The costs of ocean shipping can be quite high. In some cases, the fees might be considered exorbitant — especially when you compare them to the amounts you were charged just a few years ago. Ocean detention and demurrage costs have skyrocketed in recent years.
To keep your shipping expenses under control, your only choice is to pay close attention to what you’re being charged. That proposal may seem easier said than done though.
You need a post audit solution that empowers you to save money without draining your company’s resources.
The Costs of Ocean Detention and Demurrage
Analyzing shipping costs, whether associated with ocean demurrage, rail per diem or truck driver detention, can be a complicated proposition.
For one thing, different companies involved in the shipping process levy different fees. Rates aren’t standard across the board. Plus, not everyone even uses the same terminology. What one company refers to as “detention,” another company might call “per diem.”
Even if you can keep all of that straight, your organization may not have the capacity to handle such an intense level of scrutiny. There can be several reasons why you might find it easier to ignore overpayments than to try reining in those costs:
- Time: Combing through billing statements and other records isn’t a one-and-done task. Staying on top of fee analysis requires a dedicated block of time on a regular basis, and many organizations simply can’t do that.
- Manpower: An organization also needs one or more people to be in charge of this task. If everyone on the team already has a full plate, pulling someone for this responsibility may require ignoring other essentials.
- Business intelligence: To be efficient and thorough in fee reviews, data analysis tools are a must-have. For organizations without intelligence tools at their fingertips, the idea of performing fee audits may be a nonstarter.
- Constant changes: Even if an organization gets started with this process, regular changes within the industry can make it hard to keep up. Shipping disruptions from 2020 and beyond have made the cargo industry more convoluted than normal. Unless your sole job is to stay on top of industry changes, keeping track of everything could be enough to make your head spin.
Without these pieces of the puzzle in place, figuring out where errors are occurring and refunds are due may seem well near impossible.
Recent Updates in Ocean Detention and Demurrage
More than anywhere else in the world, American ports are likely to drive your shipping fees up and up, higher and higher. A 2022 report ranked ports from around the world based on their detention and demurrage charges.
According to this research, the world’s most expensive ports are all located in the United States. The locations that make up the top five are New York, Long Beach, Los Angeles, Oakland and Savannah.
They’re not just a little more expensive, either. Fees at these ports are at least twice as high as those from Hong Kong, which takes seventh place on the list of the most expensive ports.
The exorbitant prices can be crushing for those who rely on ocean shipping. In mid-2022, detention and demurrage fees were about 12% higher than they had been before the pandemic. That increase can significantly affect companies’ bottom lines as well as consumer prices.
Because of the economic impact, US legislation is attempting to curb exorbitant fees. The Ocean Shipping Reform Act (OSRA) was signed into law on June 16, 2022.
This act granted new authority to the Federal Maritime Commission (FMC). The agency was tasked with reducing shipping challenges. One area specifically addressed by this legislation was detention and demurrage fees.
In late January 2023, the FMC issued an update. An interesting point noted in the update was that more than 200 filers have appealed to a provision set forth in OSRA: the right to submit Charge Complaints in response to fees that seem excessive.
Solutions for Dealing with Ocean Detention and Demurrage
If you’re dealing with high shipping costs and enormous fees, the best solution is to outsource this task to a company that can fully focus on your post audit needs.
A dedicated provider won’t be limited by the factors that hold back your in-house team. Rather, you can count on a post audit organization to have the time, staff, data tools and industry knowledge to handle this responsibility.
Your post audit provider should scrutinize your payments to look for errors that may have occurred. Whether the bills were inaccurate or charges were duplicated, there may be money that belongs in your pocket. A post audit service can help you recover those funds.
The provider will also pay close attention to the fees you’ve paid. If you’re being overcharged for detention, demurrage or other fees, an audit company can catch those issues and get you the money you’re owed.
The best post audit providers use up-to-date data technology to uncover errors, overcharges and recurring fees. Plus, they cover contract compliance for not only ocean shipping but also any other forms of transportation that your company uses.
Trans Audit for Your Post Audit Services
For over four decades, Trans Audit has been a leader in post audit services. Using the latest in data technology, we’ve served hundreds of clients around the world.To learn how Trans Audit can save you on ocean detention and demurrage costs — as well as other forms of shipping overpayments and overbillings — schedule a consultation today.
