Freight shipping costs are complex on a standard level — requiring knowledge of certain fees, the time and ability to review contracts, and the wherewithal to negotiate with carriers. But add accessorial charges to that complexity, and shipping costs are enough to overwhelm any shipper.
Accessorial fees are important for shippers to understand so they can control costs. Without foresight and proper planning, shippers may be hit with surprise accessorial charges after a carrier has completed a shipment. Getting a strong understanding of these fees, what they entail, and how to avoid them allows you to maintain budget predictability and run cost-effective shipping operations.
Read on to get a firm grasp of accessorial charges in this comprehensive guide.
Understanding Freight Accessorial Charges
What Are Freight Accessorial Charges?
Freight accessorial charges are surcharges on top of standard shipping costs. Your shipment may incur these extra fees for a variety of reasons explained in detail below. Everything from loading dock delays to extra equipment usage to residential deliveries may count as accessorial charges.
Every transportation carrier is different in what it considers accessorial costs — and what they charge for the costs as well — so it’s essential to spend time in your shipment planning phase figuring out where you might incur these fees. Establishing what accessorial fees will be a part of your shipment upfront and in your contract saves you from surprise costs post-booking. You have the opportunity to negotiate with carriers on fees before a shipment occurs and to use technology to analyze freight costs as well.
Note that accessorial charges are more commonly associated with less-than-truckload (LTL) shipments — a term that denotes your freight is shipped on a truck with other companies’ freight. If you typically ship using full truckload (FTL) services, you may deal with these types of fees less frequently because FTL transit tends to be more direct and predictable. However, it’s smart to stay educated about accessorial charges no matter what type of freight method you use.
The Impact of Accessorial Charges on Shipping Costs
The impact of accessorial charges on your shipping costs — and ultimately your bottom line — is entirely dependent on how you plan for a shipment. Spending more time strategizing to make shipments economical and negotiating with your carrier can mitigate unforeseen charges. Choosing software and technology tools that automate and analyze certain parts of your shipping processes — or working with an expert who helps you negotiate with carriers — are two ways you can minimize the negative impact of accessorial fees.
While accessorial charges are pesky to shippers, they are necessary to protect carriers’ profitability if shipments go out of scope. They ensure carriers get compensated for added time and effort that isn’t factored into an initial contract. Below, we review the most common types of accessorial charges.
Common Types of Freight Accessorial Charges
Liftgate Service
Liftgate charges occur when carriers cannot simply unload your freight onto a loading dock or ramp from the truck. In the absence of a dock or ramp, carriers will need to call for a trailer with a liftgate to unload your freight — incurring a fee for the use of this equipment. A liftgate may also be necessary if there is a shipping dock present, but it’s at a different elevation from the truck’s platform.
Liftgate fees apply to pick-up as well, so if your shipping location requires the raising or lowering of freight to insert it into a truck, you’ll need to factor liftgate fees into your regular shipping contracts.
Residential Delivery
Deliveries to residential addresses incur residential accessorial fees to factor in the time, effort, and fuel required to navigate cities, driveways, apartment complexes, stairs, elevators, and other factors. These fees may apply to residential addresses regardless of whether or not they operate as businesses. It’s typically more expensive to deliver to a residential building than a commercial one because commercial addresses tend to be more accommodating for deliveries and/or grouped together, resulting in less time-consuming, batched deliveries.
It’s important to note that some transportation companies may also charge “non-commercial delivery” fees that are different from residential delivery fees but similar in that they incur costs if a truck has to pick up or deliver outside of a business park. For example, deliveries to schools, storage facilities, churches, or office buildings may incur this type of fee.
Inside Delivery and Limited Access Locations
Inside delivery adds a cost if a driver is required to go past a front door or loading dock to complete the delivery or pick-up. This term tends to cover instances where drivers have to physically enter pick-up or delivery locations to personally move the freight to the trailer or hand-deliver the freight.
