Calculating port costs can be complicated and time-consuming, but using the right digital solution combined with human expertise can ensure accuracy at a rapid pace, writes Mark Franklin, VP Commercial, Marcura’s DA-Desk
Shipping companies are facing increasing costs across the board, making it vital to identify any areas to optimise operations. While the price of fuel, hire and technologies are important areas of focus for the sector, so too are port tariffs, which can offer significant savings in the form of relevant price changes, rebates and discounts – although this requires an eagle eye for detail. This is where a hybrid approach – harnessing technology and human oversight – can deliver results.
Navigating port tariffs can be extremely cumbersome, as they generally consist of multiple sources of information, where the relevant information is buried within hundreds of pages. Additionally, tariffs can vary for different berths, terminals, and even vendors within a port, who may use different methods of calculation. Keeping abreast of various calculations and changes is very time-consuming and could result in misinterpretations or mistakes – particularly likely when tariffs change, which happens at least once a year. Furthermore, this is repetitive work that could generate complacency that would hamper accuracy and employee morale.
Boosted by automation
By harnessing the power of technology, many of the more mundane and repetitive tasks in calculating port tariffs can be automated. A good example is the collection and codification of all individual tariffs in a single system that can apply all applicable rebates and discounts to a vessel making a port call – and ensure compliance with relevant regulations. However, despite the sped-up processing times, machines are no match for the reasoning abilities of a human being – who could use contextual clues to assess the information.
An ideal match would be one where the machine is used to automate the checking of the relevant information and obscure details (both labour-intensive) and human beings can provide an extra layer of critical thinking and quality assurance. This approach not only increases overall productivity but is also likely to boost morale for teams that are no longer encumbered by repetitive tasks and can use their valuable time for more productive activities.
Large scale challenge
Most shipping companies do not have the resources to invest in large-scale automation as well as a team of specialists that focus exclusively on agent payments, final disbursement accounts (DA) review, and discounts on contracts and agreements.
Unless operating a large fleet that regularly calls at various ports around the world, most organisations would conduct ad hoc research on rates and available discounts and scramble to apply these to their vessels – running the risk of applying the wrong type of tariff and losing savings.
DA-Desk operates a proprietary DA Validation Engine (DAVE) that validates our customers’ port call information against more than 1,800 rules, which would be extremely time-consuming for a small team to keep on top of. This output is then manually screened by our team of experts who cross-check information to ensure that every PDA and FDA is accurate.
We regularly update information in our database across all four tariff structures prevalent globally: linear tariffs where cost increases with time spent by the vessel in port; time threshold tariffs that show significant cost increase after a specific period; stepped cost tariffs where the cost increases in tiers; fixed cost tariffs where there is a flat fee. Integrating human expertise into the review process also identifies false positives, thereby minimising the administrative burden and ensuring outreach only occurs when truly necessary.
This is complex work. Many ports offer rebates or discounts in return for regular calls, and then there are environmental discounts, which can be based on vessel emissions, fuel type, or speed. However, not all port authorities participate, and those that do usually apply the discounts in different ways – meaning that this is time-consuming work that would only be cost-effective if applied to a multitude of vessels calling at ports across the globe.
DA-Desk processes more than 200,000 port calls per year, giving our customers visibility on the real costs, rebates and discounts available using our reference database of over two million port calls. We also leverage historical data and AIS to ensure the accuracy of information provided and OCR technology to screen invoices for correctness of data, such as vessel name and GT.
Worth the effort
While this scale of automation and human verification may sound extremely energy-intensive, we have empirical evidence that this hybrid approach delivers results. In one instance, a port authority had mistakenly calculated a tariff at €0.4649 per GT instead of the tariff of €0.1689 per GT that our system was showing. As a result of our representatives querying the costs against the most up-to-date tariff in our system, we were able to secure a credit note for our customer of €3,378.
Sometimes the savings are smaller, as was the case where the use of AIS historical data from our system allowed us to reclaim £13 for a client who had been charged incorrect dockage costs due to a typo in the GT of the ship.
While this amount may not be worth the efforts for individual companies to use up employee hours, we know that over a year, these small figures can add up for our customers.
Our system shows that we secure credit notes for about 4% of all our transactions with an average saving for our customers of $4,300 per credit note – with the biggest credit note in 2023 sitting at a value of $380,000.
We understand that outsourcing financial transactions to a third party may not be the way forward for everyone – particularly large organisations that prefer to handle tasks in-house and are willing to allocate deep budgets to these tasks. However, for most shipping companies, having disbursement account experts on hand with the unbeatable combination of machine and human processing is the best way to ensure that port call costs remain as low as possible. Our detail-driven approach, ease of use and year-on-year savings have resulted in a 98% retention rate and 10% year-on-year growth from word-of-mouth recommendations.
Want to know more about how our DA-Desk system can help you?
Read more on our dedicated DA management page.
Read our our recent post on the best questions to ask when you choose a disbursement accounting automation partner.
