When cargo is moved from ships to trucks to warehouses, distances are short, yet costs can quickly add up.
In drayage, port congestion or peak season frenzies can make it hard to find a chassis or move unloaded containers away from the terminals. And, unavoidably, every unexpected arrangement or delay can incur substantial charges.
In this case, such charges are called drayage fees.
Using a reliable freight-forwarding cost calculator helps you find competitive shipping rates from a long list of carriers. Still, during drayage, there can well be some unforeseen extras charged after the cargo has been shipped or delivered.
As a shipper, understanding potential complexities in drayage operations and looking into possible accessorial charges is essential to manage your shipping expenses effectively.
What Are Drayage Fees?
Drayage fees are unexpected charges that occur when moving freight, typically a container, to/from ports or rail yards over short-haul distances. Drayage accessorials can be anything from drivers waiting an extra hour for pickup (detention fee) to containers stored an extra day at the terminal (demurrage fee).
When getting a quote, drayage rates may seem straightforward, but situations outside the norm of regular pickup and delivery result in costly accessorial charges. That’s why taking into consideration any possible drawbacks is vital for accurate budgeting.
Drayage plays a small but crucial role in connecting the first and last mile in the shipping loop of world trade – an industry that’s actually growing at a steep 2.5% year after year.
And, despite the relatively brief nature of these trips, drayage fees can significantly add to the overall freight transport expenses.
But let’s first take a look at how drayage rates are calculated.
How Are Drayage Rates Calculated?
Factors that generally affect international shipping costs also shape drayage rates.
First, there’s a base fee, which is the primary charge imposed for cargo transported to/from the port to its next destination. Base drayage costs are determined by factors such as distance, delivery time, and handling ease:
- Weight & Distance: The shipment’s weight and the transportation distance are usually the most crucial elements in calculating drayage costs.
- Freight Type: Sensitive or dangerous goods requiring special handling are all calculated in the base drayage rate.
- Chassis Fees: Costs for using container chassis might include pass-through charges or administrative fees.
- Delivery: Shippers’ requirements for specific time deliveries or multiple delivery points increase drayage prices.
- Accessorial Charges: Extra fees are added for services beyond standard operations, such as fuel surcharges, waiting time, or equipment usage.
So, once you calculate the basics, you then need to account for extra drayage fees, aka. accessorials.
Different Types Of Drayage Fees
Various additional charges can occur during drayage.
Though you can’t calculate everything down to the last penny, advice from respectable ocean freight forwarders, coupled with your own experience and freight bill auditing reports, can well give you a close-to-accurate approximation of drayage costs for every shipment.
So, typical accessorial fees in drayage include:
Detention Fees
The detention fee is calculated based on the total number of days from when the container departs the port or terminal for unpacking until it is returned. Carriers, ports, or shipping lines allow some free days, after which detention is charged ‘per diem’.
Additionally, driver detention fees apply to the extra time drivers are waiting at the port to pick up or drop off cargo. Carriers usually allow 1-2 hours of free time, after which extra drayage charges can reach a couple hundred dollars per hour.
Demurrage Fees
On top of detention, demurrage fees are applied when full containers remain at the port beyond their allotted free time – typically 3 days. If a container is stored at the port or terminal longer than its allotted time, it results to a demurrage penalty.
Daily demurrage charges increase as more days pass with your containers waiting at the port. They also vary between ports. Ports in North America issue the highest demurrage charges, compared to other ports worldwide, typically starting at +$200 per unit/day for the first 4 days.
Pre-pull Fees
Pre-pull charges occur when a trucker picks up a container from the port or ramp but does not load or deliver it the same day. In this case, the carrier will keep the container in their yard, and the pre-pull fee covers the cost of moving and storing the container.
Pre-pulls can be a cost-effective solution to prevent a container from going into demurrage, where higher charges apply. But, pre-pull fees may also apply if a customer requires a specific appointment time for loading or unloading.
Drop Fees (or Bobtail fees)
Dropping off an empty FCL container at a designated return location, like a warehouse, for loading/unloading may result in a drop fee. Although this arrangement often accommodates the shipper’s needs, still, the driver has to make two separate trips – thus increasing drayage costs.
Appointment requirements increase drop fees even more.
Chassis Split Fees
This type of drayage fee occur when no chassis are available at the ocean port (or rail ramp) where the container is located. Then, chassis have to be brought in by another location, requiring additional procedures and working hours.
True, in times of high surge or during peak seasons, chassis may be hard to find onsite. But other times, carriers may be required to terminate the chassis at a different location than where they picked it up.
No matter what, shippers are charged for chassis split.
When handling cargo at busy ports, anything can go off schedule. So, as fees are added and numbers grow, finding ways to reduce drayage costs can significantly improve a shipper’s bottom line.
Here are some things you can do:
How To Reduce Drayage Costs
Several strategies can help reduce drayage costs:
Plan Meticulously
Proper planning minimizes delays and helps prevent many extra fees. Things like flexible pickup/delivery times, proper packaging, and strategic prepulls help shippers avoid unnecessary drayage fees.
Depending on your load, investigate the most profitable options between consolidating shipments or separating mixed loads.
Moreover, providing volume forecasts to your carrier while allowing them flexibility in how they handle cargo can lead to better rates.
Use Technology & Document Everything
Today, automated freight auditing software helps you do more than just review shipping invoices and contracts for discrepancies.
AI-freight audit solutions, integrated with your TMS and ERP systems, document every detail and enable a seamless flow of data that helps you analyze trends and get insights into areas where savings can be made.
Still, in-person checks, including taking photos of everything before it leaves your premises, are indispensable in solving disputes on incorrect charges.
Partner With An Experienced Freight Forwarder
Freight forwarders that specialize in ocean freight, like Ship4wd, can help you streamline the entire shipping and drayage at the most competitive rates.
Choose between FCL for cost-effective rates and enhanced security on large shipments or LCL for improved cargo efficiency and scalability when shipping smaller loads.
Backed by 75+ years of experience in global shipping, Ship4wd, Inc. is an international freight forwarder that helps SMBs stay competitive and agile via cutting-edge digital solutions that ensure accurate rates for small-to-medium importers and exporters. Get started today!