With the COVID-19 pandemic, containers are piling up at ports. And container chassis trapped underneath. As a result, demurrage and detention charges, along with several other charges, are shooting up, including chassis surcharge.
The Chassis Usage Charge is one of the several additional charges incurred while moving your cargo. Until 2009, the carriers used to own and provide chassis along with the containers. However, MAERSK exited the chassis business with other companies following the league. This forced the trucking companies to purchase or rent their own chassis. And in came an additional charge.
As for now, the shipping industry is still searching for a cost-effective solution. Meanwhile, here’s clearing up the chassis surcharge and how you can reduce your chassis surcharges.
Chassis Surcharge Explained
Chassis is used to move the containers in/out of the ports. For the same, a usage surcharge is imposed. The Chassis Usage Fee is one of the several additional fees making the total freight charges. It can typically range from $15-30 per day.
But it is not exclusive. Chassis charges are linked to many other fees like congestion surcharge, terminal handling charges, consolidation fees, etc. But the main charge that is dependent on the chassis is demurrage and detention fees.
Demurrage refers to the time in port after arrival — a full container has to be moved out of the terminal to be unpacked within the allocated free days, otherwise, demurrage charges are added.
Detention refers to the time outside the port — if the consignee holds on to the carrier’s container beyond the allowed free days, detention charges are incurred until it is returned empty to the shipping line.
Demurrage and detention fees are added to decrease the container’s turnout time and make the process faster and more efficient. However, you cannot always predict what happens at sea. The vessel might be running late, the port is full, or the chassis is not available — it can be anything.
At most ports, it is difficult to get chassis because they are congested. That leads to higher demurrage and detention charges. And the recent COVID-19 situation has caused further complications.
COVID-19 and Shipping Surcharges
The havoc wrecked by the COVID-19 across the world is causing the economies to crash. With the disruption caused in the industry by the COVID-19, rising administration charges are a new headache for the freight forwarders and shipping companies.
In the shipping industry, this has led to fewer vessel callings and blank sailings. Without cargo to handle, terminals are placing restrictions and limiting shifts to save labor costs. Some ports are not even accepting empty containers now. Vessels aren’t available to unload empty containers back to China. These containers are piling up with chassis trapped underneath them. This leads to unavailability of space at ports and of chassis as well. As a result, demurrage and detention charges, along with several other charges, are shooting up, including chassis surcharge.
Managing Container Chassis Costs by SOC
The additional charges can be managed by using SOC — Supplier Owned Containers. Here’s why.
With SOC, you are in full control of the container, be it supply, time or ownership. By sourcing your own container, you can choose the time for which you need the container.
Controlled Additional Costs
Because you have better control over time and ownership, extra demurrage or detention charges can be avoided. Seeing you’re not obliged to move the containers within a limited time.
Unavailability of Container Chassis
Equipment like chassis is usually available at ports. However, moving the containers to inland locations can be a bit of a problem. Especially when the distance between the loading/unloading point and the place where chassis are available is considerably more. Something that only adds on to the costs. SOC can be cost-efficient, keeping the time and distance factor in mind.
In Control of Time
There are times when the port is congested, and the chassis charges are skyrocketing. While other times, the port is relatively empty, and chassis charges are controlled. With SOC, you can choose to wait for the port to get empty. You can also wait for the equipment to be available at reasonable charges. Both without worrying about piling demurrage or detention costs.
Negotiate the Chassis Fee with your Container Provider
Usually, forwarders providing SOC also provide the chassis for the container at reasonable charges. You can talk with your container provider about the chassis as well and negotiate the fee.
Soc containers and xChange
The purchase, leasing, and management of chassis are becoming a headache for the carriers due to several extra costs incurred due to it. And we know these costs are not going away anytime soon. However, with SOC containers, you can manage the freight finances better.
And as always, Container xChange has got your back. You can just type in your location, choose a suitable container and get work done quickly. Avoid incurring any extra costs by xChange. We can help you find SOC Containers in more than 2500 locations worldwide.