Delay Fees and GRI Chinese New Year

AN ICONTAINERS GUIDE
DELAY
FEES & TIPS:
GENERAL
CHINESE
NEW YEAR
RATE
INCREASE
HOW TO REDUCE THEIR IMPACT
ON YOUR SHIPPING COSTS
REDUCING THE IMPACT OF DELAY FEES AND GRIS ON SHIPPING COSTS
INTRODUCTION
Ocean freight shipping is responsible for 90 percent of world trade. With
such huge responsibilities, it should come as no surprise that it requires
many different players and rules, to ensure processes run smoothly.
You can think of the ocean freight industry as a machine — a piece of

engineering masterpiece that relies on every cog and wheel to ensure its
job is done well. If even a single component, tiny as it may be, misses a
cue and fails to carry out its function, a chain reaction — a butterfly effect
— is triggered that causes setbacks for the rest of the flow.
That said, getting a quote for an ocean freight shipment requires looking
beyond the basics of getting your cargo from point A to point B at a
predetermined rate. Unanticipated problems (which happen more common
than you think) in ocean freight can easily throw your entire shipment
process into disarray and cause hold-ups and ultimately, additional costs.
The problem with these costs is that they’re often

impossible to predict and are thus hardly ever considered
when analyzing and comparing ocean freight rates.
But yet they can have a tremendous impact on the final

cost of your international ocean freight shipment.
— Klaus Lysdal, vice president of operations at

iContainers
02
To make things worse, there are so many different types of extra costs.
Some, such as demurrage and detention, are more straightforward and
common. Others, however, apply only to very specific situations.
The one thing they have in common is that, more often than not, they are a
result of factors beyond the shippers’ control.
However, that’s not to say that they’re inevitable. As a shipper, there are
certainly steps you can take to reduce the risk of delay fees.
In this guide, we’ll address the most common extra costs of an ocean
freight shipment: delay fees such as demurrage and detention, and General
Rate Increases, or GRIs.
We’ll explain what they are, when they apply, and above all, what you can
do to work around them and keep your shipping costs low.
03
DELAY FEES
DEMURRAGE, DETENTION, PER DIEM,
WAREHOUSE STORAGE
Given the complexity of the supply chain in logistics,

delay fees are actually much more common than one
would think.
But the main problem isn’t so much its prevalence as

it is its monetary impact on your shipping costs;
delay fees can cause overall costs to double or
sometimes even triple.
From port congestion to trucking shortage and port

workers’ strike, these are factors that shippers have
no control over that can cause delay fees.
But delays can also be triggered by common yet

easily avoidable mistakes such as irregularities and
inconsistencies in paperwork, which is cause for
inspection by customs authorities.
04
THE ROOT OF DELAY FEES

As per standard industry practices, shipping lines and
warehouses often include the cost of equipment and
facility usage in their prices. However, this is only for a
limited amount of time.
Should usage exceed the amount of time stipulated, extra

costs will be implemented in the form of delay fees.
This is similar to a hotel stay whereby failure to check-out

by a certain time determined by the hotel will result in the
cost of an extra night’s stay incurred.
But delay fees aren’t as simple as that. To begin, there are

different delay fees that apply to different and specific
situations. Here’s a look at the different types of delay fees
in ocean freight shipping.
05
DEMURRAGE
Demurrage fees work very much like parking fees in a

parking lot as it has to do with container storage
space inside the port.
— Klaus Lysdal
When it’s charged: Often known as a storage charge,

demurrage fees are charged when a shipment remains at
the port beyond its stipulated free time offered by the
carrier. This is to compensate for the space it takes up.
Demurrage fees are charged per container per day and are
charged to the shipper/consignee by the carrier. Most
carriers implement a progressive structure for demurrage
fees that can rise very quickly.
For example, a fee of $100/day may be charged for the first

three days after the free time expires. From the fourth to
tenth day, then it could rise to $250/day and from the 11th
day onwards, it could escalate to $350/day. The exact
levels varies from carrier to carrier and port to port.
Note: Some terminals may have their own separate storage

charges that will apply on top of the carrier’s demurrage
charges.
06
DETENTION
Detention fees are also very commonly known as Per
Diem.
In this section, we’ll go into the different

circumstances in which detention fees are applied,
and the meaning of Per Diem.
Detention fees are applied in two scenarios:
1. Trucking: Additional waiting time for truckers

