Running a business that involves the shipment of physical goods to your customers calls for planning and budgeting for freight and delivery charges, as well as for accessorials—hidden or unforeseen fees associated with shipping.
Naturally, the cost of shipping your products will increase as your company grows. Of course, you’ll want to be well-informed and prepared to meet all your business shipping needs. You will want to take care of shipments as effectively as possible, so you can ideally save on your supply chain’s daily operations.
At Gilbert International, some of the services we offer are consulting, transportation, logistics, and accessorial tasks. We have put together a valuable source of information for you to get a better idea of what to expect and how to better plan and prepare for your shipping and accessorial needs.
Accessorials are additional freight fees your shipment can accrue. They are services that nobody planned for and can come up as the motor freight carrier is trying to deliver your goods to their final destination.
The unforeseen tasks the carrier or driver has to perform during delivery can add up and end up drastically affecting your final costs.
They span beyond the standard negotiated pickup and delivery operations at the time your carrier tenders the shipment. Accessorials cover a vast spectrum of services outside of the fuel surcharge and the line-haul charge generally included in the original shipping quote or estimate.
It can be challenging to forecast the exact final costs because the carrier usually applies the additional fees after they complete the shipment.
Less-than-truckload (LTL) shipments are more likely to accrue accessorial charges, as these types of loads are relatively small, and the carrier is transporting them along with other goods.
Even though LTL shipments can be very efficient because the cost depends on the class and type of items, the use of space, and the pickup and destination locations, they can also call for additional tasks since the truck is making multiple stops along the way.
We aren’t saying full-truckload (FTL) shipments—where the truck is transporting only one cargo making up the entire load—never accrue accessorial fees. Even though accessorials are less likely to come up in this instance, you can still run into them.
Accessorials are different from special service codes, surcharges, and other major carrier fees because the carrier assesses and applies them post-shipment.
You can budget and plan for accessorial fee accrual to a degree. Because carriers neither apply these types of charges at the point of manifestation nor include them in their regular invoices, you can have a tough time factoring them into your business's supply chain and logistics budgets.
In reality, accessorial fees make up nearly half of freight carriers’ total annual earnings and revenue—sometimes more than that. Keeping that in mind, you can imagine how high they can run. An additional stop, for example, can cost you roughly $200.
Carriers have almost no incentive to reduce these fees or to provide detailed and in-depth billing tiers. What’s more, they are not legally required to do so.
The only requirement for freight carriers is to specify accessorial charges in their public tariffs. They don't have to provide small businesses with the detailed information needed to determine the precision and necessity of the extra fees they accrue.
Carriers are well aware that most companies don't (or can't) effectively plan for additional expenses related to accessorial fees. They also know they are likely to sort of "make up" for any losses they may have accepted during the initial contract negotiation through the assessment of accessorial charges.
Remember that freight carriers sometimes even hire outside, third-party consultants to work with them on-site and determine instances where they can apply accessorials. Some of these consultants’ salaries may be commission-based, so they have a significant incentive to find as many ways to accumulate accessorial charges as possible.
Accessorials can be time-based or have a fixed, flat fee. Time-based accessorials can escalate until the situation or issue is resolved to the client’s satisfaction and closed.
Because of the impact unforeseen challenges have on the carrier’s bottom line and the driver’s ability to wrap up an order within the scheduled time frame, accessorial charges can be continuous.
Here are the most common types of accessorial charges carriers can apply to your final total:
● Residential adjustments● Reclassification and weight adjustments● Additional stops and handling● Detention● Truck order not used (TONU)● Inside Delivery● Oversized loads/over-the-length loads● Out-of-route mileage● Lumper or drive load/unload● Sorting and segregation
The freight carrier will usually include limited data on the above types of accessorial fees in their supplemental invoices. You will find that they will often leave entire accessorial data fields completely blank. Without the necessary supporting information, you can't make scholarly inquiries about why the carrier assessed additional fees.
You can accrue accessorial charges for residential adjustments when the carrier delivers the shipment into a residential area. It's much different than delivering to a business area, commercial office, or warehouse because of the need for extra time and labor.
The driver has to maneuver through neighborhoods and find a way to unload the freight in a location that may pose challenges, so the carrier will charge you an accessorial fee to compensate for it.
If you classify your shipment incorrectly—mark an FTL shipment as LTL, for example—or enter incorrect measurements, the carrier will end up having to reclassify and recalculate everything.
It will not only change the negotiated shipment cost but likely cause you to have to pay accessorial charges, as the carrier will probably charge you extra fees for having to perform the adjustments and recalculations in the first place.
If additional, unplanned stops come up and alter the original agreement between you and the freight carrier, it will result in accessorial fees.
If your freight carrier gets delayed for whatever reason while picking up or delivering a load, detention charges will normally apply.
