forwarder or cargo proprietor directly). These fees occur when a carrier’s equipment is not returned after the containers free time expires.
Who Charges Demurrage?
Shipping carriers can charge demurrage fees to freight forwarders. However, freight forwarders pass this fee to cargo owners.
Who Charges Port Storage Fees?
Port terminals can separately charge for port storage to the consignee of the container (either the carrier, freight forwarder, or proprietor directly).
How Much Does Port Demurrage Cost vs Port Storage?
Different ports and carriers charge different rates. In short – it varies.
For port storage of container, expect to be charged $100/per container, per day.
For Demurrage expect anywhere from $100 – $300/per container, per day. Much like FBA storage, carriers apply a long-term storage rate too. This will increase the daily fee amount after a certain number of days.
What is a Pre-Pull?
A pre-pull is defined as when a trucker picks up your shipping container from the port and stores it at a trucker’s yard. It helps avoid Demurrage fees when a container can’t immediately be processed at port.
Reducing Demurrage Costs & Port Storage
Again, ports charge storage fees for parking a container in their yard beyond the allotted number of free days. Port storage fees can run up to $100/per container, per day. While demurrage, charged by the carrier, can cost between $100-300 per container/per day.
Alternatively, a Pre-Pull is $200-$400 + minimal storage costs at a trucker yard. As such, if you don’t know how long it will take to move your containers, a pre-pull is less risky than incurring extended demurrage. All the same – the quickest way to reduce port storage is to execute your paperwork for customs and custody exchange without error.
What is a Bonded Warehouse?
Bonded Warehouses & Port Storage
Bonded warehouses offers storage to freight forwarders. The industry also refers to these locations as Container Freight Stations. If your shipment is selected for a customs exam, it will be set aside for storage at a bonded warehouse. Under this circumstance, your goods incur storage fees until the exam is complete. This scenario materializes when using a shared LCL container to ship goods. If another proprietor of goods incorrectly filed customs paper work, the whole container receives an examination at a container freight station. Exams and storage can ranges from days to weeks – so sit fast.