Most shipping containers that are discharged from a vessel are brought to a container yard before they are gated out and transported to their final destination. While this mostly happens seamlessly, facility, transportation, and clearance-related delays require the containers to be stored at the port for a period of time.
Each seaport sets the number of days that a container may be stored at the port free of charge, which is known as free storage days. The Last Free Day (LFD) is the date at which a container needs to be picked up from the port before it incurs port storage fees.
In some countries, port storage costs are also referred to as demurrage. In this article, we’ll be taking a closer look at what happens after the last free day, how this date is calculated, and other information related to this topic.
What Happens After The Last Free Day?
After the last free day, the port will apply storage fees per container for each day. Depending on the country, the port may charge the cargo owner directly or may invoice the shipping line or freight forwarder, who typically outlay these costs before they are passed on to the cargo owner.
To prevent these accessorial charges and further delays, effective management of timely cargo pickup and delivery is crucial. This involves staying well-informed about the Last Free Day and taking proactive measures to efficiently manage the pickup or delivery of containers from the port.
How Are Last Free Days Calculated?
As mentioned earlier, the number of free days is set by the port operator and typically lies between 3 to 7 days. This means that storing the container at the port within this period is free of charge.
The first free day starts when the container is discharged from the vessel and has been unloaded at the port. They are then transported within the port terminal to a container yard (CY), where they are temporarily stored.
The Last Free Day is the date at which a shipping container needs to be gated out of the port. Therefore, the storage period typically ends, when the containers are picked up by the consignee.
It’s important to keep in mind that certain carriers and port operators may have their own variations in calculating the LFD. It’s advisable to refer to their terms and conditions to understand their key dates and calculations.
What Are the Port Storage Charges After the Free Days?
The port storage charges are set by the port and will differ depending on the operator and location. Ports typically set tiered rates, meaning that the longer a container is stored at the port, the more expensive the rate.
This pricing structure typically encourages cargo owners to move shipping containers out of the port terminal as soon as possible, to ease congestion inside the terminal and ensure that there is enough container storage space. For example, the first three chargeable days of port storage will usually be less than the fourth day onwards.
While general timelines may vary, the number of free days that ports give is typically about 3 to 5 days for FCL, about 7 days for LCL, and about 2 – 3 days for rail and air shipments.
Factors That Can Lead to Longer Port Storage Beyond the Last Free Day
In this section, we take a closer look at the various reasons why some containers may need to be temporarily stored at the port.
- Cargo Type & Handling Requirements – Specialized handling needs, storage limitations, customs, and regulatory procedures, as well as handling priority given to certain cargo types, can all delay the movement of containers with port premises.
- Inclement Weather – Certain weather conditions such as storms or heavy snowfall, can affect port storage requirements, as some trucking companies may not be able to pick up the containers. Moreover, these types of weather conditions can also cause delays in port operations, vessel schedules, and transportation, which might result in longer port storage.
- Labor Shortage – Delays in unloading, sorting, customs clearance, and transportation, which can impact how long the cargo stays in storage before the Last Free Day.
- Consignee Limitations – The consignee, the party receiving the container, may face space shortages in the facility, labor shortages, and a lack of storage space in the warehouse. This typically results in higher port storage charges, as the container is picked up from the port at a later time.
How to Manage the Last Free Day & Prevent Storage Charges From Occurring
Below, you’ll find various ways to effectively manage the last free day of your shipping containers and potentially mitigate storage charges from occurring.
Collaborating With Shipping Lines
Ensure that you practice open communication with shipping lines and request relevant information on cargo arrival dates, as well as the expected storage duration at the port. It’s important to communicate regularly with all stakeholders and relay information about date changes, especially when the Last Free Day is approaching.
This will help each party to stay informed and up-to-date. In particular, information such as vessel schedules, transit times, and potential disruptions need to be communicated to manage cargo arrivals efficiently.
Ensure Accurate Documentation
Submission of inaccurate documents can result in customs clearance or processing delays at the port. For this reason, you should always verify the accuracy of all shipping documents before they are submitted. This should be done promptly to avoid risks of extended storage of containers exceeding the last free day and incurring storage charges.
Utilize advanced tracking solutions that monitor cargo movements and indicate potential storage durations in real-time. You should also consider using automated alerts and reminders that notify key stakeholders when the Last Free Day is approaching.
Co-Founder & Writer
About the Author
Gerrit is a certified international supply chain management professional with 15 years of industry experience, having worked for one of the largest global freight forwarders.
As the co-founder of freightcourse, he’s committed to his passion for serving as a source of education and information on various supply chain topics.