Detention On Full Truckloads - Advice for ShippersPosted On 14th November 2016
The shipper’s perspective on detention and why they don’t want to pay detention fee was recently summed up by an email I received from an unhappy client who posed the following:
“When trucks are late for the appointment it causes me to have down time with my labor and delay other trucks from other companies. Who pays for that labor and the other companies’ detention? I would like to know where I send that invoice to.”
He has a point, although it is based on several misunderstandings.
Few Facts to Remember:
#1. Freight Brokers do not own these trucks. For example, when you book on Expedia and are charged an extra luggage fee, you get mad at the airline, not at Expedia. Similarly, shippers should not get furious at their freight broker for applying the detention fees. Freight brokers cannot provide shippers with great pricing and service without being indemnified for the extra charges imposed by the carriers.
#2. The spot market works on the assumption that after two hours of waiting, if the carrier was on time, they are entitled to charge detention. Period. It is a very standard contract term. It is reasonable. Carriers and drivers cannot, without compensation, hang out very long getting loaded or unloaded and stay in business. They also deserve compensation for their time and equipment being out of service. Detention is part of the Broker-Carrier contract and is in every Trucker Tariff. If you sign an agreement with any broker, online or otherwise, you (the shipper) are subject to the Trucker Tariffs and various Accessorial Price Agreements of the Full Truckload or Volume truckers, if that is what you booked. It is unethical not to pay drivers and carriers reasonable detention and other charges IF the carrier was early or on-time for the appointment UNLESS special exceptions were carved out in advance with the carrier.
#3. The shipper’s expectation of compensation due to a truck not showing up and the consequent downtime with per hour labor the shipper is paying is, strictly speaking, a feature of and risk to the shipper’s business and not to the carrier’s or to the broker. All carrier tariffs and the agreement with the freight broker usually will clearly say that “we are not liable for the damage to your business due to late deliveries, missed pickups, etc”.
Shipper can contractually get the carrier to accept that liability or perhaps some defined penalties for lack of performance, including missed pickups, but shipper needs to state this up front and modify the contracts and agreements with their freight brokers or carriers. Shipper needs to be proactive and do this in writing in advance. These new contract terms might reduce the pool of available carriers to you, it might raise your prices, but it might not also it will depend on the specifics. The increased costs for more reliable on-time truckers might be greater than the labor savings and hassle savings.
To answer the question of “who pays for other trucking companies detention when I am late because Carrier A showed up late on first appointment slot?” or something close to that – again, such a negative cascading effect on the shipper’s loading plans for the day is for the shipper to manage. A solution is when the first driver is late – say he is a half hour late – you agree to load him but you make the broker make the carrier sign an Addendum to the Load Confirmation that the carrier foregoes any possibility of charging you or the broker detention, and any resultant layover charges as well, and that you reserve the right to load him in an intermitted fashion between other carriers who show up on time for their appointments during the day – so you kick him off the dock when the other trucker’s show up – and you bring that late truck who has agreed to the Addendum back between the other “on-time” trucks. I also would make sure the driver understood the arrangement, I’d make sure the Broker called them - without driver agreement it makes for a miserable day obviously and no one needs drama.
Detention, missed pickups and layover charges are real cost killers – but they can be reduced drastically if managed properly.