12 Mar How to Reduce Accessorial Charges for Small Parcel Shipping
Just about every company is looking to lower costs and get better value for their transportation spend. Yet, not every company conducts a detailed freight invoice audit on a regular basis. Failure to reconcile shipping invoices can result in higher shipping costs, loss of carrier refunds, and be a cash flow drain.
Pay Attention to Accessorial Charges
Accessorial charges are value-added service charges that are often applied after a shipment is made. These charges make up more than half of a carrier’s total revenue, which makes them lucrative for the carrier and costly for the shipper. According to a survey conducted by Parcel magazine, many small parcel shippers realize that accessorial charges such as carrier rate increases, surcharges, and dimensional weight changes, greatly impact their business – so this should not come s a surprise. At the same time, over a third of respondents said that accessorial charges were their biggest concern with their primary domestic parcel carrier.
The more you know about accessorials, the more accurately you can manage and budget your shipping costs. Being able to identify when they occur as well as knowledge about your shipping activity and lanes will make it easier to reduce or possibly eliminate these costs. While there are over 100 different accessorial charges, the most common culprits include Dimensional Weight Pricing, Residential Surcharge, Lift Gate Service, Fuel Surcharge, and Additional Handling Surcharge.
Reducing the Impact of Accessorials
Accuracy: Carriers are hoping that you will slip up, so they can hit you with a surcharge. Keep track of all packages’ measurements and weight before shipping. That way, if there is a question about an accessorial, you will have a record.
Fuel Surcharges: Carriers have varying fuel charges, but by calculating your fuel usage using your freight data, you can determine if there is a way to cut down on them.
Duplicate Invoices: Carriers are notorious for sending multiple invoices for the same charges. Double check to see if an invoice has already been paid for that charge before cutting a check.
Total Cost: Figuring out the total cost of each package is a KPI (key performance indicator) that should be measured each week. The percentage that accessorials make up of the total cost per package is important.
There are many reasons for an accessorial fee on a shipment, but giving your carrier updated information about your shipping needs and habits will cut down on the number of surprises on your invoice.
Many shippers do not take the time or have the resource to audit every freight invoice to ensure accuracy, but it is worth the effort. A third-party logistics provider can intervene on your behalf to correct invoices if you are unable to do it. Keep in mind that these charges are negotiable so make sure you are not being over-charged for those times when you are at fault.