What is a per diem charge?
A per diem charge is a daily fee imposed by transportation carriers for the use of their containers or equipment beyond a predetermined free period. Typically, this charge is applied in the freight industry when cargo remains in a carrier’s equipment, like a shipping container, beyond the agreed-upon free time. The term “per diem” translates to “per day,” reflecting the daily nature of this charge.
Why is the per diem charge implemented?
The implementation of a per diem charge serves multiple purposes. Primarily, it incentivizes shippers and consignees to unload and return the containers promptly, ensuring efficient container circulation. This practice helps avoid equipment shortages and maintains the smooth operation of shipping services. Additionally, per diem charges compensate carriers for the potential loss of income when their equipment is tied up and unavailable for other customers.
What if I need to keep storing the cargo?
In scenarios where extended use of the carrier’s equipment is unavoidable, it’s important to communicate with the carrier proactively. Negotiating terms for extended use or exploring alternate storage solutions can mitigate the cost impact of per diem charges. Always plan ahead to minimize the duration of container use beyond the Last Free Day, as per diem charges can accumulate quickly, significantly increasing the overall cost of shipping.
Related Freight Glossary Terms
- Last Free Day
- Carrier