If you’ve ever received an itemized quote from a transportation company, you’ve probably encountered a few surcharges you’ve never heard of. Like any trade, transportation has its share of industry-specific jargon that you may or may need to become more familiar with.
Discovering unexpected charges on a freight invoice can be annoying, especially when they happen often. It also doesn’t usually help develop a successful relationship with a carrier.
Most of the time, these are just adding extra fees. Logistics teams, whether shippers or freight service providers, don’t like accessorial costs. Accessorial fees have an immediate detrimental effect on customer service and the bottom line.
But what exactly are the accessorial charges?
In general, accessorial charges or fees are described as extra fees or surcharges imposed by the carrier for services above and beyond simple shipment delivery. Carriers frequently impose additional fees for various forms of transportation, such as truckload, less-than-truckload, and package delivery.
The good news is by understanding how they work; accessorial costs can be minimized or even eliminated. Once familiar with the fundamentals, you can better organize your shipments to reduce additional costs.
Why Accessorial Charges Happen
The process of transporting products is rarely as straightforward.. Deliveries frequently change, take longer than expected, or require expert instruments to handle. These take time, money, and/or resources.
A freight accessorial fee may be levied for many different reasons. But they usually fall into three groups: administrative, distance & time, or equipment.
These fees are frequently the result of a bill of lading (BOL) error discovered at the carrier terminal. Loads larger or heavier than allowed may need special permissions, which could result in additional fees. These avoidable costs can be simply prevented by double-checking the order accuracy.
2. Distance & Time
Delivery fees are very common and usually, happen when a delivery window is missed. Many times, shipments may need longer time or even more stops to reach their destination. Sometimes unpredictable factors affect lead time. Delivering the product or finding another route will incur additional costs depending on how long it delays the process.
Some shipments need extra hardware or tools to load, deliver, or carry. For example, consider medicine refrigeration or a lift gate for facilities without loading docks. Extra accessorial fees can be applied if those conditions aren’t specified before pick-up.
Usually, the consignee is responsible for paying the delivery costs. In recent years, free shipping has become a major selling point in the eCommerce industry. Outside of eCommerce, the consignee still shoulders most of the transportation costs.
Shipping systems are often used to determine the shipping costs at the time of shipment to bill the consignee. The WMS or ERP is notified of these charges, so they get included in the client’s invoice.
Eight Common Types of Accessorial Charges
Although they are only part of your freight charge, these additional costs might be difficult to control. To control your freight costs, you must know which extra charges you can anticipate and which ones you should avoid.
Most of the time, accessorial fees are something that LTL or parcel carriers will charge for overnight or express deliveries.
Incurred by a carrier for extra time spent loading or unloading at a shipper or recipient. Drivers typically waive the detention fees for the first two hours of waiting at either facility. This is because some warehouses have a grace period or leeway. They will then charge an hourly cost after the leeway until the loading or unloading procedure is finished.
2. Residential Delivery or Pick-Up
The shipper must indicate whether the address is commercial or residential when they first request a rate. These deliveries frequently involve navigating residential streets. Shipments in residential areas need to be unloaded with more effort and time.
Fees are applied to account for it if the final delivery is suddenly changed to a residential address. This happens if the original pick-up point or delivery address was at a warehouse or distribution center.
A carrier might need to redeliver a package if no one is available to accept it. This could also happen if the recipient rejects the consignment or the necessary equipment is not on site.
4. Liftgate Delivery
Commercial trucks directly load and unload the freight using a loading dock. A liftgate is needed to lower or raise the freight to the proper level when a loading dock is unavailable. Not every truck has a liftgate installed. If there isn’t one, the shipper might have to pay extra fees if the delivery can’t be made on time.
5. Lumper or Driver Load
Unloading a vehicle frequently falls outside a driver’s standard employment duties. As a result, they bill for the labor whenever the driver has to load or unload the freight. Additionally, third-party workers—often called “lumpers”—are hired to unload freight at sizable distribution warehouses. As a “lumper” fee, distributors pass these fees to shippers. Unloading fees may be charged in cold storage or complex facilities to cover the cost of the particular handling necessary to offload freight.
There can be an extra fee if your freight takes up more room than the pallet size. Carriers have to modify the truckload to fit all the items. Take note that your items would be more than 12 feet long for them to be considered oversized.
7. Truck Ordered and Not Used (TONU)
TONU, or truck ordered but not used, is applied when a truck order is canceled. After all the terms have been agreed upon and approved, the broker cancels the truck before loading the goods. For same-day cancellations, there are typically fees. There is a grace period where the truck can be canceled without penalties.
This can happen for several reasons, such as the buyer discovering a lower price for the product elsewhere. It could also occur if the shipper lacks sufficient inventory to fill the load.
The driver might need to stop for one or more days if the truckload cannot be loaded or unloaded properly. As a result, the driver may incur additional costs and miss one or more work days.
Planning Around Accessorial Charges
Accessorial fees are a permanent fixture of the transportation sector. But if you plan properly, you won’t need to constantly wire additional payments for these fees.
You may have noticed that some of these charges are applied only after delivery. For instance, you’re unlikely to schedule a layover or detention in advance. The easiest method to prevent paying more in most cases is simply communicating openly in advance. You can find estimates of individual charges by coordinating with your partner carriers. When seeking an estimate, it will probably cost you less if you mention them immediately. This will allow the transportation company more time to prepare for particular needs.
It might cost extra as the carrier might charge more if they receive something else and get blindsided by new requirements. They have to work quickly to acquire equipment that complies with those unique needs, which might not be readily available in your area.
Accessorials usually begin during the booking stage of a delivery or transport. Errors such as incorrect classifications or irregularities with the BOL can be avoided through process automation. As a result, human error is minimized, and process compliance is verified during shipping execution.
End-to-end shipment visibility also makes it easier to anticipate potential problems, prevent unforeseen equipment additions, and plan the cargo, delivery, and unloading timing.
Knowing your shipping facilities, the goods you are transporting, and the receiver’s facilities and logistical procedures will help you prepare for accessorial expenses. You can more accurately foresee accessorial costs if you understand your supply chain well.
Determine the difficulties the carrier will encounter at the pickup and delivery docks and discuss them in advance with the carrier. Accessorials may sometimes be negotiated out of the tariff throughout contract negotiations.
Create trusting, long-lasting relationships with your partner carriers. Consider every accessory charge carefully and consider how it affects your budget. Consider whether the charge might have been avoided and investigate whether the issue was with the shipper, recipient, or carrier. Finding the answers to these questions will undoubtedly result in lower accessorial costs as well as improved flow and distribution of your products.
Explore digital solutions to dealing with accessorial charges. ZhenHub helps you manage your shipments digitally, eliminating the need for tedious tasks such as inspecting paperwork. Get full visibility over your entire fulfillment operations on our easy-to-use platform. Our trackable shipping services are at your fingertips when you sign-up for free.