Usually, they start accruing after two hours, and the carrier will base them on the amount of time spent waiting.
Remember, you can negotiate these types of accessorials before signing a contract with the freight carrier. However, they are non-negotiable at the time of invoicing.
TONU charges can be similar to detention charges. But while the former can occur during both pickup and delivery, TONU charges have to do with picking up the load.
If, for example, a motor carrier goes to pick up a shipment, and for whatever reason, the load is not ready, and the driver has to sit around and wait—sometimes for an extended period—they will assess an accessorial fee.
Suppose the carrier has to bring the shipment into the inside of a building and spend additional time and ensure the necessary equipment and workforce availability. In that case, you can be sure that they will add an extra fee to your final cost.
Each state or province in the United States and Canada has maximum legal limits of the length, height, size, and weight of loads.
Usually, the average maximum legal width of loads is 8.5 feet and the maximum height allowed is between 12.5 and 14.5 feet. The permitted length will vary significantly from state to state.
Carriers have to accommodate the transportation of shipments that happen to have excessive weight, exceed the size of pallets, or result in loads wider (or longer) than 12 feet, which is generally the standard width of the lanes of highways and interstates.
When this happens, you can expect an accessorial fee added to your final shipping cost.
Out-of-route mileage refers to any additional miles the driver ends up accruing in addition to the pre-negotiated mileage. Naturally, these result in accessorial fee accrual.
Because loading and unloading the delivery truck doesn’t generally fall to the carrier, if the driver has to load and unload the freight, the carrier will charge lumper accessorial fees.
Sorting and segregation refer to the process of sorting and separating the products in a particular shipment according to differentiating characteristics—like size, color, flavor, and so on.
The shipment receiver, your customer, can make a direct request to the carrier and have them perform the service. Of course, if not specified on time or discussed between you and your client beforehand, it can accrue significant accessorial fees, as it is quite time-consuming and involves plenty of additional labor.
Remember, the freight carrier doesn’t need to include this service in the bill of lading (BOL) or ask for your approval.
In addition to the accessorial fee examples specified above, there can be others. Other types can be after-hour deliveries, handling hazardous materials, metro pickup and delivery, layovers, and redeliveries, to name a few.
The list of hidden fees a carrier can come up with can seem never-ending. Keep reading for some tips on how to eliminate—or at least reduce—your chances of accruing accessorial fees.
Clear communication with the freight carrier is the best way to reduce the likelihood of accessorials or even avoid them altogether.
Performing in-depth analyses of your business’s shipping history can be very helpful. You can do this internally or partner up with a qualified third-party logistics provider.
Build good working relationships with carriers, especially those that implement specific programs offering incentives for collaborative, effective business relations. They may provide discounts for accessorials or even waive them entirely.
Here are some other things you can do to reduce your spending when it comes to the accrual of accessorial fees:
1. Verify freight details.
2. Clarify all details with the client.
3. Use scanning equipment.
4. Hire a third-party logistics provider for auditing.
5. Choose a freight carrier that uses autonomous trucks.
Make sure you are efficient in covering all your bases when initially creating your freight shipment.
Pay close attention to the box measurements and weight. If you need to make adjustments, remember to make them traceable.
Doing this will give your carrier less room to add accessorials. It will also give you the necessary leverage to dispute any fees you feel are made in error.
Make sure you have all delivery details down. Have the client specify whether the final destination is a business or a residential area. If the product is going to a residential area, determine if the final destination is a business located within.
It's a good idea also to verify the extent of the client's flexibility, if any, and their ability to receive the shipment so that you can avoid sustaining missed delivery charges, for example.
You can invest in the purchase of scanning equipment that will automate the entry of data. It will ensure the shipment specifics—like dimensions, weight, and so on—are correct.
Even though hiring and implementing a third-party logistics provider to manually or automatically audit every freight invoice you receive can involve additional costs, it can also prove extremely efficient in saving you money in the long run.
The third-party provider will interface with your freight carrier on your behalf and help you secure refunds when you are erroneously charged, for example.
Rather than human drivers, technology operates autonomous trucks. Because there is no human involvement in the process, total shipping costs can significantly decrease.
In the instance of lower shipping costs and minimal possibilities of delays and unforeseen obstacles, you also reduce accessorials' likelihood.
Assessing the freight costs that your business sustains is essential if you want to save money. As you can see, the accrual of accessorials substantially affects your total costs and significantly affects your budgeting.
Because of this, implementing the best practices to optimize the efficiency of your transportation operations and seeking effective ways to plan for the unexpected is vital to maintaining your supply chain budgets.
At Gilbert International, we strive for excellence in our accessorial practices and services, and we hope we have helped you become better-informed and prepared to reduce potential losses.