How to Avoid Cancellation Fee Costs and Reduce Logistics Costs?

Cancellation Fee is a common fee, which is usually incurred when the goods cannot be shipped on time or the transportation plan is changed due to some reasons during the transportation of goods.

This article will answer common questions about Cancellation Fee in detail and provide professional solutions to help B2B companies and e-commerce sellers optimize logistics processes and reduce operating costs.

Cancellation Fee and Dead Freight: Why are they generated?

What is Cancellation Fee?

Cancellation Fee, also known as Dead Freight or Shortfall Charges, refers to the fees incurred when the goods fail to ship on time or the transportation plan is changed. These fees are usually borne by the shipper, usually charged at 30-80% of the booking fee, and the 72 hours before the departure of the shipping company is the key time node to compensate the carrier for the loss caused by the underutilization of the reserved space.

Dead Freight refers to the difference fee when the actual loading volume is less than the reserved space, mainly due to the failure of temporary replenishment, and the calculation method is: (booked space volume - actual loading volume) × unit space cost.

Shortfall Charges specifically refer to the tiered fines generated by long-term agreement customers who fail to reach the agreed cargo volume, which is common in annual shipping contracts.

Underutilization Fees are surcharges triggered when the container loading rate is less than 85%, which constitutes double billing with Dead Freight. It is essentially the same as Dead Freight, but it emphasizes the hidden losses caused by underutilization of space.

Common reasons for Cancellation Fee

Failure to enter the warehouse on time

The shipper failed to deliver the goods to the designated warehouse before the specified customs cut-off time, resulting in the failure of the goods to be loaded on time.

Insufficient cargo volume or weight

The actual volume or weight of the cargo is lower than the declared value at the time of booking, resulting in underutilization of the space.

Changes in transportation plan

The cargo owner temporarily cancels shipment or changes the transportation plan, but fails to notify the carrier in time.

Customs inspection

Customs inspection causes the cargo to be unable to be shipped in time, affecting the transportation plan.

Cargo characteristics

The characteristics of the cargo itself (such as liquids, dangerous goods, oversized and overweight pieces) make it impossible to carry.

How to avoid and prevent Cancellation Fee?

Booking plan management

Establish a clear transportation schedule, maintain real-time communication with the freight forwarder, and provide timely feedback on possible changes. Inform the cargo owner in advance of the cancellation fee that may be incurred if the shipment is not on schedule.

Timely communication and information feedback

Please ask the freight forwarder to maintain regular communication with the cargo owner before the customs cut-off date and provide timely feedback. And inform the cargo owner in advance that if the cancellation of the booking is not notified in time, a Cancellation Fee will be incurred.

Ensure the accuracy of cargo information

Please ask the freight forwarder to require the cargo owner to provide accurate cargo information, including volume, weight and specifications, when booking. If there are any changes, notify them in advance. Ensure that the cargo data (such as volume and weight) is consistent with the actual cargo. If the cargo has special characteristics (such as liquids, dangerous goods, and oversized items), the transportation conditions must be confirmed in advance.

Accurate logistics services

According to the characteristics of the cargo and the shipping schedule, accurately match the space to avoid over-space/under-space. Track the status of the cargo in real time and flexibly adjust the booking plan.

Confirm the characteristics of the cargo

Preventive measures: Please ask the freight forwarder to inform the cargo owner in advance that liquids, dangerous goods, and semi-dangerous goods will not be accepted. Oversized and overweight items must be confirmed in advance.

Cooperate with customs inspection

Preventive measures: Please ask the freight forwarder to require the cargo owner to make the bill, document, and cargo consistent when declaring customs. If the customs has any questions, please cooperate with the customs broker of the freight forwarding company to reply to the customs in a timely and clear manner to ensure that the goods are shipped in time.

Chinadivision helps you avoid additional costs

As a professional third-party logistics fulfillment service provider, Chinadivision provides comprehensive logistics solutions to help you optimize logistics processes and reduce operating costs. Our services include:

Transportation plan review and optimization: Develop detailed booking plans for customers to avoid cancellation fees caused by plan changes.

Accurate cargo data support: assist customers to complete cargo measurement and data optimization, improve loading efficiency.

Real-time logistics monitoring system: provide intelligent monitoring tools to keep you informed of transportation status at any time.

Fast customs clearance and document review services: ensure compliance operations and reduce the risk of delays caused by customs declaration issues.

Hot topics and solutions about Cancellation Fee

Why does temporary cancellation of booking generate Cancellation Fee?

Shipping companies need to plan space in advance. Temporary cancellation leads to waste of resources and needs to compensate for empty space costs.

How to reduce Cancellation Fee?

Advance planning: keep communicating with freight forwarders to ensure information synchronization and avoid contract changes.

Risk hedging: hedge space booking risks through financial instruments (such as futures) to reduce the probability of temporary cancellation.

How to avoid Dead Freight?

Accurate calculation: communicate with freight forwarders in advance to ensure that the volume and weight of the cargo are consistent with the booking.

Contract constraints: clarify cancellation terms to reduce the risk of temporary cancellation.

Cancellation Fee is a common fee in maritime logistics, usually caused by the failure of cargo to ship on time or changes in transportation plans. By communicating in time, ensuring accurate cargo information, confirming cargo characteristics, and cooperating with customs inspections, you can effectively avoid and prevent the generation of Cancellation Fees. If you need more help, please contact Chinadivision. We will provide you with professional logistics services to ensure the smooth operation of your business.