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What is dwell in shipping and how does it impact freight rates?

February 23, 2022 Kevin Baxter


Dwell is a shipping term that primarily refers to the amount of time a container spends at a facility like a terminal or port between when it's unloaded from one form of transport and moved out of the facility. The issue of dwell comes into play in container shipping, so it's primarily associated with intermodal and ocean freight. Costs related to dwell may impact freight rates already, or they may be added on as accessorial charges if containers overstay their allotted time - a term referred to as demurrage. Containers that dwell for a lengthy period at a terminal are considered aging cargo. Beyond the primary form of dwell, street dwell describes the period containers spend when pulled out of the terminal by truck - typically to avoid demurrage. At any rate, dwell is a common issue especially as supply chain constraints abound.

What are dwell fees?

Dwell fees are the costs associated with dwell - the time a container spends at a terminal - and vary based on the location as well as market conditions. Typically, a certain window of terminal dwell is allowed fee-free, with dwell fees based on the time above and beyond that allotted period - invoiced as demurrage. Storage is similar to this type of fee, though that typically refers to a more planned scenario. Beyond these more built in freight charges are market-based additions - to address congestion and/or to incentivize adjustments in shipper and carrier behavior.

For instance, starting in fall 2021 at ports like Long Beach and Los Angeles, dwell fees were announced for containers spending anywhere from six to nine days or more on site, whether full or empty. The fees - or threatened fees - would be $100 per day, increasing in $100 increments per container per day the longer they remain beyond the allotted time. While the ports levy these dwell fees against ocean carriers, the carriers typically pass them directly to shippers, resulting in increased freight rates. In this case, the threat of the fee has coincided with a reduction in aging cargo, so leaders repeatedly delayed its implementation.

When dwell fees are assessed differently for railroads than trucks, concern may come from either direction. Going back to the Long Beach and Los Angeles example, the initial dwell fee structure allowed three extra free days for truck containers. This led rail companies like BNSF and Union Pacific to express concern that intermodal shipping would be negatively impacted. The Los Angeles Harbor Commission eventually equalized the days, as they noted fewer shipments going by rail during the time when the fee-free periods differed.

Find yourself dwelling on dwell fees? We can help. Drop us a line and we'll be happy to get back to you to discuss your company's shipping needs, and how we can help avoid those extra charges that can impact your freight rates.

In the meantime, check out our Learning Center to find more on this and a variety of other freight and logistics topics, so you'll know supply chain lingo and issues up and down. Here are a few links to get you started: 

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