September 7, 2021

How much is D&D costing your freight forwarding business?

The sharp rise in detention and demurrage (D&D) fees this year has caused many heated debates for freight forwarders, as any additional costs are much more keenly felt in the wake of the Covid pandemic.

The costs relating to time containers spend at ports has always been an area of friction for transport professionals but  media reports have put the rises in D&D fees as high as US$2,500 at some of the major US ports. Added together with rising demand for containers, congested port space, vessel delays and hinterland connection bottlenecks, the landscape for forwarders has been increasingly challenging. 

In a recent  webcast with the Journal of Commerce, Freight Payment: Technology and the Race to Improve Billing Accuracy, Expedock’s CEO and Co-founder, King Alandy Dy addressed the issue of detention and demurrage fees and spoke about technology’s role in meeting the ongoing challenge. He said that the key to minimizing the friction around D&D was through accurate data, transparency and communication with all parties. 

US Ports are up to 30x higher than other ports according to a 2020 study

“The difficulty for forwarders has been rapidly increasing,” King said. “Until now, freight forwarders haven’t had line-item level analytics on their invoices or been able to split up the item by vendor but now they really have to audit things and take a closer look at everything. The overall lack of visibility is becoming a much bigger pain point for those not using state-of-the-art AI-solutions.”

Technology’s answer to the D&D challenge

“The D&D challenge is not a new issue but it has become particularly acute this year, from an ocean freight perspective. A previous survey by Expedock looking into ocean freight forwarders’ costs found that duplicate D&D charges average at around 19.3%. D&D is a growing issue for everyone and technology is stepping up to provide answers to what is an ongoing and major financial burden of doing business. 

“One of the key use cases of our software is that Expedock can flag any duplicate D&D fees from either the drayage company or ocean carrier. Forwarders would usually need to do this by integrating the data from across various data sources, pulling it in from different systems allowing them to investigate the cause. It’s a lot of manual work, especially at scale, but technology can automate all of that.”

He went on to say that AI-powered automation was already delivering critical benefits for freight forwarders. Through streamlining the day to day billing and invoicing process, while handling data from multiple sources simultaneously, it was proving itself invaluable to cost reduction efforts. 

“Technology’s real advantage comes in increasing accuracy right down to the line item. King said: “Expedock uses its AI-technology to pull data from the physical document itself and reconciles that information instantly to provide immediate efficiency gains.

“Freight forwarders want to remain flexible with who they work with so setting up an EDI connection is not going to work for everyone. It’s here where the PDF documents and flat files remain a necessity of doing business. This is why it has not always been straightforward for companies to optimize their processes. Expedock fills in that gap and offers a solution to the problem.” 

Technology will be used more and more to automate the mundane parts of the sector and be used to increase efficiencies. There’s no doubt that the freight forwarding landscape is changing and technology will have an increasingly important role to play.

Hear the ‘Freight Payment: Technology and the Race to Improve Billing Accuracy’ webcast in full here. If you would like to speak to someone on addressing the accuracy challenges in Freight Bill Audit and reconciliation please contact us.

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