What’s inside?
Most freight forwarders struggle to achieve full visibility, requiring a great deal of detective work when it comes to ocean freight tracking and logistics operations. Crucial milestones, such as the actual time of arrival (ATA) and the actual time of departure (ATD), are not provided by most carriers. The carriers don’t necessarily provide milestone updates for a hundred percent of ocean freight shipments, even regarding the milestones they do usually cover. Sometimes shippers and freight forwarders will get updates, and sometimes they won’t.
Additionally, carrier updates are often delayed hours, sometimes days, creating many blindspots and uncertainties during a shipment. Large latency gaps, meaning the gap between the actual occurrence of the milestone and the update, can be costly. For example, if a container arrives at a port on Monday and you only receive an update on Wednesday, it will cost you two days, which can incur detention and demurrage charges.
Container Milestones and Vessel Events
It’s important to differentiate between the container and vessel journeys. For example, a situation where multiple vessels transport container X from the original port of loading (POL) to the port of discharge (POD). Transshipments complicate the issue, often forcing freight forwarders to act as detectives to try and figure out exactly where their container is and where it’s going. In a traditional transshipment scenario, container X will leave the original POL on vessel A, travel to a transshipment port, be discharged from vessel A, and be loaded onto vessel B, which will transport it to the final POD. In more complex scenarios, there could even be one or two more intermediate ports along the way.
Which Milestones are Important?
There are many milestones along the container journey that are important for shippers and freight forwarders. For example, vessel arrival at the transshipment port, vessel departure from the transshipment port, and all the port calls along the vessel journey. The two critical and the least reported milestones by carriers are when the vessel arrives at the POD (ATA) and vessel departure from POL (ATD).
This leaves shippers in the dark and makes it difficult to plan for extra charges that may occur if there is a major delay in ATA, or if it is arriving early.
“Loaded at POL” is another important milestone for both importers and exporters. When there is a freight on board (FOB) agreement in place, it is the point of handover between the shipper (exporter) and the consignee (importer) – meaning that the shipper gets paid when the cargo is loaded on board.
What is an FOB agreement? “FOB shipping is an international commercial term (Incoterms®) indicating the point where costs of shipping and liability of goods transfers from the seller to the buyer…the seller is responsible for the goods and transport costs until their delivery to the shipping ports. Subsequently, the buyer takes responsibility from the port until the goods’ final destination.”
The Value of Visibility!
A solution that uses Maritime AI™, such as Windward Ocean Freight Visibility, can fuse multiple data sources with AI technology, ensuring the gaps of missing information are filled. Proprietary geofencing provides information directly, and in real-time, solving latency issues.
Over the past 12 years, Windward’s maritime experts have been enhancing the global mapping of container terminals and ports. The boundaries of each terminal (“polygons”) were mapped based on official information provided by the terminals and are monitored daily for changes to any of the 1,400+ polygons. Part of the daily monitoring process is based on our extensive and constant tracking of all container vessels globally. This enables real-time updates on vessel departures from POL, arrivals at POD, and arrivals/departures from transshipment ports.
Having full visibility of milestones provides much-needed value, including:
- Knowing when the shipper can hand over the responsibility of the shipment to the importer and when the cargo is loaded on board. This is the point where the shipper gets paid and obviously wants to receive the money ASAP.
- Better management of land transportation and warehouse staffing by knowing when the container was loaded onto a vessel at the transshipment port, and when it was discharged at the POD, freeing up personnel for more critical tasks and knowing when/how to scale.
- Keeping track of critical dates, such as ATA and ATD, to validate late fee invoices – instead of wasting money on inaccurate detention and demurrage charges.
Validate Detention & Demurrage Charges with ATA & ATD Milestones
Full visibility of ATA and ATD milestones will help validate the dates on late fee invoices (for detention and demurrage charges). They can be used as evidence, if there is a need to refute them, instead of just paying the charge and unnecessarily wasting money.
What is the Difference Between Demurrage and Detention Charges?
As our previous blog post mentioned, demurrage and detention may have various definitions according to different stakeholders, but we believe these are the most widely accepted definitions:
Demurrage charges:
When shipping cargo, the containers arrive at the port of destination (PoD) and must be moved off the quay within a specific number of days. Known as free days, they are negotiated with the carriers as being included in the shipping price. The carrier will cover the demurrage charge from the port for these days. After these “free” days, if there is a further delay in collecting the containers from the port, the shipper will need to begin paying demurrage charges.
Detention charges:
Like demurrage, detention charges are levied when an empty container is not returned to the container yard or port within the allotted time – a specific number of days the carrier has given the shipper to use the container. Detention charges are there to motivate shippers to return containers in a timely manner for reuse. For example, a shipper may have five days to return containers to the port. The shipper will be charged a detention fee if there is a delay.
Looking Ahead
Managing shipment milestones is critical for effective and efficient operations in today’s fast-paced world of shipping and logistics. Unfortunately, many freight forwarders struggle to obtain complete visibility.
Achieving full visibility of these milestones ensures on-time and efficient delivery of goods, as well as earlier tracking, and reduces the need for manual work. Milestones are updated as they happen, rather than retrospectively, improving your agility in real time. This greater visibility translates into increased productivity, improved customer support, and ultimately, better ROI.
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