If you have any question about per diem charge, you will find the answer right here.
So, keep reading to learn more.
- What Is A Per Diem Charge In International Shipping?
- Who Is Liable For The Per Diem Charge?
- Why Do Carriers Charge Per Diem?
- Is Detention Fee The Same As Per Diem Charge?
- How Does The Per Diem Charge Work?
- What Is The Difference Between Demurrage Fee And Per Diem Charge?
- How Are Per Diem Charges Calculated?
- How Can Per Diem Fees Impact My Supply Chain?
- Can I Negotiate The Per Diem Charge Per Day With My Carrier?
- How Do I Avoid Per Diem Charges?
- Can A 3rd Party Logistics Company Help Me Avoid The Per Diem Charge? How?
- What Happens If I Need To Keep Storing Cargo?
- How Is The Per Diem Charge Different From Port Storage Charges?
- Are There Any Special Considerations In Relation To Per Diem Charges?
- Why Are Per Diem Charges Controversial In The Shipping Industry?
What Is A Per Diem Charge In International Shipping?
Per diem charge refers to the fee charged once a container exceeds the set free days. The charges will vary based on the type of equipment and carrier.
Per diem fee is charged daily until the container is returned to the port.
Containers At A Port
Who Is Liable For The Per Diem Charge?
The importer is responsible for settling the per diem charge with the respective carrier(s).
Why Do Carriers Charge Per Diem?
Per diem is charged to ensure the efficient circulation of containers.
Aside from that, it prevents importers from overstaying with the containers and caters to any losses incurred during the period.
Is Detention Fee The Same As Per Diem Charge?
Per diem is a type of detention fee with a fixed rate that containers are charged daily once they exceed the free time.
However, per diem and detention are often used synonymously as both are fees charged on late containers.
How Does The Per Diem Charge Work?
To get a proper understanding, here is a brief example of how the per diem charge works. For instance, you intend to import a container to the US via a shipping line.
As soon as your container is cleared by customs you will be given a certain number of days to freely use it.
If these “free days” lapse, the ocean carrier will charge you a per diem fee each day after the expiration of the free days.
Charges often range between $125 and $175 for each extended day until you return the container.
Such amounts can escalate to a higher value when dealing with several containers annually and thus it’s always important to avoid per diem charges.
Per Diems Are Charges Incurred After Free Days Elapse
What Is The Difference Between Demurrage Fee And Per Diem Charge?
Demurrage fee refers to a charge imposed by the shipping line on cargo that overstays at the port terminal without being transferred for unpacking within the free days.
On the other hand, a per diem charge is applicable when you overstay with carrier equipment such as a container past the allocated free days.
Demurrage Fee Is Imposed By A Shipping Line On A Cargo That Has Overstayed At A Terminal
How Are Per Diem Charges Calculated?
For instance, let’s say you have a 20ft container arriving on the 10th of April and can be ready for pickup on 4th May.
This means you will have 25 days before the container is collected. Other figures you will need in the calculation of the charges include;
- The number of free days: 5
- Total days charged with detention and demurrage: 20
- 20ft rate after 10 days: 120,00
- 20ft rate on the first 10 days: 60,00
With 25 days available for container pick up, you will pay for the 20 days since you have 5 free days. Meaning, you will be paying;
10days x 60,00 =600,00
10days x120,00 =1.200,00
When calculating demurrage or detention, It is advisable to use demurrage and detention charge calculator.
How Can Per Diem Fees Impact My Supply Chain?
When shipping, you’ll want to consider detention, demurrage, and per diem charges as they can greatly impact your shipping business.
And it’s easy to see why.
Every small fee charged on every container can sum up to hundreds if not thousands of dollars per shipload of cargo.
And that’s not enough, per diem fees can also cause delays.
As a business, such charges should be avoided at all costs if so, you are projecting on increased profit margins within the supply chain network.
Knowing these fees is critical in coming up with possible ways to avoid the charges and reduce negative impacts on the supply chain.
Can I Negotiate The Per Diem Charge Per Day With My Carrier?
Per diem charge is a fixed amount. However, you can negotiate free days with your carrier. This is mostly valid for “large shippers”.
How Do I Avoid Per Diem Charges?
Below are some of the ways you could avoid per diem charges;
- Contract specifications – You can negotiate the number of free days with your carrier detailing specifics that might hinder you from returning the container at the allocated time.
- Labeling, Cleaning, and packaging – inspections done at the customs can result in your container being delayed in turn incurring per diem charges.
- Ensure that your goods are properly labeled and you possess every required documentation to avoid falling into such a situation. Also, clean your container as this also causes delays when passing goods through customs.
- Draymen Scheduling – With some ports being congested and busy, it’s important to book a drayman in advance to avoid any container pickup delays.
Can A 3rd Party Logistics Company Help Me Avoid The Per Diem Charge? How?
Yes, 3rd party logistics company keeps track of your container’s movement from arrival to delivery.
Since most use systems to handle the cargo, expect fast supply chain cycle times.
In cases where a per diem charge is imposed due to their operations, they shall be liable to the charges and not the customer.
3rd Party Logistics Providers Shall Be Liable To Charges And Not Their Customers
What Happens If I Need To Keep Storing Cargo?
To save money, offload your cargo and store it in a warehouse as it is much cheaper than per diem charges.
By so doing, you also allow the container to be returned to the port at the required time.
How Is The Per Diem Charge Different From Port Storage Charges?
We can easily define per diem charges as “equipment rental fee” while storage charges are incurred as a result of using the physical space at the port once the free time lapses.
Are There Any Special Considerations In Relation To Per Diem Charges?
No. Per diem charges are fixed and it’s only the free days that can be negotiated upon.
Why Are Per Diem Charges Controversial In The Shipping Industry?
Per diem charges are controversial since shipping lines have been accused by importers and exporters to have unfair practices (e.g., unreasonable charges and less free time).
This has led FIATA and USFMC to introduce practice guides and recommendations to curb such practices.
Storing Cargo In A Warehouse Saves Money As You Avoid Charges Resulting From Overstay
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