How Shippers Can Reduce or Eliminate Accessorial Charges
Regardless of the size of your company, how much you ship, or the relationship you have with an LTL company, one constant all shippers can rely on are accessorial charges. These freight charges can unexpectedly show up on your freight invoice – and quite often will raise some eyebrows as to why the extra fee is on the invoice. While many carriers will work with shippers – especially higher-volume customers, there are a few ways that a shipper can reduce or eliminate accessorial charges.
Noted below are a few facts about accessorial charges and how smart shippers can reduce these charges – which can save a shipping company thousands of dollars or more each year.
What are Accessorial Charges?
A freight accessorial charge is an additional service that is provided by a carrier, not indicated in the original freight estimate. These charges are popular with LTL carriers, but can also appear from parcel carriers – especially those who provide overnight or express deliveries. There are a few examples of common accessorial charges which we’ll list below:
• Residential Service: When a shipper sets up a shipment, sometimes the delivery will require residential services. However, LTL carriers (and even parcel carriers) consider residential deliveries to be more time consuming or requiring special handling. A great example of this is when a company ships a pallet of their product to a customer. If the invoice indicates that the point of delivery is a business but is discovered to be a home or other residential property, the carrier can charge a residential delivery fee.
• Lift-Gate Service: An LTL shipment is intended to deliver freight onto a loading dock, which is quick, easy, safe and efficient. However, if the delivery requires the carrier and driver to off-load the freight using their liftgate, an additional charge can and often is submitted to the customer.
• Internal Delivery: Assuming you have set up an LTL delivery or even a parcel delivery, and the recipient needs the carrier to place the products inside a garage, their home, or another location on the property beside the point of off-loading, an additional internal delivery service charge is warranted.
• Special Handling: This accessory charge typically occurs when the shipper sets up a delivery requiring special handling, such as hazardous materials, international, or medical equipment.
While these are all services that most carriers offer, the problem occurs when the shipper fails to notate the information on the freight estimate. There is another common charge called limited access, that are the most common type of accessorial charges. This problem is typically caused by poor communication between the shipper and the recipient, by not planning receipt of delivery based on the carrier’s terms or expected delivery times. A few examples include:
• A failed delivery due to a business closure or no signature available for delivery.
• Not having the right resources to deliver the freight.
• Not being open to the public during normal business hours.
• Delays due to security-related inspections and processes.
How to Reduce Accessorial Charges
It’s clear to see based on the above examples, that the leading source of accessorial charges are simple lapses in communication, inaccurate information documented on the freight estimate, and failures on behalf of the recipient. These problems can cause issues with a shipper, as those unexpected charges can dip into the company profit margin, or cause issues with customers who have those charges placed on their shoulders.
So, the question needs to be asked – how can a shipper avoid these charges? To be honest, the answer is simple – consistency, clarity, and transparency. Here are a few tips:
• Clarify details with customers: Before you submit for a rate estimate for shipment, make sure to ask the customer about their location (business or residential). The key in this area is to ask them if their “business” is in a residential property. If it is, make sure to indicate on your freight estimate that it’s a residential property for accurate estimates. Clarify their ability to receive the shipment to avoid missed delivery charges.
• Verify your freight details: When you’re filling out a freight estimate, make sure to note if the delivery requires special handling, specific delivery handling services, or specific delivery requirements.
One item that many shippers are not aware of is that some accessorial charges can be negotiated on an individual carrier basis. However, the best way to accomplish this is by working with an experienced 3PL. A third-party logistics company has built strong relationships with carriers in multiple segments that can help you reduce these ‘unexpected charges’. They can also help you review all freight invoices for mistakes, ensuring your being charged accurately.