Today’s ocean freight shippers have plenty to worry about: from the persistent specter of labor issues to sluggish global imports, 2023 has brought anything but the smooth sailing that shippers were hoping for. However, in the constant onslaught of headlines, shippers can lose sight of the essential details.
Though not as attention-grabbing as global trade wars or labor scuffles, the persistent rise of per diem charges at international ports has been a constant thorn in the side of ocean freight shippers from Savannah to Shanghai. These charges, levied against shippers by increasingly fee-hungry carriers, can sink a shipper's bottom line. With this in mind, we’re digging into what’s behind the spike in per diem ocean freight charges and how smart shippers are leveraging ocean container tracking to bolster their bottom line against rising per diem charges.
What’s Behind the Rise in Per Diem Charges?
Despite the ubiquity of per diem charges throughout the ocean freight industry, the reasoning behind these charges can be confusing for shippers. Ultimately, a per diem charge is the charge an ocean carrier levies against shippers for failing to move containers within a previously agreed-upon timeline. “Per diem,” Latin for “each day,” refers to the fact that these charges reoccur each day past a shipper's final “free day,” or the last day a container can be left in a port or terminal without incurring any extra expenses.
In today’s volatile ocean freight environment, per diem charges can significantly impact a shipper's bottom line. As carriers restructure and ports struggle to navigate high-stakes labor issues, shippers are increasingly likely to encounter problems when attempting to move containers from port-side storage facilities. If a sudden blank sailing leaves a container stranded or a drayage provider falls through on short notice, shippers can incur per diem fees until alternative transportation can be found — a task that, in today’s volatile transportation marketplace, has no specific timeline.
Per diem charges generally hover between $75 to $150 following unprecedented volatility in recent years. According to ContainerXChange, port charges, including container per diem, were 12% higher in 2022 than their pre-pandemic levels. Despite legislative efforts to lower port fees, hard times in inventory and warehouse management may force shippers to take on still more per diem charges. A severe lack of warehouse capacity is forcing some shippers to leave inventory at ports, leaving them vulnerable to port fees. Regardless of why companies incur per diem charges, the results are the same: higher transportation costs. As a result, shippers are more desperate than ever for innovative solutions to the persistent problem of per diem charges.
Why do Shippers Struggle to Avoid Rising Per Diem Charges?
With rising per diem charges exacting a heavy toll on today’s shippers, many in the transportation industry are searching for ways to avoid per diem charges altogether. However, a few key challenges stand between today’s shippers and a supply chain free of per-diem charges.
- Ineffective Container Tracking leads to a vague understanding of real-time container location. It can leave shippers struggling to gain visibility over operations as their containers rack up per diem charges.
- Poor Exceptions Awareness often leaves shippers struggling to contend with an increasingly disruption-prone supply chain—an especially costly blind spot as the prevalence of blank sailings continues to increase.
- Ineffective Collaboration Strategies mean that shippers struggle to convey accurate container data to supply chain partners, which can quickly result in containers overstaying their welcome at crowded ports.
As per diem charges continue to rise, shippers are desperate for solutions. Increasingly, shippers are finding the answer to increasing per diem charges in ocean container tracking.
Is Ocean Container Tracking the Solution to Rising Per Diem Charges?
The global track and trace market is on the rise, set to increase from $6B in 2023 to a staggering $20B by 2030. As the demand for container visibility solutions continues to grow, it’s clear that ocean container tracking is now a permanent fixture in the maritime supply chain landscape. Accordingly, many shippers are turning to ocean container tracking to navigate rising per diem charges on ocean containers. Through three critical features of ocean container tracking, smart shippers are leveraging innovation against rising per diem charges.
End-to-End Visibility
Today’s ocean freight professionals know that, in a competitive supply chain, visibility can’t stop at the vessel. While most shippers have access to some sort of ocean freight visibility, vessel-only visibility leaves shipments vulnerable to slowdowns at ports, which then leaves shippers exposed to the high costs associated with rising per diem charges. Shippers are helpless to avoid per diem charges without visibility over drayage and intermodal transportation.
End-to-end visibility follows a shipment from initial loading, through ocean transportation, onto the drayage vehicle and through the intermodal transportation process. This ensures maximum visibility over shipments not just on the vessel but throughout the highly complicated port transportation process and the intermodal transportation process. With end-to-end visibility, shippers can quickly adapt to port-side disruptions and build a resilient supply chain from departure to destination.
Integrated Exceptions Awareness
In the highly unpredictable ocean transportation industry, exceptions are an inevitability. Volatile global trade issues, increasingly unpredictable weather conditions, high-stakes labor issues, and blank sailings can all lead to significant delays in transportation, which can quickly result in costly per diem charges for shippers. Shippers are helpless to mitigate the negative impact of exceptions without adequate exception awareness.
With tech-enabled real-time alerts, shippers can maintain the operational awareness needed to mitigate exceptions seamlessly. Customizable alerts for everything from rolled cargo to the last free day ensure that shippers have the insights they need to adjust in real time and avoid the high price of increasing per diem fees.
Scalable Collaboration
As the global supply chain becomes ever-more interconnected, shippers are under increasing pressure to improve collaboration. However, collaboration is limited without the right tech stack, leaving shippers open to logistical vulnerabilities. Shippers need accurate ETAs, timely communication, and visibility to maximize their transportation partnerships at the port and beyond.
Shippers increasingly turn to ocean container tracking software to provide the collaboration capabilities they need. An API, or application programming interface, allows different software applications to cooperate through a single platform, ensuring maximum interoperability between various platforms. This will enable shippers to work seamlessly with transportation partners through a single, cloud-based platform. With a scalable API, shippers can leverage the full value of their supply chain ecosystem to combat rising per diem charges.
What Does the Future Hold For Per Diem Charges?
While it’s difficult to predict what direction per diem charges will take in the coming months, some industry experts predict that ongoing warehousing issues could increase shipper vulnerability to per diem charges in Q3 of 2023. In an interview with CNBC, Paul Brashier, vice president of drayage and intermodal for ITS Logistics, warned shippers that a lack of warehouse space could force some shippers to use shipping containers as a makeshift warehousing solution, which he says could cost “[...] tens of millions of dollars in penalties.” Unfortunately for shippers, Brashier predicts that per diem charges will continue to rise in the year’s third quarter. Without a guarantee that per diem charges will fall, smart shippers are turning to ocean container tracking as the solution to rising per diem charges.
With Per Diem Charges on the Rise, Smart Shippers Choose Ocean Container Tracking From OpenTrack
As per diem charges continue to increase, shippers are under pressure to find solutions. With OpenTrack, shippers can utilize the latest ocean container tracking technology to ensure maximum visibility across operations. By leveraging key features of OpenTrack’s streamlined, cloud-based API, shippers can navigate rising per diem charges while avoiding high costs.
- End-to-End Visibility means shippers can maintain visibility from vessel to drayage to rail.
- Automated Exception Alerts ensure that shippers stay in the know with rolled cargo, vessel delays, demurrage, and last free day.
- API & TMS Integrations offer shippers a streamlined solution to integrate software across the supply chain ecosystem, allowing maximum collaboration throughout operations.
Book a demo with OpenTrack today, and see how ocean container tracking can help your business fight back against rising per diem charges.
