Finding hidden costs on a freight invoice is frustrating, and it happens far too often. Furthermore, it doesn't bode well for building a positive partnership with a carrier.
More often than not, this is actually just an accessorial charge.
These are fees or service charges added to a delivery due to unexpected delays, or additional "services" provided by the carrier to complete a delivery.
The good news is that accessorial charges can be reduced or eliminated by simply understanding what they are and how they work. Once you understand the basics, then you can plan your shipments better to minimize extra fees.
In this blog post, we'll break down what accessorial charges are, explain the most common types you'll encounter, and introduce a few ways you can reduce the potential of being nickeled and dimed to death by your carrier.
What is an Accessorial Charge?
An accessorial charge is applied to shipping invoices for extra services. When an extra service is provided but not included within the initial estimate for services, this is an accessorial charge.
In most cases, an accessorial charge is something that you will see a lot with LTL or parcel carriers (especially overnight or express deliveries). Some of the most common charges that show up unexpectedly on an invoice—and are easy to catch during a freight invoice audit—include the following:
Residential Delivery or Pick-Up
When the shipper initially requests a rate, they must specify whether it is a business or residential address. The primary reason for this is that residential deliveries require special handling or equipment that is not a part of the normal business operation for most larger carriers.
Express delivery companies will also charge an additional fee for residential deliveries or pickups, due to the additional traffic or restrictions associated with residential properties.
If the initial estimate states that the delivery is to be picked up or delivered to a business, that ends up being a residential property, an accessorial charge is often added to account for it.
Special Handling
Some products require special handling services. These include things such as international shipping documentation, hazardous material certifications and documentation, or medical equipment.
If the shipment requires any additional handling or specialized equipment or certifications, it is common to receive an accessorial charge.
Liftgate Delivery
For LTL shippers, a common accessorial charge found on invoices is the liftgate charge.
If the carrier cannot deliver a pallet directly to a loading dock, the use of the liftgate is usually required. Since this action takes more time and resources to complete, the customer usually pays an additional fee.
In some cases, a carrier will waive an accessorial charge, especially if the customer is upfront about the possible need for a liftgate from the beginning. The creation of the accessorial charge came about due to shippers taking advantage of carriers. Eventually, carriers decided that to prevent the extra free work, they could piece it out.
Today, the main reason for these charges is simply poor communication between a carrier and the shipper, or the shipper and the freight recipient.
A few other examples of additional charges:
- Non-delivery due to the closure of business or no available recipient.
- Not open for receiving within the expected delivery window.
- Security delays.
- Improper equipment or location for safe delivery.
Are there Ways to Avoid Accessorial Charges?
Contrary to popular belief, it is not advantageous for a carrier to add additional charges to their customer's invoices. All modes of transportation are highly competitive these days, which stimulates carriers to take care of customers by eliminating many common accessorial charges.
However, businesses are in business to protect their own interests. So, accessorial charges are not a thing of the past, nor will they ever be. If you find that you are always being hit with extra fees, there are proven ways to reduce accessorial charges before they become a recurring line item.
There is no magic cure-all for removing all accessorial charges. But, with some common sense and a few simple steps, you can indeed greatly reduce them.
Always clarify your delivery details
Before you book any shipment, it is critical to verify all delivery details with the freight recipient. Specifically, ask them if they operate in a commercial business property or residential property. Ask them to clarify their delivery window availability.
Last but certainly not least, ensure they have the right resources for the carrier to efficiently deliver their product safely.
Be upfront with the carrier
If you are upfront and honest with the carrier from the beginning, they may waive some additional charges. And if you are really lucky, you might get a few discounts in the future.
Work with a Modern 4PL Provider
Modern 4PL providers—and third-party logistics companies—maintain incredible relationships with carriers in all modes of delivery. They can negotiate shipping rates on your behalf, which often includes reduced accessorial or special handling charges.
Furthermore, a Modern 4PL logistics company also provides clients accurate details right up to the point of delivery. This reduces mistakes, delivery re-attempts, or other frustrating situations for the carrier, shipper and customer alike!
Final Thoughts
Just because something looks like a hidden fee, doesn't always mean that it is. A good carrier will always discuss the possibility of extra fees and services with you before signing into a contract. After all, it protects everyone's interests to be transparent.
If you'd like to reduce accessorial charges and receive exceptional rates on shipping, contact the experts at Redwood to learn how our Modern 4PL approach can help.