Making Sure Accessorial Fees Don't Suck Money Out Of Your Bottom Line

Accessorial fees are like vacuums. They suck. They (usually) suck to see on your invoices and they can suck money out of your company’s pockets. Accessorial charges are assessed while a shipment is in transit or upon its delivery and can present an important cost management issue for shippers. Since many shippers charge their customer when an order is placed, it is problematic when the actual shipping charges exceed expectations due to accessorial fees. When your shipping costs exceed the revenue collected from your customers, accessorial fees really suck.

Thankfully, and unknown to many shippers, these charges can often be discounted or waived entirely. Shippers can also use a parcel audit to chase down incorrect accessorial charges and have them credited back. The cost reductions from discounted (or waived) accessorial fees can be substantial, but they do come at a cost. Time. The man hours associated with combing through every invoice, drilling down to every tracking number, line item by line item, can be very tedious and time consuming.

Some common accessorial fees assessed are:

• Dimensional Charge
• Residential Charge (plus transportation differential)
• Address Correction Charge
• Delivery Area Surcharge

Implementing a parcel audit or carrier contract negotiation can mitigate the man-hours needed on the shipper’s end to catch and contest the dozens of accessorial charges that can show up on an invoice. Many shippers are unaware that carriers like UPS and FedEx can and will discount most accessorial fees.  In some cases a carrier may agree to entirely waive a fee.  The cost reduction resulting from a discounted or waived accessorial fee can be substantial. Implementing a parcel audit won’t prevent the accessorial charges from appearing, but it will catch the incorrect charges when your invoices are audited. So arm yourself with these best practice suggestions to help avoid getting slapped with unnecessary accessorial fees.

BEST PRACTICE SUGGESTIONS:

1. Be aware of the accessorial charges that your carrier has the ability to assess.
2. Identify which accessorial charges your company regularly incurs so you can work to negotiate discounts on these, or other accessorial charges.
3. Relative to your shipping characteristics, negotiate industry leading accessorial fee discounts (and/or waivers) in addition to your transportation tariff incentives.
4. Design a system that enables your company to pre-determine and charge your customers for accessorial fees that will be assessed in-transit and upon delivery.
5. Validate the legitimacy of every individual accessorial charge that appears on your carrier invoice by implementing a parcel audit.

Author

Rich Harkey

Rich Harkey

Senior Strategy Manager

Rich Harkey is a results-driven professional with extensive experience in the logistics and supply chain industry.

As the Senior Strategy Manager at Lojistic, Rich leverages over three decades of expertise to help businesses improve their shipping strategies and reduce costs. With a deep understanding of the requirements of shippers and the operational intricacies of carriers, he excels in everything from optimizing business rules and managing carrier invoices to negotiating carrier contracts.

Rich's comprehensive knowledge of the logistics industry, combined with his strategic insights and passion for data analysis, has enabled thousands of companies to gain visibility into their shipping expenses, driving impactful results.