Many company owners don’t realize that the greatest unforeseen cost in shipping are accessorial charges.
Accessorial fees, or surcharges, are common with many major carriers. That includes surcharges for residential deliveries, deliveries outside major areas, oversized packages, parcels not in corrugated boxes, fuel, additional handling cost, and others. “Accessorials can add as much as 30% spend with carriers,” said Robert Martinez, founder and co-CEO of Shipware, a consulting firm working with shippers to reduce parcel and LTL spend. “Each needs to be measured, understood, and benchmarked before asking for concessions.”
Most come as a surprise when the freight bill arrives. These are charges that carriers apply to the freight bill for services beyond normal freight costs. They are generally applied after the shipment has been delivered. These costs are difficult to forecast, and recent heightened capacity can really drive up these additional fees if you aren’t carefully checking for them.
The best way to avoid these additional costs is to understand what they are and what you must do to avoid them.
Common Truckload Costs
- Detention / Layover / Demurrage
- Additional Stops / Diversion Miles / Circuitous Miles
- Driver Assist / Count / Clean / Sort & Segregate
- Hazardous Materials
- Limited Access Fee
- Pallet Jacket / Shrinkwrap
- After-hours Delivery
- Non-dock Delivery
- Tolls / Border Crossing
- Truck Ordered but Not Used
Common LTL Costs
- Advanced Notification
- BOL Correction
- Detention Charges
- Oversize / Overlength
- Reclassification /Reweigh
- Tolls / Border Crossing
In some cases, carriers introduce these charges temporarily but they become permanent, like the fuel charges.
“Fuel costs are way down from where they were in 2008 to 2010, but the charges never went away,” said Joel Dunkel, president of Parcel Forum trade show. While COVID-19 surcharges are new, it’s impossible to know whether they will become permanent, he said.
The Surface Transportation Board (STB) decision on demurrage and accessorial costs are part of a wider effort to “promote transparency, timeliness and mutual accountability by rail carriers and the shippers and receivers they serve.” The STB also clarified that the party responsible for demurrage should be the one in the best position to expedite the loading or unloading of railcars. “The intent is to ensure that the recipients of demurrage invoices will be provided sufficient information to readily assess the validity of those charges without having to undertake an unreasonable effort to gather information,” said the board.
Common Intermodal Costs
- Detention/ Demurrage / Per Diem
Since many of these extra fees are self-explanatory, most can be avoided by establishing a process that starts when the order is entered into your system.
Understanding conditions where the shipment will be unloaded is helpful:
- Does the site have a standard dock?
- What type of equipment is used for unloading?
- Are Lumpers used to unload? How are the Lumpers paid?
- What are the receiving hours?
- Are appointment times required?
Shipping department procedures are important and should be reviewed. Packaging is important and impacts pricing. The way boxes are placed on a pallet and the way boxes are labeled are important to many customers. Shippers must be careful to follow their customers guidelines. Shipments might be refused or require rework. All at additional cost.
Shipping departments must use the correct classification on the Bill of Lading and enter the correct weight. Most LTL carriers have scanners to validate the size and weight of shipments. If a delivery cannot be made for some reason, the shipment could be subject to charges for storage, re-delivery, or return. Accessorial charges create a revenue opportunity for carriers and they have become very good at spotting those opportunities.