My father was always fond of saying, “There is a lot of growing up between ‘it fell’, and ‘I dropped it.’” It’s a statement of personal responsibility and owning the outcome of your actions and choices. Not only is it an essential aspect of individual character but hopefully the collective character of a responsible organization.
However, it is possible to do everything right and still fall victim to circumstances beyond your control. One such situation is emerging in the intermodal shipping industry as of late. Due to shipping back logs, increased pandemic regulations, logistics and transportation labor shortages, and the general confusion of not knowing what tomorrow may bring, companies (often through no fault of their own) are paying more for their international shipping operations. This is mainly due to a common fee that has never presented itself as a problem in the past: a demurrage fee.
In the trade, transportation and logistics industries, a demurrage fee is incurred when a company fails to collect their container at the point of entry within a specified timeframe. It’s not an overly common fee as most businesses require their goods at ever increasing speeds to maintain their own stock or raw materials, especially in a just-in-time (JIT) production model. At face value, and in times of normal operations, this is a good thing. Demurrage fees at best incentivize smooth and efficient operations within shipping ports which benefits everyone, and at worst, they disincentivize companies from using dock space as de facto warehouses for their goods. However, these are not normal times.
Large, traditional ports of entry for international goods have always faced congestion problems. It’s simply a known reality within the logistics industry. However, this reality coupled with the complications of the global pandemic have resulted in a situation where drayage service providers are finding their trucks idling outside of the port gates rather than getting their payloads on the road. It is becoming increasingly common for companies to hit the demurrage deadline as their trucks wait in line.
How do companies avoid this situation? Simple. Ship your intermodal goods through an uncongested ramp. With the growth of international trade over the last forty years, and its reliance on the standardized 20’ or 40’ shipping container, intermodal ramps in less dense sub-markets have sprung to life to not only meet the need of a far higher volume than in the past but an increasingly decentralized manufacturing environment. One such facility is the ADM intermodal ramp in Decatur, Illinois which has no wait time and just a 25-minute turn time until you’re back on the highway. The ADM intermodal ramp also charges no demurrage fees.
If the last mile of your goods is not actually located within a major city, there is no reason your container must get stuck in one. This only costs your company time and money.
Written by Andrew Taylor, EDC’s Economic Development Officer