Definition:
In the shipping and logistics industry, per diem refers to the daily fee charged by ocean carriers when a shipper holds a container beyond the free time allowed after pickup from the port or terminal. It compensates the carrier for the loss of container availability while it’s outside their control.
How Per Diem Works:
- Free Time: Carriers usually offer 4 to 7 days of free time to pick up, unload, and return the container.
- Daily Charges: Once free time expires, per diem charges apply per calendar day (including weekends and holidays) until the container is returned.
- Typical Rates: Per diem fees generally range from $75 to $150 per day, depending on the carrier, container type, and location.
Real-World Example:
Imagine an importer receives a container at the port on July 1st with 5 days of free time. If the container is returned on July 10th, the shipper would pay per diem for 5 days (July 6th to July 10th).
- If the daily per diem is $100, the total charge would be $500 (5 days x $100/day).
Why Per Diem Matters:
- Cost Control: Avoiding per diem fees requires efficient unloading and prompt container returns.
- Supply Chain Flow: Delayed returns can disrupt carrier schedules, leading to cascading supply chain issues.
- Contractual Obligation: Per diem terms are outlined in carrier contracts, so shippers should review agreements carefully.
How to Avoid Per Diem Charges:
- Plan Efficient Unloading: Ensure your warehouse or distribution center can process cargo quickly.
- Monitor Free Time: Track container arrival and free time windows closely.
- Work with Your Freight Forwarder: They can coordinate pickup and returns, reducing the risk of delays.
Per diem charges are avoidable but costly if containers aren’t returned on time. By streamlining operations and tracking container movement, shippers can protect their bottom line while keeping cargo flowing smoothly.
