One of the most common costs that result from poor planning by the logistics department is detention fees. This probably comes as no surprise, but since detention remains an ongoing problem for many shippers, it’s clear there is work to be done by those companies.
Loadsmart has data that helps to explain the issue even further. Detailed in our recently published analysis: A Logistics Performance & Benchmarking Report (download the full report here) is a strong correlation between shipping lead times and detention costs.
As you’ll read in the report, the overall average lead time shippers provide carriers for a pickup is 6.3 days. But, there’s a range of lead times based on the industry. More important is the correlation between more lead time and a higher percentage of total shipping expense coming from detention.
For example, our data analysis shows how the Manufacturing (5.8 days lead time) and Retail (7.2 days lead time) industries have two of the most considerable average lead times and the lowest percentage of costs (just over .4% each) from detention.
Conversely, Agriculture has a much lower lead time of 1.7 days (the lowest of any industry tracked by Loadsmart), with the highest percentage of expenses at .8%. The conclusion is more lead time means fewer detention costs.
Benchmark Your Lead Times
When it comes to understanding and addressing the extent of this problem in your shipping operation, benchmarking relevant KPIs is a good place to start.
Of course, not all industries are the same, so comparing your company against a complete dataset is essential to finding actionable insights.
Note that reducing detention is one of several benefits we identified in a previous article on why companies should make better planning a priority for their shipping operation).
What are some ideas for helping to reduce detention?
Understanding the importance of more lead time and taking steps to reduce costs like detention can be addressed in multiple ways. With an average of 10% of full truckload shipments facing some amount of detention, there is a lot of room for improvement for shippers and their dock operations to do better.
For one, technology that drives your overall shipping process, such as a connected TMS, helps you find rates and carriers quickly while communicating important shipment information to them. Other technology can enable your dock to operate better, too. A shipping dock is a lynchpin for every successful logistics operation because it’s where logistics plans, production and warehouses, and carriers all come together. Efficient docks have well-documented processes for handling products to staging loads ahead of time, prepping paperwork—all the things that get trucks on their way as quickly as possible.
Proper logistics planning, informed by data and supported by technology, is the best way that companies can reduce the cost of detention and improve the overall performance of its shipping operations. To learn more, visit www.loadsmart.com.
Transforming the future of freight, Loadsmart leverages technology and logistics data to build efficiency around how freight is priced, booked and shipped. Pairing comprehensive logistics technology with deep-seated freight industry expertise, Loadsmart fuels business growth, simplifies operations and increases efficiency for carriers and shippers alike. For more information, please visit: https://loadsmart.com. Move more with less.