Port Charges, Demurrage, TMF & More: A Paying at the Port Primer
Ports are a major link on the supply chain which continue to account for a number of hangups - and corresponding port charges are a part of the issue. When all is said and done, a shipper - or someone - is responsible for paying a variety of port charges when moving product inland through the ports. There are no shortage of potential port fees to navigate when things are complication-free. But in an especially complication-full environment, it's important to factor in all areas, including traditional port dues, demurrage, detention, TMF, and more.
How are port charges calculated?
Port charges are calculated based on a combination of fees, some of which are required in all cases and others which depend largely on timing or other external factors. Some are calculated based on the type of freight, value of freight, how it's packed, weight, size, how long it is held in the port, or the sheer amount of goods. Examples of required fees include charges for the goods themselves - AKA goods dues, terminal handling charges (THC) for loading and unloading ships, and port storage - either as arriving freight awaits customs clearance or departing containers await shipment. A note: Port storage is generally an unavoidable charge, though some free days are typically included on both the front and back-end.
Port charges that largely depend on timing include demurrage, detention, and early or late arrival charges. Other external factors can lead to cancellation charges, amendment charges, lift on/liftoff charges, restow, and container stuffing/destuffing. Some ports also charge traffic mitigation fees - also referred to as TMF - to trucks. And another variable fee is increasingly becoming the norm: port congestion surcharges (PCS) which address - you guessed it - port congestion.
What is demurrage charge?
Demurrage charges are assessed when cargo is left at the port or terminal beyond the allotted free time, whether it's inbound our outbound. Port storage is not normally one in the same as demurrage, though in some cases they're considered as such. While at times factors that seem beyond the shipper's control - like congestion - may cause the delay, demurrage is normally billed regardless.
The demurrage charge is levied by the freight line at a per day rate that escalates the longer the load remains stationary. Demurrage charges aren't to be confused with detention charges, which refer in this case to fees levied for holding a carrier's container beyond allotted free days outside of the port/terminal (detention in other scenarios may also refer to an hourly charge for loading/unloading containers beyond a driver's allotted two hour free window). And as one may expect, demurrage and detention charges are not without controversy.
What is TMF fee?
A TMF fee, or traffic mitigation fee, is levied to trucks by certain ports - namely the major ports of Long Beach and Los Angeles in California. The fee was instituted at these ports for day-side trucks to cover costs of offpeak (i.e. overnight) gate shifts. PierPass - the organization that implements the TMF - says the fee addressed congestion among drayage trucks that caused backups on local roads. The fee is generally tied to inflation, but other market conditions can also factor in. Paying this TMF fee requires creation of a PierPass account. Other ports have considered implementing similar fees, though Long Beach and Los Angeles remain the prime examples.
How to avoid port charges
While some port charges are unavoidable, others can be minimized or avoided altogether. It starts with knowledge - as in, knowing the number of free days allotted. Additionally:
- Pre-clear cargo by submitting shipping documents as early as possible
- Try to avoid any last-minute itinerary changes
- Line up multiple trucking options
- Track containers closely
There may be a lot to keep track of here, but that's where working with a third-party logistics provider can help. Let Us Know if you're interested in putting our connections, experience, and personalized service to work for you, and we'll be happy to discuss how we can help with your company's needs.
In the meantime, learn more about some of the aforementioned fees. Then, browse our Learning Center to get more freight and logistics information. Take a look through a few highlighted pages below if you need help getting started:
- Domestic Freight Services: Intermodal, Truckload, LTL
- Outsourced Managed Transportation Service Solutions