You won't be in the logistics industry long before you encounter the contentious topic of detention fees.
Detention fees are payments made to carriers after their driver is delayed at a shipper beyond the industry-standard grace period of two hours. Beyond that two-hour window, detention fees accumulate at a rate of $25 to $100 per hour.
Seems straightforward, right? Wrong.
Why are detention fees such a contentious subject? Between carriers, brokers, and shippers, everyone seems to have strong (and differing) opinions regarding detention.
Further complicating the subject of detention is the post-pandemic global supply chain squeeze. I don't know about you, but when the Ever Given got stuck for a week in the Suez Canal, one major question I had was how everyone would handle the detention fees!
So today, we'll ask:
- What's the deal with detention fees?
- How is detention defined?
- What are the differences between detention and other fees (like demurrage)?
- Honestly, why do people freak out about detention in general?
- And finally, how can the industry solve the problem of detention?
Let's get started—we don't want to get detained!
Detention is such a heated topic that some believe the Biden administration will step in. Do we really need to go all the way to the top to solve detention? I suppose it can't hurt. It also doesn't hurt to get clear about our basic definitions.
Driver Detention Fees
Shippers incur these fees when a truck driver has to wait a certain amount of time in order to be loaded. As noted above, the industry standard is that detention kicks in after a driver has been at a shipper for two hours. Those typical detention fees of $25 to $100 per hour can really add up.
Dwell time is how long a truck driver has waited at a shipper. Facility managers who track dwell times using a document digitization tool like Vector's can get a fairly accurate, high-level gauge of their facility's overall efficiency. Electronic logging devices and digitization tools like Vector's automatically time-stamp all movements and paperwork. This builds trust and helps alleviate contentions over dwell time.
Missed Appointments and Lost Loads
Missed appointments can result in a driver losing their next load. This ripple effect is a hidden cost of a driver being detained on one load. With stricter ELD mandates, plus driver safety standards, a driver can't just gun it and make up lost time like they used to.
Port Detention Fees
Port detention is the penalty accrued when a container exceeds the free time allotment from when it leaves the port's gates until it comes back empty.
Shippers incur these if their containers are detained at a port. The time after your container arrives at the port, and before a truck picks it up, is considered port storage. It's considered free time up to a certain extent, typically two to five days. When you exceed free time, you begin getting charged demurrage fees.
This is the amount of time your container can sit in port storage without charge. As mentioned above, typical free time is two to five days. This depends on the container. For example, dry containers typically get more free time; refrigerated containers get less.
Back in the day, a detention slip was the piece of paper you might have gotten from the principal that listed the time and date of your detention. You'd serve detention after school, and it would last somewhere around an hour. If you really screwed up, you'd have to serve detention for longer periods of time, during school hours, or even on Saturday. (See The Breakfast Club for more about this type of detention.)
Of course, now that you're out of high school and in the logistics industry, a detention slip has a different meaning.
In order to request a detention fee, a detention form is typically required. Drivers must be diligent about filling out detention forms with all required information. It's worth noting that if a driver misses their dock appointment, they're ineligible for detention.
In reality, paperwork is the bigger bottleneck in logistics, and detention slips just compound delays across the supply chain! But there's a better way to do paperwork, and we'll cover it below.
Most people in the supply chain agree that lengthy loading dock times have plagued the industry for years. But I think our individual issues with detention started with our first detention slip!
Let's take a closer look at why the term detention strikes fear in so many hearts.
The Detention Slip: Why Is Detention Such a Contentious Subject?
I think the anxiety that surrounds detention culture begins when we're young.
Remember the first time you got detention back in school? Maybe something happened in class. You stepped out of line. Then you hear the booming voice of God. The loudspeaker called you out by your full name. Please report to the office!
The death march down to the office was bad; waiting in the chair outside the principal's office, torture.
In the Belly of the Beast
The office smelled of burnt coffee and pencil shavings. Compared to the rest of school, it was quiet, serious, confined. This space filled your senses with horror. Years later, you might have felt the exact same way while walking into your first real office job.
Worst of all was the innocent kid who walked into the office after you. You asked, "What are you in for?"
His reply ripped out your soul. In for? He was just waiting for his mother to pick him up. He had a doctor's checkup, and afterward he'd get a lollipop.
By the time you sat in front of the principal, you were already a shell of your former self. Alas, the principal was immune to your pitiful tears. Detention for you!
As an armchair psychologist, I can tell you that an early experience like this gives detention a contentious and bad vibe.
Can We Solve the Issues of Detention?
When we dig deeper, we see that detention is a safety issue. An FMCSA report indicates a correlation between speeding and crashes. As noted above, drivers who miss their dock appointment can't request detention. A missed appointment can really upset a driver's schedule—without compensation for dwell time. Not to mention, a driver detained on one load may miss their next!
Therefore, everyone must realize that this policy regarding appointments incentivizes speeding and unsafe driving practices. Why? Appointments ensure the possibility that a driver can request a detention fee when dwell time is excessive. Put simply, drivers might speed or drive erratically in order to get to an appointment.
On one hand, it's understandable. Drivers are like you and me. No one likes to miss an appointment or get hit with additional fees. A driver who gets detained and speeds to the next appointment is simply trying to protect their livelihood.
Who Is Trying to Take Advantage of the System?
On the other hand, we need to acknowledge that at times, people try to cheat the detention economy. Let's face it: There's money involved with detention. Sometimes brokers, drivers, and shippers try to work the system. Sometimes that means fudging numbers about where a driver or container was and for how long. The goal is to either make a bogus claim to get a few bucks, or avoid payment and save a few bucks.
Regardless, the result is that detention is a divisive topic.
How Can Technology Assuage Detention Fears?
A technological advance like Vector's digitization software can help alleviate detention-fueled contempt. A truck's ELD and the automatic time-stamp on Vector's digitized documents removes the guesswork!
In general, the entire supply chain can benefit from greater visibility. Consider this. If shippers, brokers, and carriers were able to share and see the same real-time information regarding a driver's status and location, perhaps unsafe driving could be avoided.
Beyond that, at a more granular level, digitized documents streamline everyone's workflow. Ideally, there are no more slips of paper and no more detentions, which makes everyone happy.
Don't Deny the Impact of Detention
The state of the supply chain in 2021 has provided a broad understanding of the ripple effects of detention. When a container shortage collided with a capacity shortage, it led to even more delays. In light of the e-commerce boom and global post-pandemic awakening, we have a real battle on our hands.
In the final analysis, I think the issues we face today are complex and started long ago. For example, it's like unpacking your childhood baggage. That said, we've all been there—we made it this far. In fact, we're the ones sitting behind the desks now. And I doubt Mom ever stopped loving you even if you did get detention.
Put another way: Let's honor the past, but without getting detained in antiquated ways of doing business. Instead, let's honor our dreams about a better future. So let's enact a tech-inspired industry standard that solves detention once and for all, shall we?
Lollipops are on me.
This post was written by Brian Deines. Brian believes that every day is a referendum on a brand’s relevance, and he’s excited to bring that kind of thinking to the world of modern manufacturing and logistics. He deploys a full-stack of business development, sales, and marketing tools built through years of work in the logistics, packaging, and tier-1 part supply industries serving a customer base comprised of Fortune 1000 OEMs.