How Last Free Day Milestones Help Save Millions on D&D

Published on
Mar 13, 2024
Written by
Adam Baker
Read time
6 Minutes
Category
Articles

Adam Baker

VP of Customer Experience

In logistics, timing is everything. And when it comes to the logistics of inbound shipping containers, accurate ETAs have typically been the datapoint logistics professionals have focused on. Ultimately, this has also been the datapoint supply chain visibility companies have focused on as well.  

Because we take an industry knowledge first approach to visibility data, early on we asked, what are logistics teams actually trying to do with visibility data, and specifically ETAs?

What we found is that logistics teams were constantly checking ocean carrier and terminal websites and updating massive spreadsheets to schedule drayage as accurately as possible and to estimate the Last Free Day (“LFD”) for their ocean freight as early as possible.

The Last Free Day is the final day a shipping container can remain at the terminal before demurrage is charged, or the date a container must be returned empty to the terminal to not incur detention.  

Logistics teams use Last Free Days to prioritize which containers to have picked up or returned to the terminal first. Misjudging this date can result in costly demurrage and detention charges, chassis fees, and other per diem fees that can have a major impact on a company’s bottom line.

On the surface finding the Last Free Day is simple and straight forward.

Step 1: Identify the Free Time, the period during which the shipping container can be held at the terminal without incurring a fee.

Step 2: Determine the Discharge Date, when the container is unloaded from the vessel.

Step 3: Calculate the Last Free Day by adding the free time to the arrival date. For example, if the container gets discharged on the 1st of the month and the free time is five calendar days, the Last Free Day would be the 6th of the month.

In practice, however, it’s much more complicated for a few reasons.

  1. Free time varies depending on the shipping line and the terminal, and in some cases the Port Authority. Free time can range from a few days to a week or more at most ocean terminals, to a single day or less at many rail terminals. And some BCOs will have custom contracts that lay out specific Last Free Days.  
  1. Sometimes free time is calculated as “working days,” while other times it is calculated as “calendar days.” Then there are holidays to consider, and each terminal has different days/hours of operations.
  1. ETAs often change, which means logistics teams must constantly be checking carrier and terminal websites for the most up to date data for their estimations.
  1. Discharge dates provided by carriers and terminals aren’t always accurate, or even provided.

There are a lot of variables that come into play, and for BCOs importing hundreds, or thousands of containers per week, it’s a full-time job just to understand all of this. Often times, the best a logistics professional can do is make an estimation of the Last Free Day.  

If these estimations are wrong, it can result in hundreds or thousands of dollars in additional costs on a single container. In some cases, it results in tens of millions of dollars in demurrage and detention charges throughout a given year.

Real Results with the Container Lifecycle Management™ Platform

We set out to solve this problem for our customers. With the Container Lifecycle Management™ (“CLM”) platform logistics teams get the granular milestones they need to better plan and prioritize their work.  

In addition to highly accurate predictive ETAs, the CLM platform provides actual real-time Last Free Day, Available for Pickup, and Rail Notify milestones directly from most ocean and rail terminals.  

These important milestones, as well as hold statuses from terminals and U.S. Customs, not only save logistics teams time, but also help to proactively manage this part of the container lifecycle, prioritize containers at risk, and avoid demurrage and detention charges and other costly per diem fees.

Below are results from five Gnosis Freight customers who import between 15,000 and 60,000 containers to the U.S. each year. These results show the improvement in demurrage and detention charges starting with when they first started using the CLM platform.

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As you can see, the results for Gnosis Freight customers have been immediate and substantial! In each of these cases the customers have seen savings and projected savings of millions of dollars in the first 12 months of using the CLM platform.  

It’s Not Too Late to See Results Like These

As a Beneficial Cargo Owner (BCO) or shipper, understanding the Last Free Day is vital. It's not just about avoiding penalties; it's about improving KPIs and optimizing your operations.  

With the help of highly accurate ETAs, a precise calculation of the Last Free Day allows for proactive and more effective scheduling of drayage, of labor at distribution centers, while helping anticipate potential issues and allowing logistics teams to manage by exception to prevent delays.

For companies that struggle with demurrage and detention, and are looking to reduce logistics costs, Gnosis Freight’s Container Lifecycle Management platform might be the fastest and easiest way to do so.  

For companies that don’t have challenges with demurrage and detention, having this level of data accuracy surrounding your containers can give logistics teams the ability to explore new strategies like inventory optimization or drayage optimization to add additional value to their organizations.

While Last Free Day is an important milestone for importers, for exporters the Earliest Receiving Date (ERD) and Cargo Cut-off Date are the primary milestones to avoid demurrage and detention and other per diem fees.  

Exporters can also leverage the CLM platform to reduce demurrage and detention charges with the Export Management solution which provides up-to-date ERD and Cargo Cut-off dates.

It’s not too late to see your own results like this. Just click here to schedule a demo and we’ll show you how.