Accessorial fees can make up 5% to 10% of your total LTL billing. Depending on the volume of freight you move, this can be substantial. While these fees are a normal part of the shipping business in many cases — and typically known upfront — they can sometimes come as a surprise. And, unfortunately, billing discrepancies here can lead to overcharges.
As you know, surprises in billing, are rarely — if ever — a good thing.
However, there are strategies you can implement to prevent inaccurate accessorial fees and ways to automate the invoice reconciliation process to ensure you’re being charged properly.
Accessorials are not a problem if you’ve built the fees into what you charge your customers and you’re still hitting your margins. In many cases, the services are necessary and not an issue — as long as you get billed appropriately.
But there’s a lot you can do to avoid getting hit with accessorial fees you didn’t plan for.
Anticipating and communicating your shipping needs can identify problems upfront. Here are some of the common add-on fees that can be avoided with careful planning.
Not all warehouses or distribution centers run efficiently. If drivers have to wait too long, waiting fees are tacked on. Typically, anything beyond the 15-minute unloading time results in detention fees.
If a driver is unable to complete a delivery because the recipient isn’t ready or available, you’ll get hit with a redelivery fee to account for the extra time.
Extra charges can apply when a third party is needed to unload freight. If lumper fees are added, you should be able to request a copy of the lumper fee receipt given to the driver to confirm the charges.
As part of the last-mile delivery, there may also be fees for inside delivery. This requires extra time and equipment to offload and place goods, resulting in additional accessorial charges. There might also be fees for liftgate service for deliveries where there is not a loading dock, such as residential or small business deliveries.
Other fees can come from:
As you can see, there are a wide variety of accessorial fees that may apply. To make things more complex, different carriers will have different fee schedules. In some cases, your contract or spot quote may include specific rates or even bundled services to reduce costs.
When an invoice arrives, it’s critical to review each item to make sure you are being charged properly and the fees align with your agreed-upon rates.
Besides the additional costs, these fees can have an impact in other ways. Because fees fluctuate by delivery, it can make forecasting expenses more challenging. And, if you don’t account for them properly in your quotes and pricing, it will eat into your profits. This is especially a problem for high-volume shippers who have tight margins to begin with.
Those surprise charges can also affect cash flow and working capital. If not handled properly, they can damage your relationship with your carrier, making future negotiations more challenging. If you have to bill unforeseen costs to customers, that can lead to a loss of business.
While you must maintain competitive prices to stay profitable, you can’t take accessorial fees for granted. They are a cost of doing business, but you need to be aware of what can be charged and plan carefully to lower your costs and ensure your pricing models account for them.
Proactive management is key to reducing accessorial fees.
Your SOPs should include proper preparation, weighing, measuring, and classifying of shipments. Thoroughly training your staff on how to avoid additional fees helps as well. Also, address accessorial fees in your contract negotiations. High-volume shippers can often get better rates, waivers, or fee caps for certain charges.
Other recommendations include:
It’s also a good idea to look at trends over time. Analyzing historical data from carriers might uncover patterns or trends that require further review. For example, you might see that certain accessorials tend to lead to incorrect charges or that certain carriers charge incorrect fees.
You need to examine the details critically when you find discrepancies between what you’re being charged and what you expected. Overcharges are common, so you need a standard process for reviewing each invoice and comparing it to quoted rates, load requirements, and contract obligations.
When you discover an error, notify the carrier immediately and provide documentation to back up your claim within the week. You will have a much better chance of resolving a dispute if you have a standard way to document each shipment.
Accessorial charges can quickly erode your profits, but you can significantly reduce their impact with the right strategies. By proactively managing these charges, from careful contract negotiations to precise shipment preparation, you're already taking essential steps to protect your bottom line. However, there's always more to learn.
Ready to dive deeper? Download our ebook, Optimizing the LTL Billing Disputes Process: What CFOs Need to Know to Streamline Their High-Volume Shipping, and discover how to:
Equip yourself with the knowledge and tools to outmaneuver unexpected fees and optimize your LTL shipping costs.
Accessorial fees can make up 5% to 10% of your total LTL billing. Depending on the volume of freight you move, this can be substantial. While these fees are a normal part of the shipping business in many cases — and typically known upfront — they can sometimes come as a surprise. And, unfortunately, billing…
Read more
Accessorial fees can make up 5% to 10% of your total LTL billing. Depending on the volume of freight you move, this can be substantial. While these fees are a normal part of the shipping business in many cases — and typically known upfront — they can sometimes come as a surprise. And, unfortunately, billing…
Read more
Accessorial fees can make up 5% to 10% of your total LTL billing. Depending on the volume of freight you move, this can be substantial. While these fees are a normal part of the shipping business in many cases — and typically known upfront — they can sometimes come as a surprise. And, unfortunately, billing…
Read more