If you’re in the freight business, things can get complicated. When it comes to freight rates, the...
Understanding Accessorial Fees In Freight Shipping
When in the business of shipping, you want to get familiar with accessorial fees. If you are in the freight industry, accessorial charges can be a significant factor to take into account when calculating margins and the profitability of a venture, whether you are shipping or you are transporting. When you consider the reasoning behind an accessorial fee on a bill, it's easy to see why some trucking companies charge so much. Carriers can, and will, charge accessorial fees based on a variety of factors, so it’s important to stay informed on what those may be and why they exist.
What is an Accessorial Charge?
An accessorial charge is a fee that is added onto the freight cost, or a shipper’s freight invoice, depending on specific factors that may take the shipment outside of its usual pickup and drop-off routine. Just like truck drivers or companies need to pay insurance or leasing fees, there are also accessorial fees in the shipping process. For any added service that a carrier may provide to make their delivery or pickup, an accessorial charge may be included. The fee often applies to any work by the carrier beyond the standard pick-up and drop off.
How Are Accessorial Fees Determined?
Accessorial charges are added onto shipping or delivery costs for a variety of reasons. Most often, any added equipment or special handling of cargo will be subject to a charge, due to the added accommodation or effort by the carrier or transportation provider. Any added loading, unloading or delivery requirements, such as residential or inside delivery, and especially any equipment or effort not stated in advance of pick-up is subject to be charged to an accessorial fee.
Other times, if there are errors on the Bill of Lading or other documentation discovered after the shipment has been picked up, or there are in-transit issues such as redelivery, limited access, or layovers, then there is a likelihood an accessorial fee may apply. Yet, if the carrier causes a layover, the carrier would pay, however. Any fees after the freight has been picked up often end up resulting from error, while other general accessorial fees can be anticipated before pick-up and are more common. Some common unknown or after the fact charges which may occur are:
- Demurrage (When cargo spends longer than allocated time at the terminal).
- Storage (If the carrier has to store the delivery for any period of time).
- Detention (Keeping the trailer or driver for an extended time period).
Who Pays The Accessorial Fees?
Most of the time, the accessorial fees are paid for by the consignee. The entity or individual who is paying for the shipping of the cargo will also pay the carrier or transportation provider any of the accessorial fees, as they are usually added to the freight bill when the shipment is booked. The final freight bill will also reflect any additional charges or unexpected service requirements that may have occurred during the trip. Fuel surcharges fall into additional costs the shipper may incur, but there are a variety of other accessorial costs to consider.
Some of The Most Common Accessorial Charges
Additional Stops: If a carrier has to stop at more than one location to drop off or pick up the cargo for the specified shipper or consignee.
After-Hours Delivery: When the carrier delivers cargo outside of their usual business hours.
Advance Notification: When the driver has to notify the consignee, before they complete the delivery.
Bill of Lading Correction Fee: When the correct BOL is not provided at the original location and needs to be corrected before delivery.
Circuitous Miles: If the carrier needs to make any stops out of route.
Deadhead: When the container has to travel back empty to the point of origin, cutting into the carriers time.
Driver Loading/Unloading: If the driver has to assist in the loading or unloading of the cargo.
Hazardous Materials Fee: Any materials being transported which need to be controlled or require special handling for the safety of infrastructure or human health.
Inside Delivery: If the driver has to move beyond the loading dock or front door to pick up or deliver the cargo.
Lumper: When third parties load or unload the cargo, such as at large distribution warehouses.
Overweight: When the loaded trailer and truck exceed the federal regulations.
Pallet Jack: If the driver needs to use a pallet jack to load or unload the trailer.
Shrink-Wrap: If shrink wrap is needed to secure or wrap the pallets in the trailer.
Stop-off Charge: When cargo needs to be delivered to two or more locations.
Truck Not Used: If a truck is ordered but then not used for transport, an accessorial fee may be charged, dependent on the carrier’s cut off time window.
Diversion Miles: When a driver has to go to a different location, after having already arrived at the pre-determined delivery address.
Per Diem: A daily charge for using the carrier’s equipment, until the equipment is returned to carrier.
How To Limit Accessorial Costs?
In shipping, it is essential to make sure that the weight and measurements of a shipment are accurate, and that all the documents, especially Bill of Lading, are filled out correctly and in detail. The BOL should include special handling instructions as well. It is essential to let carriers know ahead of time of any special circumstances, handling or equipment needs. If a load is not within legal limits, it creates problems for carriers and drivers, so the shipment will need to be reworked and thus more fees may apply. Most importantly, transparency, or communication between the parties involved is key, as carriers can get prepared ahead of time and plan ahead for the transport.
Accessorial charges are probably one of the most misunderstood cost categories in logistics. The fees that you'll see for accessorial services depend on the shipment, carrier and any additional handling challenges the cargo may face. However, they are an important method for carriers to ensure they are paid for additional complications or any additional services. If the shipment makes things more complicated for a trucking company, then they can charge add-on accessorial fees. Whether you are shipping or you are the carrier or small trucking company, make sure to consider the accessorial costs in your planning, as it can make a difference to your budget.