Watch your ACC! Understanding and Managing LTL Accessorials
As shipping costs rise, it’s more likely small businesses will search for ways to save money within their supply chain operations. In doing so, it’s important to be aware of any potential hidden costs, including accessorials. Over the years, we have observed carriers become stricter with applying accessorial fees to cover inefficiencies when handling shipments outside “the norm.” While manufacturers cannot prevent all accessorial charges, they can take steps to become more proactive.
Before learning how to manage accessorial fees, it’s important to understand what they are and why carriers charge for them. Simply put, accessorial fees are added charges to your freight invoice when extra services are required to handle your shipment. Accessorial fees are often added to the invoice after delivery and can be seen as hidden or unexpected fees for manufacturers. Some common accessorial fees include (but are not limited to):
- Lift-gate services
- Oversized/extreme length freight
- Residential pickup/delivery
- Limited access pickup/delivery (may include construction sites, schools, hospitals, military bases, etc.)
- Reweigh and inspection fees
- Sort and segregate
- Appointment and notification
- High cost/remote areas
While accessorial fees and the rising costs associated with them may be frustrating for small businesses, it’s important to understand why carriers impose such fees. As with all businesses, LTL carriers take care in measuring their operating ratios to understand their profitability. For this reason, shipments outside the standard pickup and delivery margins must be charged accordingly because of the inefficiencies imposed on the carriers. While these charges may seem hidden or additional, carriers should be paid for the services they provide.
The number one way to stay in front of unexpected accessorial fees is to know your customer. For example, if you’re shipping to a name of a business that may sound like a school or residence (i.e., “John Smith Middle School” or simply “John Smith”), spend the extra couple minutes to look up their address and determine what services may be needed. Does the customer require an appointment for delivery? Will they need a lift-gate? Do they have a dock? Asking your customer is the best and most direct way to answer these questions and can help eliminate some accessorial fees, such as a redelivery. By knowing your customer, it also allows you to select the correct accessorials ahead of time and know the overall freight costs before quoting your customer – helping you cover the additional fees.
Inputting the correct information for your customer into a TMS or rating engine before shipping also helps outline costs and the best carrier. Carriers charge different amounts for the same accessorials, so knowing ahead of time if you have a shipment delivering to a residence can mean a difference of $40.00, $125.00, or more. Gathering accurate information upfront helps you select the right carrier.
Conveniently, each carrier provides a detailed rules tariff online available for the public, explaining each accessorial, when it’s applicable and the associated costs. Recon helps manufacturers negotiate lower rates for commonly used accessorials (for example, it’s standard for us to waive most BOL correction fees and notification fees on our customer’s behalf – remember, YOU own your tariff with the carrier, not Recon). When accessorials occur, it’s important to identify a pattern and the root cause. Another commonly unpredictable accessorial is detention upon delivery. While it’s understandable carriers want to be paid for the additional time spent during delivery, the fee forced on the responsible party for freight payment can be unexpected and expensive. A way to mitigate this fee is to first observe a pattern and then take action. If you notice one of your customers takes a longer time unloading the driver, ask if a delivery appointment would be more suitable or add an average of the detention fee to their invoices going forward. Having a TMS is essential for reporting shipping trends and with the help of a freight management consultant team, Recon can help you analyze patterns and stay proactive.