Navigating Accessorial Fees in the LTL Industry: Understanding Shipping Costs
In the complicated ecosystem of Less-than-Truckload (LTL) shipping, there’s more to consider beyond just the weight and size of your freight. Accessorial fees play a crucial role in determining the overall cost of shipping, and understanding them is essential for shippers, carriers, and their intermediaries.
What Are Accessorial Fees?
Accessorial fees are additional charges incurred by carriers for services beyond standard transportation. While the base rate of LTL shipping typically includes the transportation of freight from one point to another, accessorial fees come into play for additional services or special requirements needed for a shipment. These fees cover a wide range of situations documented in carrier tariffs that require extra time, labor, or resources which are then passed to the carrier’s customer.
Importance of Understanding Accessorial Fees
Carriers need to understand the resources needed before the delivery of cargo. For example, If a liftgate is needed, that has to be presented at the beginning of the shipping process to ensure the carrier has the proper equipment to make the on-time delivery. Here are some benefits of having access to the correct accessorial fees:
Cost Transparency: Understanding accessorial fees provides clarity on the total cost of shipping, enabling shippers to budget effectively and allowing carriers to provide the appropriate quote before shipment delivery.
Accurate Pricing: Knowledge of accessorial fees allows shippers to receive accurate prices from carriers based on the specific services required without the need to amend documents at a later date.
Operational Efficiency: By anticipating and planning for accessorial fees, carriers can streamline their logistics processes and minimize disruptions during transportation.
Common Accessorial Fees in the LTL Industry
Liftgate Service: When a pickup or delivery location lacks a loading dock or forklift, carriers may need to use a liftgate on their truck to lower or raise freight to the ground.
Inside Delivery: This fee applies when freight needs to be taken inside a building or to a specific room beyond the standard delivery process.
Limited Access: Fees may apply for deliveries or pickups at over 60 different types of locations that are difficult to access. A few example locations with additional fees include:
- Residential
- Military
- Golf courses
- Hospitals
- Schools
- Airports
- Mines
Detention: Time is money in the industry. If a driver experiences delays during loading or unloading beyond the agreed-upon time frame, detention fees may be charged to compensate for the driver’s time.
Re-Delivery: This fee is incurred when a delivery attempt fails due to recipient unavailability or incorrect address information, necessitating a second delivery attempt.
Re-weigh/Reclassification Fees: Accuracy is key in LTL shipping. If the freight’s weight or classification differs from the declared values, carriers may charge for the adjustments needed to align billing with the actual shipment characteristics.
Understanding these fees is paramount as they directly impact the overall cost of transportation services. Clear communication about accessorial fees helps carriers and customers alike see the full cost of shipping, enabling more accurate pricing and avoiding surprises at the time of delivery. Understanding these fees is essential to all parties involved for accurate pricing, efficient resource allocation, and seamless operations.
Leveraging API Access
Application Programming Interface (API) access to location data has revolutionized the logistics industry by providing real-time, accurate information about delivery addresses. APIs that provide address validation and geocoding services ensure accurate delivery addresses, reducing the risk of failed deliveries and re-routing charges. By validating delivery addresses in real-time, carriers can improve first-time delivery rates, enhance operational efficiency, and minimize accessorial fees. By integrating location data APIs into their systems, carriers can gain valuable insights that drive profit, streamline operations, and enhance billing accuracy. By automating billing processes and integrating location data APIs into their billing systems, carriers can minimize billing errors, improve revenue recognition, and enhance financial performance.
This is where Shiplify comes in. Shiplify helps companies in the LTL industry identify location-based accessorial fees with location data through Shiplify’s API. The information provided allows shippers, carriers, and 3PLs to be fully aligned on which shipments will lead to accessorial fees, increasing transparency and reducing shipping headaches.
Often, LTL shippers send shipments to locations not equipped to receive freight. This can cause carriers to return the freight to their terminal and redeliver on a later date, which not only costs the carrier time and money but also creates a bad customer experience for the shipper’s customer. If the carrier can foresee the potential issues at a location, they can prepare their drivers by providing the necessary equipment. This extra equipment and special handling is why carriers have to add accessorial fees to the shipment costs. Shiplify eliminates this by identifying the accessorial fees during the quoting and carrier selection process. Shiplify helps carriers with location knowledge, optimized routes, and accurate invoicing for improved accessorial revenue. Equipped with this information, companies can make informed, strategic decisions that align with their long-term goals.
In the LTL shipping industry, accessorial fees are a critical component of the overall cost equation. By understanding these fees and their implications, shippers can make informed decisions, negotiate favorable terms, and optimize their logistics operations. Correct identification of common accessorial fees allows carriers to give the right freight quote and invoicing, provide full transparency, and ensure a smooth shipping process from origin to destination. In the dynamic landscape of LTL shipping, mastering accessorial fees is key to achieving a cost-effective and efficient supply chain.