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One of the many factors that add up to your overall LTL freight rates is accessorial charges. Knowing what accessorial charges are, and how to control their occurrence and cost is one way to help reduce LTL freight costs. Many shippers are unaware of exactly what accessorial charges they may encounter and just how much they can cost.
In this article, we will review the most common accessorial charges, and how your company can better predict your usage and also, negotiate better accessorial terms with your carrier.
Accessorial charges are additional services that the carrier might provide outside of the standard shipping and receiving procedures. These charges will oftentimes be assessed and applied after the shipment has been made, making it difficult to forecast into transportation budgets. While base rates are the core portion of LTL freight costs, accessorial fees can add up, leading to a significant increase in your transportation costs. Here is a list of the most common accessorial charges:
Additional fees are applied when carriers are asked to deliver within a residential area, rather than a typical business setting. When delivering to a warehouse, or business, they have specifically designed docking areas that make pulling in, backing up and unloading seamless for a carrier. However, this is not the case within residential zones. Can you imagine maneuvering an 18-wheeler truck through your neighborhood, and then somehow turning it around at the end of your little residential cul-de-sac? That takes not only skill but time. Much more time that it would take to slip into a warehouse dock. And as they say, time is money.
Like we mentioned above, commercial trucks are designed to load and unload conveniently onto loading docks. When shipments are being made to residential addresses with no loading dock areas, they require extra equipment, called lift gates, that can raise and lower a shipment from the truck to the ground. Having this feature on trucks requires an additional investment, hence the additional cost. Also, if you don’t make the carrier aware that a lift gate will be needed and they arrive without the required equipment, they won’t be able to complete the delivery, adding an additional re-delivery fee to your shipment.
So, now that the truck has made it to the residence, and unloaded it off the truck with its lift gate, most customers don’t want their products just left on the curb. This brings with it another accessorial, inside delivery. Similar to the two above, this is an extra cost because it requires additional equipment (a pallet jack to lift the pallet up curbs and stairs), additional time, and sometimes, additional man power.
Sometimes, the pickup or delivery is a little more complicated than just residential. In fact, the limited access accessorial can be applied to both commercial and non-commercial delivery sites. These are locations that require additional time due to:
Some examples of locations that will most likely cost you a limited access accessorial are government facilities, schools, prisons, medical facilities, camps and nursing homes.
As you can see, there are many reasons for an additional accessorial fee on a shipment. And since these fees are often times added after the shipment has been made, it can be difficult to predict freight costs and budget accurately. The best way to avoid surprises is to make sure your carrier has as much information about your shipping needs as possible. Here’s a great checklist of information to relay to your carrier to receive the most accurate quote:
The one good thing about accessorial charges is that they are completely negotiable. They need to be considered when negotiating with carriers for your total shipping cost. When looking to reduce your LTL freight costs, remember to consider accessorial rates even if their base rate looks appealing.
To better understand accessorial charges, think about pricing within the airline industry. When you are booking your airline ticket fares differ by airline, but now there are many “added charge” that you might not realize until the time of your trip. Airlines can charge for carry-on items, checked luggage, upgrades to priority boarding, and more. Think of these added charges like the accessorials of air travel.
When negotiating accessorial fees with a carrier, it’s important to know the frequency of your accessorials. If you know the real frequency as a percentage of your total LTL volumes, they will be more willing to negotiate. Also make sure to measure and record the characteristics, weight, and dimensions of your shipments, which will help you dispute an accessorial error that may occur.
For the best results on your freight costs, hire an established 3PL. They will be able to negotiate the lowest possible rates on accessorial charges as well as perform auditing to catch any unnecessary charges that may be added. Here at LTX, we can help you in all areas of your LTL freight management. Clink the button below for a Free Quote.