Understanding Detention Fees and Why They’re Necessary
Ah, detention fees. They’re one of the least understood service charges and also one of the most notorious when it comes to customer complaints. Yet for trucking companies, detention fees are an unfortunate necessity for keeping business moving.
In fact, any fees collected from detention time often won’t even make a dent on the potential losses from getting held up at the dock. But what are detention fees, and how do they work?
What Is a Detention Fee?
Detention fees are a charge assessed by trucking companies when shippers or receivers hold trucks and/or trailers beyond the allowable time for loading and unloading goods. Basically, if a shipper or receiver delays a truck beyond a certain time limit, it must pay a detention fee.
An industry survey report commissioned by Transplace notes that, “81 percent of companies are keeping to the accepted industry standard by allowing two hours free detention, with only five percent of companies allowing less than two hours.”
The two-hour limit, however, tends to be a more realistic option for long haul trucking. With short haul, being on time is critical to avoiding losses. When you consider the number of same-day deliveries and back-to-back appointments trucking companies have on any given day, keeping trucks moving is of the utmost necessity. Best Yet Express falls into this category. Not only are we a short haul trucking company, only servicing Southern California, but most of our operational time is during regular business hours only.
The Reason for Detention Fees
For customers, detention fees may seem unfair, but when you look at the load board of any trucking company and the great pains they go through to make sure it’s properly scheduled, you begin to grasp just how damaging being stalled at a stop can be.
A trucking company’s load board will be full and scheduled the night before on a daily basis. Naturally, being stalled at one stop throws a wrench into the whole thing. We have to ke
ep moving to remain on schedule.
The other consideration for a trucking company in this position is reputation. At Best Yet Express we pride ourselves on our reputation. It’s how we keep our customers. If we promise to be at a pick up within a specific window of time and the previous stop has unexpected, excessive delays, we find ourselves in a sticky position with our other customers. This often causes a chain reaction that can throw off multiple shipments. We have a lot of customers depending on us daily that we have to answer to and we want to make excuses even less than customers want to hear them. While we do what we can to leave cushion times, these stalls have to fall into a reasonable window.
The Cost of Detention Time
Unexpected delays can lead to missed appointments and opportunities, increased equipment costs, and most notably, paying more for drivers’ salaries. In fact, unexpected delays are often more costly than deadheading (when trucks are moving without any load).
For example, if a driver is paid by the mile, detention time translates to lost hours that would’ve otherwise produced income. Obviously, your driver won’t like being forced to sit and not be paid for it.
If a driver is paid hourly, the cost for the trucking company to pay a driver for sitting can quickly diminish and often times eliminate any profit the company would be receiving. With the level of competitiveness of the industry profit margins are often so low it does not take much stalled time before the company actually starts to lose money on the load.
Workarounds for Shippers Known to Detain Trucks
Because detention fees are a punitive measure, it can cause some friction between trucking companies and their shippers. If you’re moving for a shipper that’s known for delaying your trucks, it may be easier to just charge a higher mile rate rather than just charging them with a detention fee they’ll only gripe about.
Bottom line, whether or not you agree with detention fees, they are a measure born out of necessity. Delays are unavoidable, which is why most companies have a 1- to 2-hour grace period for detentions. Anything more requires communication and an understanding of the rules and charges between trucking company and shipper/receiver.
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