during loading
2. Containers: Usage of containers over its stipulated
free time
TRUCKING
Detention fees in trucking are like waiting fees

charged by trucking companies in the event loading
or unloading goes beyond the grace period.
When it’s charged: They are billed by the trucking or

drayage company when shipment loading/unloading
takes longer than anticipated grace period. This may
be because of issues with loading and unloading,
incorrect paperwork, congestion at the loading and
unloading facilities resulting in the trucker having to
wait for his turn, etc.
Detention fees are billed at an hourly rate. There’s

usually a free time of one to two hours, which varies
from shipment to shipment (eg. whether it’s a
domestic or international shipment).
07
CONTAINERS
In terms of container usage, detention fees — also

known as Per Diem — are charged by carriers for
the overuse of shipping containers.
If demurrage
When it’s charged: Carriers typically grant a
fees are like number of free days during which you are allowed
parking fees, to use the shipping container at no extra cost.
This is usually set at seven days but can vary from
you can think
carrier to carrier and port to port. After this period
of detention expires, you are charged detention fees.
fees as car
Latin for ‘per day’, per diem fees are, as its name
rental fees. suggests, charged on a per day basis — for each
day of container overuse and accumulates until
— Klaus Lysdal the container is returned to the carrier’s
possession.
Per Diem fees vary from port to port and carrier to

carrier, but its standard range is between $50 and
$100 per day.
Note: Unlike demurrage, detention (per diem) fees are often

negotiable. The request should be made in advance; if you think you
may need a few extra days with the shipping container, inform your
freight forwarder as early as possible so that they can negotiate with
the shipping line.
However, keep in mind that the decision to grant extra free days
ultimately lies with the carrier.
08
WAREHOUSE STORAGE FEE
The warehouse storage fee is a fee that only

applies to LCL ocean freight
freight shipments and is
similar to demurrage fees.
When it's charged: Warehouse storage fees are

charged when your LCL cargo sits uncleared in a
terminal warehouse for too long. This may be
due to improper or incomplete paperwork, unpaid
fees, etc. that may prompt a customs hold.
Full warehouse storage fees must be paid in full

before you’re allowed to retrieve your LCL
shipment.
09
HOW TO AVOID DELAY FEES

With proper management and advanced planning, you
can easily do away with delay fees and keep your overall
shipping costs low. Much of it involves being organized
and complying with deadlines, but having knowledge of
the ins and outs of the industry also helps with avoiding
delay fees.
Here are some tips that can help.
BOOK AT LEAST TWO TO THREE WEEKS IN ADVANCE
The earlier you book your shipment, the more wiggle

room you have to make changes should things go wrong.
Booking a shipment at the last minute is not only cause

for uncertainty but it also very often means possible
delays at loading/unloading facilities.
SUBMIT DOCUMENTS ON TIME
Early submission of related paperwork gives you extra

time should anything need to be changed down the road.
This is especially important for the BillBill of
of Lading
Lading,
problems with which is a common cause for delays in
container release and subsequently, delay fees.
We recommend preparing your documents in advance so

that the only details that should be finalized upon
loading is your container and container seal number.
10
NEGOTIATE MORE TIME
You feel the free time offered is too tight or if your

container is detained for a customs inspection, consider
appealing to your carrier for an extension of free time.
This is especially important for high-volume shipments,

fees for which can really skyrocket..
Carriers sometimes agree to offer more free time

at an increased rate, but it’s an option that’s
cheaper than demurrage and/or detention fees.
— Klaus Lysdal
STAY UP-TO-DATE WITH YOUR SHIPMENT
Make sure you’re caught up with the departure and

arrival dates and times of the vessel. Remain in constant
communication with your freight forwarder so they can
inform you of any changes.
This helps with keeping track of the exact moment your

allocated free time begins and ends so that you can
speed up pick up if necessary if you’re cutting too close
to incurring delay fees.
11
CHECK FOR SPECIAL DOCUMENTS/REQUIREMENTS
Depending on the nature of the cargo you’re shipping,

special documents may need to be presented for customs
clearance purposes. These requirements vary from cargo
to cargo and destination to destination.
To prevent hold-ups at customs, make sure you have all

the paperwork, permits, and certificates required for your
shipment.
CONSIDER EXPRESS RELEASE
Unlike an original Bill of Lading, the processing time for

