October 16, 2012
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As your company grows, if you ship physical goods, it’s likely that you’ll seek ways to save money on daily supply chain operations. One growing cost center for many businesses is shipping goods from your location or warehouse to the end consumer.
As shipping costs climb, it will become even more important to assess the freight costs your small business incurs – most importantly, hidden costs. Every small business owner should seek out ways to plan for the unexpected, manage unforeseen shipping costs and maintain supply chain budgets.
One of the biggest unforseen freight costs are accessorial — extra charges for transportation services including packing, unpacking, long haul fees and extra pick-ups. Freight carriers may also charge extra fees for trailer detention, re-delivery, fuel increases, and other expenses or extra services.
The biggest difference between accessorials and surcharges, special service codes, and other fees that the major carriers charge is that, for the most part, they are assessed and applied post-shipment.
Companies can plan and budget for anticipated surcharges and special service codes to certain degrees, but accessorials, which are typically neither applied at the point of manifest nor included in regular invoices, can be extremely difficult to factor into your company’s logistics and supply chain budgets.
For this reason and others, they can be a major thorns in the sides for your supply chain managers and executive level management who have to answer to you for losses that are nearly impossible to pre-determine, difficult to uncover, and at the same time, very hard to ignore.
The Dilemma of Limited Data and What to Expect
Today, the three accessorials that are charged most often are:
1. Residential adjustments,
2. Weight adjustments,
3. and Additional handling accessorials.
Like other accessorials, they are usually included in supplemental carrier invoices that contain limited data. Often, carriers will leave entire accessorial data fields completely blank. Without supporting information, shippers are unable to make knowledgeable inquiries as to why their accessorials were assessed in the first place.
Unfortunately, companies cannot expect to get any relief from accessorial charges in the foreseeable future—at least, not without negotiating a new carrier contract or taking strategic steps to reduce them internally.
Currently, accessorials account for about half of carriers’ total annual revenue, if not more. Carriers have almost no incentive to reduce accessorials or provide detailed billing when it comes to accessorials. Carriers are only required to publish accessorial charges in their public tariffs; they do not have to provide your small business with enough detailed information to determine why they were assessed and verify that they were assessed appropriately.
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