Less-than-truckload (LTL) shipping can be an ideal solution when you don’t have enough freight to justify a full truckload. But the cost benefits of LTL can quickly erode once accessorial charges are factored in. These extra fees often go unnoticed until the invoice arrives. Understanding and managing these hidden costs is crucial for businesses looking to optimize their shipping expenses and avoid surprise charges.
What are accessorial charges?
Accessorial charges are additional fees applied by carriers for services that go beyond basic transportation. While a standard LTL shipment involves picking up goods from one location and delivering them to another, accessorial services address any requirements that fall outside this scope. These might include liftgate services, residential delivery, inside delivery, and more. Each of these services comes with its own set of fees, and if you’re unaware of how and when they apply, your LTL invoice can skyrocket.
Types of accessorial charges
While the range of accessorial services can vary by carrier, some of the most common charges include liftgate fees, residential delivery, and limited access locations. Liftgate services are typically required when a facility lacks the necessary dock or equipment to load or unload the freight. Residential deliveries often come with additional charges because delivering to a residence involves more time, effort, and resources than a commercial facility.
Other accessorials include charges for inside delivery, where the carrier brings the freight into the building rather than just leaving it at the dock. Re-delivery fees are another common charge applied when the carrier attempts to deliver freight but is unable to complete the delivery on the first attempt due to incorrect information or unavailable personnel.
Bottom-line impacts
The financial impact of accessorial charges can be significant. A few dollars here and there may seem inconsequential, but these costs add up over time. For businesses shipping frequently or in high volumes, unmanaged accessorial fees can dramatically increase overall shipping expenses. These fees eat into margins and can even negate the cost benefits of using LTL services.
Accessorial charges can also strain customer relationships if they lead to unexpected delays or additional fees passed down the supply chain. A lack of transparency in freight costs reflects poorly on the carrier and the shipper, potentially damaging long-term partnerships.
How to avoid or manage accessorial charges
To avoid being blindsided by accessorial charges, businesses must focus on improving visibility into their shipping processes and being proactive with carriers. Provide as much information as possible when booking a shipment. Details such as delivery locations, equipment needs, and special handling requirements should be clearly communicated upfront. This minimizes the risk of additional charges being added later due to missing or incomplete information.
Businesses should also regularly audit their freight invoices to identify patterns in accessorial charges. By reviewing past shipments, companies can spot recurring issues and take steps to address them with better planning or by choosing carriers that offer more favorable terms. Data analytics tools can provide deeper insights into these trends, helping companies make informed decisions about carrier selection and route planning.
For those with frequent LTL shipments, negotiating with carriers for fixed accessorial fees or discounts can be an effective cost-saving strategy. Long-term relationships with carriers often enable more favorable terms, particularly if you’re able to commit to consistent shipment volumes. While not all accessorial fees are negotiable, many carriers are willing to work with shippers to find mutually beneficial solutions that reduce the burden of these hidden costs.
Leveraging technology for cost control
Technology can help businesses manage their accessorial charges. An advanced transportation management system (TMS) like nVision Global’s Impact TMS can automate the process of flagging potential accessorials before they become a cost burden. By integrating a TMS into your logistics operations, you can gain better visibility into your shipping requirements, ensuring that all necessary services are accounted for before the shipment leaves your dock. This reduces the likelihood of post-delivery surprises and allows for more accurate cost forecasting.
TMS solutions can also assist with invoice auditing, allowing companies to quickly identify discrepancies in billing and contest any accessorial fees that weren’t agreed upon or applied correctly. This level of transparency empowers shippers to maintain tighter control over their logistics costs and avoid being hit with hidden fees.
Hidden costs, visible solutions
Accessorial charges in LTL invoices are an often-overlooked component of freight costs, but with the right strategies and tools, businesses can take control of these hidden fees. By improving shipment visibility, negotiating with carriers, and leveraging technology, companies can minimize the financial impact of accessorial charges and maintain the cost-efficiency that LTL shipping promises.