an Express Release is much shorter, which eliminates the
wait for an original B/L and lowers the risk of delay.
If your importer-exporter relationship allows it, consider

using an Express Release so your cargo may be released
immediately upon arrival at destination.
HIRE A FREIGHT FORWARDER
As shipping professionals and intermediaries, freight

forwarders are your eyes and ears on the ground and can
keep you apprised of any changes to your shipment
including possible delays, red flags that may come up at
customs, paperwork your cargo requires, etc.
customs
12
ARM THOSE INVOLVED WITH INFORMATION
Shipper and consignee aside, make sure all parties

involved in the transportation of your shipment have
access to your cargo information, documents, and
delivery instructions.
This includes your freight forwarder, trucking company,

and shipping agent at destination.
This helps to streamline the process and avoid

miscommunication that could lead to delays.
13
GENERAL RATE INCREASE (GRI)

Given the competitiveness of the ocean freight industry, shipping
carriers are armed with rate tools at their disposal that allow
them to adjust the price of their shipping rates. The GRI is one
such tool.
A GRI, or General Rate Increase is an adjustment of ocean freight

base rates by shipping carriers in response to market demand and
supply to balance demand, capacity, and operational costs.
It usually begins with the lowering of rates by a shipping carrier

to provide shippers with a more attractive option and gain a
competitive edge.
This triggers a reaction whereby, one by one, carriers begin to

lower their prices until rates are no longer sustainable. To make
up for low prices, carriers raise their rates in the form of a GRI.
This is especially common in the weeks leading up to and during
the shipping peak season, which typically runs from July to
October.
The amount by which the rates increase is determined by

each shipping carrier. While GRIs can theoretically be
implemented on any route, certain routes such as the
Asia-US West Coast and Asia-Europe shipping routes
have, in recent years, seen more GRIs than others.
— Klaus Lysdal
14
GRI ANNOUNCEMENTS
When markets are largely stable, GRIs are
implemented once or twice a year. But it is not
uncommon for carriers to implement GRIs more
than twice a year amidst market fluctuations or
even go a full year without.
Carriers are obliged to file their intention to raise

shipping rates before the increase kicks in — but
the amount of time before which they must do so
vary from market to market.
In the US, Federal Maritime Commission

regulation states that shipping carriers must file
for GRIs 30 days before the intended date the
increase is set to kick in.
However, carriers don’t actually have to

implement the announced increase.
In other words, they have the flexibility of

lowering the increase come implementation day
or even decide against it altogether. But what
they cannot do is increase rates beyond what was
previously announced.
15
HOW GRIS AFFECT SHIPMENTS

GRIs can often come as a last-minute and rather
unpleasant surprise for shippers.
It is important to keep an eye on announcements to

determine if your cargo will be affected.
Here’s what a typical GRI announcement includes:
Rate increase
Affected container type(s)
Affected route(s)
Effective date
GRIs usually come into effect on the 1st or 15th of

the month. And the date your cargo is officially
handed over to the shipping carrier is the
determining factor of whether you are subjected to
the rate increase.
Eg. If a GRI has been announced for August 1, your

shipment must be in the carrier’s possession by July
31 to avoid incurring the rate increase.
If your cargo has not been turned over to

the carrier prior to the GRI’s start date, you
will be bound to the new increase. This is
regardless of whether your shipment was
booked before the GRI announcement.
— Klaus Lysdal
16
TIPS: PREPARING FOR CHINESE NEW YEAR

During the Chinese New Year, workers take a break from the hustles
and bustles of life. Throngs of travelers crowd trains, buses,
airports, to either get home to visit their families or travel.
In the weeks leading up to the Chinese New Year, demand for

Chinese exports skyrockets as businesses attempt to get their
exports out before operations in China completely shut down. As
you have seen, GRIs have the potential to double your overall
shipping costs and send your budget through the roof.
Even post-New Year, capacity, and personnel often remain limited

and production can be slow to pick up. Carriers may also continue
to cancel sailings in the weeks that follow.
The best thing you can do as a shipper is to anticipate GRIs and

plan for your shipments accordingly. In the next section, we'll
present you with some tips that can help.
17
1) Anticipate. Because rate hikes are usually announced a

short time before the Chinese New Year, if your supply
chain allows for it, consider shipping three or even four
weeks before.
2) Consider alternative container types. As the most-coveted

