Warehouse and fulfillment facilities may see lots of truck traffic during a given day. Loading and unloading these trucks, managing the traffic flow, and ensuring that the right documentation is produced are all elements that must be managed, amongst others. More importantly is that all of this must be done in a timely manner especially so that loads get to their destinations on time.
For warehouses making sure that trucks move in and out of the facility on time also comes with another incentive, avoiding additional costs due to fees. Yes, fees are a part and parcel of the logistics industry and being aware of what these are is important. One of the most common fees that are charged to warehouse operators are detention fees. And no, we’re not talking about those times where you had to stay late after school for getting into trouble, although it’s just as negative.
In this article we’ll cover what detention fees are, what warehouses should consider, and how they can be reduced.
First let’s discuss what detention fees are. Detention fees are charged by carriers to a warehouses or merchants for reasons that cause the carrier’s driver to wait and be delayed. Detention fees could also be charged by a container owner (shipping company) for delays. Generally speaking, carriers and shipping companies give a certain amount of “free time” for a truck or container to remain idle at a facility in order to account for requisite tasks like loading, inspections, and so on. Anything beyond this block of “free time” and the warehouse or merchant can incur detention fees which typically run between $50 and $100 per day.
Detention fees are often confused with demurrage fees. While detention involves everything outside say a port, demurrage fees are charged when a container owned or leased by a shipping company is not picked up within a specific amount of time. If a container lays idle at a port or yard for longer than the specified timeframe the receiver of the goods will be charged for the extra time the container sits there, generally between $75 and $300 per day.
So, what are some common reasons why a warehouse or fulfillment center might incur detention fees? One of the most common reasons would be for dock delays. This could include delays during the unloading and loading process and could occur due to disorganization, minimal resources, equipment or software failures, and accidentally loading the wrong items onto a truck. Another would be wait times at the gate or lineups and congestion within the warehouse yard due to poor verification processes and scheduling. Providing wrong documentation is another reason that could increase wait times for a driver and incur detention fees. This could be when the truck arrives at the gate or dock, or when they reach their destination, including at border crossings and ports.
For warehouses and fulfillment centers it’s imperative to avoid or reduce this type of added fee as they can have a significant impact on logistics costs and ultimately their bottom line. So how can detention fees be reduced?
One of the reasons for detention fees we mentioned had to do with issues surrounding the yard and docks. By having yard management controls like a YMS in place warehouses can plan, organize, and manage the traffic that comes to their facility. A YMS will allow you to optimize the verification of loads at the gate decreasing wait times, share important documents with drivers, and if necessary, update and forward them quickly, schedule truck appointments in advance, as well allow your warehouse to direct truck traffic and manage dock assignments. A YMS will thus provide complete visibility of what is expected during a given day and bring organization to your yard. This in turn will reduce delays and wait times which should limit detention fees.
By having a YMS you will have a quick and easy way for drivers and carriers to contact you as well, either by email or SMS. If a driver is informed of a mistake or missing documents at a border crossing or port, they can contact you quickly so that you can verify and either send or make the changes immediately.
WMS technology in tandem with a YMS will also help to reduce detention fees. By having clarity on what inbound and outbound loads are arriving and departing warehouse staff will be able to prioritize orders and loads according to your expected schedule. Resources can then be properly allocated to meet trucks at the appropriate docks for unloading, as well as have staff prepare and stage loads at the corresponding docks to facilitate loading.
Furthermore, by using barcode scanning technology workers can verify items while they’re loading so that you guarantee that they are being put on the right trucks. Akatia’s WAM solution supports this type of functionality by having a built in YMS component as well as a mobile scanning application (WAM Mobile) to help organize your logistics and efficiently handle receipts and shipments thus reducing detention fees. On top of this if you’re accidentally charged detention fees you will have a clear time stamp to verify how long a truck or container was on premise and be able to recoup these fees.
Avoiding unnecessary fees like detention charges is key to avoiding overages in logistics costs. By understanding how these fees work, and what pitfalls can cause them you can better organize your warehouse and reduce detention fees. Including the right technology like a YMS and WMS as part of a comprehensive organizational plan will further give you the tools and capabilities to manage these variables and limit or eliminate these detention fees all together.
If you’re looking to transform the way you manage your warehouse and inventory, click the link below to get in contact with us. We’d be happy to speak with you!