What CEOs Need To Know About LTL Accessorial Fees
When you have a growing company, you’re always looking for ways to save money on supply chain operations. Freight management is a complex part of supply chain management, and it can take years of experience to learn all the ins and outs. For example, many business leaders don’t know there may be hidden costs called accessorials added to freight charges and bills of lading. While it might not be possible to avoid all accessorials, with a little planning, you may be able to avoid many unexpected charges.
What Are Accessorials?
Carriers, like all companies, are in business to make money. They base their prices on standard cost assumptions. Anytime a shipment requires an extra or unplanned service, the carrier will charge an additional fee to make up for the unexpected cost.
Although it’s unlikely you can avoid accessorials entirely, understanding the delivery needs of your shipments can help you avoid unexpected fees and plan for those that you can’t prevent. The first step is understanding the most common accessorial charges.
Most accessorial fees fall into one of the categories listed below. Paying attention to these attributes of your shipments can help eliminate unexpected charges.
Reweighing due to improper weight or classification: Many carriers are somewhat forgiving on weighting errors, often allowing up to 15 pounds of leeway. However, if you make a habit of listing low weights or you are off by more than the carrier’s tolerance, you will most likely see an accessorial charge added to your bill. Also, make sure you have used the correct National Motor Freight Classification (NMFC). If you forget to add it or use an incorrect code, you may get charged for a higher cost classification. If in doubt, talk to the carrier in advance, or work with a 3PL to ensure accuracy.
Additional equipment requirements: If your shipment will require use of lift gates, pallet jacks, forklifts or other equipment, make sure to include this information on the bill of lading (BOL). If you don’t, you may get charged redelivery fees as well as equipment usage fees.
Corrected BOL: Any errors or omissions on the BOL may require the carrier to pull the shipment aside to make corrections. Not only will you incur fees for the corrections, but your shipment may be delayed.
Inside pickup or delivery: Carriers assume pickups and deliveries will happen on the loading dock, so they may charge extra if they must bring the goods inside the building, especially if the delivery location requires navigating narrow hallways or long distances.
Residential delivery: Residences can be problematic for deliveries because of stairs, narrow doors and halls, delicate furniture and simply the element of the unknown. Expect an accessorial charge for residential delivery, especially for large or heavy shipments.
Appointment requirements: If the receiver requires a delivery appointment, be sure to include the information on the BOL. If you skip this info, the carrier may not be able to deliver on the first attempt. As a result, you will probably be assessed both redelivery and appointment accessorial fees.
Redelivery fees: Whenever carriers are required to make multiple attempts to deliver a shipment, they are likely to add a surcharge to your freight bill. Redelivery fees are added whenever the receiver turns the shipper away, regardless of the reason.
Sorting and segmenting shipments: Sometimes, shipments must be sorted by flavor, brand, style or other characteristics. If this is required on the dock, expect to be charged for the time and labor.
Oversize shipments: Especially heavy weights, oversize or long shipments will often incur an additional charge because of the special handling and equipment requirements.
California requirements: California has unique regulations governing shipments. If you are shipping to or from California, expect the carrier to charge you to accommodate the special regulations.
Metro and limited-access locations: Traversing narrow city streets, delivering to out of the way locations, or to locations such as jails, military bases or secure government facilities will usually incur an accessorial charge because of the extra time and care required.
The most crucial factor in managing accessorial fees is understanding when and how you may incur them. Knowing the factors that can cause add-on fees is the most important step, since many of these factors may actually be within your control.
Carriers have little to no incentive to eliminate accessorial fees, since the fees cover unexpected costs and improve their margins. Carriers are extremely reluctant to remove or credit fees once they have been assessed, so the best option is to ensure you don’t give them a reason to add them unnecessarily in the first place.
Ensuring that BOLs are accurate and contain all the required information will help eliminate fees such as corrections, reweighing and redelivery. Providing the information about special handling or required equipment may not eliminate the fees for those factors, but it will help prevent add-ons such as redeliveries.
While it seems simple, correctly filling out a BOL is no easy task. It requires knowledge of freight tariffs and shipping regulations, material handling equipment, delivery routes and customer requirements, among many other factors. Far from being a simple form, filling out a BOL requires time and attention as well as knowledge to do correctly. Many small businesses don’t have this expertise in-house, and most business owners would prefer to spend their time increasing revenue and working on strategy rather than learning the fine points of freight accessorials. There is, however, another solution.
One of the easiest and most cost-effective ways to manage accessorial fees is to work with a 3PL with experience in your industry. An experienced 3PL will have the skill to ensure that BOLs are correctly filled out and include all the required information. In addition, a 3PL partner will have strong relationships with carriers and shippers, and it may have the clout to get unexpected or excessive charges removed.
Art Nourot is Vice President of Carrier Procurement, Supply Chain Solutions at Unyson. He directs the design and development of Unyson’s strategic carrier network, and is focused on optimizing carrier service, cost and capacity to benefit Unyson clients. Before joining Unyson, Nourot served in a variety of management positions in the transportation and logistics industry since 1993.