container type, 20-ft containers are often the first boxes to
be booked full. Consider other container types, like the 40-
ft container.
3) Compare and choose wisely. Make sure you conduct

thorough research on the capacity availability and routes
offered by carriers as well as keep up to date with possible
announcements. In general, carriers determine availability
and rates based on the rate agreement (usually for
businesses with high shipping volumes) or the Incoterm
used.
3) Coordinate with all parties involved. Make sure your

suppliers, freight forwarder, all other third-party providers,
and yourself are on the same page to prevent
miscommunication, which could result in delays and a late
handover, hence incurring the GRI.
4) Hire a freight forwarder. As intermediaries, freight

forwarders can facilitate the complexities of shipping
during the Chinese New Year and help you manage these
bottleneck challenges. As a shipper, be very clear about
your needs and inform your freight forwarder as early as
possible of any specific changes.
18
CONCLUSION
There are many costs and fees that are involved
with shipping an ocean freight shipment, and we
hope that you now have a better idea of how the
three main delay fees and GRI work and affect your
shipment.
With proper planning and coordination, it’s possible

to avoid these unanticipated surprises and
unpleasantries and work around them on your own.
But the best way to really stay ahead of the game
would be to hire a reputable and reliable freight
forwarder for your ocean freight needs. That way,
they have the experience and expertise to advise
you on your best options to keep shipping costs low.
Delay fees and GRIs aside, there are many other fees
and additional costs that can greatly affect the
overall price of your ocean
ocean freight
freight shipment.
To better understand them, check out our guide:

The ultimate guide to international shipping cost
Alternatively, you may also visit our blog:

https://www.icontainers.com/us/blog/
Or Help Center:
https://www.icontainers.com/help/
19
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AN ICONTAINERS GUIDE

You can think of the ocean freight industry as a machine — a piece of

The problem with these costs is that they’re often

But yet they can have a tremendous impact on the final

— Klaus Lysdal, vice president of operations at

Given the complexity of the supply chain in logistics,

But the main problem isn’t so much its prevalence as

From port congestion to trucking shortage and port

But delays can also be triggered by common yet

THE ROOT OF DELAY FEES

Should usage exceed the amount of time stipulated, extra

This is similar to a hotel stay whereby failure to check-out

But delay fees aren’t as simple as that. To begin, there are

Demurrage fees work very much like parking fees in a

When it’s charged: Often known as a storage charge,

For example, a fee of $100/day may be charged for the first

Note: Some terminals may have their own separate storage

In this section, we’ll go into the different

Detention fees are applied in two scenarios:

1. Trucking: Additional waiting time for truckers

Detention fees in trucking are like waiting fees

When it’s charged: They are billed by the trucking or

Detention fees are billed at an hourly rate. There’s

In terms of container usage, detention fees — also

Per Diem fees vary from port to port and carrier to

Note: Unlike demurrage, detention (per diem) fees are often

WAREHOUSE STORAGE FEE

The warehouse storage fee is a fee that only

When it's charged: Warehouse storage fees are

Full warehouse storage fees must be paid in full

HOW TO AVOID DELAY FEES

Here are some tips that can help.

BOOK AT LEAST TWO TO THREE WEEKS IN ADVANCE

The earlier you book your shipment, the more wiggle

Booking a shipment at the last minute is not only cause

SUBMIT DOCUMENTS ON TIME

Early submission of related paperwork gives you extra

We recommend preparing your documents in advance so

NEGOTIATE MORE TIME

You feel the free time offered is too tight or if your

This is especially important for high-volume shipments,

Carriers sometimes agree to offer more free time

STAY UP-TO-DATE WITH YOUR SHIPMENT

Make sure you’re caught up with the departure and

This helps with keeping track of the exact moment your

CHECK FOR SPECIAL DOCUMENTS/REQUIREMENTS

Depending on the nature of the cargo you’re shipping,

To prevent hold-ups at customs, make sure you have all

CONSIDER EXPRESS RELEASE

Unlike an original Bill of Lading, the processing time for

If your importer-exporter relationship allows it, consider

HIRE A FREIGHT FORWARDER

As shipping professionals and intermediaries, freight

ARM THOSE INVOLVED WITH INFORMATION

Shipper and consignee aside, make sure all parties

This includes your freight forwarder, trucking company,

This helps to streamline the process and avoid