Inside delivery may be associated with a limited access location, which describes an area that presents additional obstacles to drivers delivering or picking up. Examples of limited access locations include gated communities where drivers have to bypass security, storage facilities where drivers may have to find facility managers to complete deliveries, or schools where delivery times are rigid and require extra steps.
Storage and Detention Fees
Shippers can make significant efforts to avoid accessorial charges, but there’s only so much you can do if freight cannot be delivered because of reasons outside your control. If your freight cannot be delivered on the contracted date, the carrier will charge storage fees per hour or day to hold your freight.
Detention fees may also accrue if drivers are delayed at either pick-up or delivery locations, making it essential that shippers stay on top of carrier pick-up/arrival times and prioritize loading and unloading.
Strategies for Managing Freight Accessorial Charges
You may have gathered that it’s essential to meticulously plan your shipments in order to avoid surprise accessorial fees. While the occasional unforeseen event does happen during a shipment, you can take three preventative measures to try to ensure you only pay for fees determined in advance.
Thoroughly Review Shipping Contracts
Understanding your shipping terms is paramount if you want to avoid accessorial fees. Every carrier has its own stipulations for what counts as a fee, when it starts accruing, and at what rate it accrues. Review the rules laid out by your transportation company of choice, so you can be sure you understand how they tack on and process accessorial charges.
Unless you have a strong grasp of legal jargon, it’s difficult to thoroughly review a shipping contract to be sure you understand every possible fee. For this reason, it’s important to leverage tools that audit your parcel contracts and optimize your rates with various carriers.
Plan Shipments Strategically
There are a few steps within your shipment planning phase you can take to mitigate surprise accessorial fees:
Contact your shipments’ destinations to find out if they have loading docks or ramps to determine if you will need to pay a liftgate fee.
Prioritize loading and unloading at your pick-up and delivery locations to avoid any detention or storage fees.
If possible, arrange for pick-up and/or delivery to occur outside buildings or in areas appropriate for drop-off to avoid drivers having to go inside buildings to complete shipments.
Ensure your measurements and weight estimates are as accurate as possible so carriers can’t ding you with these types of surcharges.
You can also do the following to minimize the need for extra services:
Consolidate shipments where possible. Organizing shipments to get the most out of services from one carrier can shave accessorial costs.
Optimize delivery schedules so you have adequate staff on hand to speed up loading/unloading and get drivers on their way.
Negotiate with Carriers
Some accessorial charges are unavoidable or they’re so common, you may as well budget for them. It’s smart to negotiate rates for these types of fees with your carriers so they’re built into your contracts and don’t end up breaking the bank if you incur them.
The better a relationship you have with a carrier, the more advantageous your negotiating will be. For example, using a particular carrier so reliably and regularly may result in them waiving certain accessorials to keep you as a cherished customer.
How Lojistic Can Help Manage Your Freight Costs
Aside from detailed planning and proper negotiation, you can avoid post-booking accessorial charges by leveraging technology for better freight cost management.
Lojistic helps manage your freight costs by analyzing your shipping data and contracts and optimizing your rates with your chosen carriers. We offer fee insights, and our solution evaluates your contracts for potential improvement opportunities. We also offer several group discount shipping programs so you can instantly lower your shipping costs.
We help you gain visibility into all potential charges so you can avoid accessorials while effectively budgeting. Use our cost comparison tool to see which of your carriers gives you the best value.
Mastering Accessorial Charges for Cost-Effective Shipping
Any shipper that wants to operate a predictable budget and experience smooth shipping overall needs to keep accessorial charges top of mind and make them a part of contract negotiation. Taking a proactive approach to accessorial fees — as opposed to waiting until they hit your billing department — allows you to control costs. Lojistic supports cost-effective shipping by illuminating savings opportunities and streamlining your shipping operations with automation, analytics, reporting, and more. Get a virtual demo of Lojistic today.
Sources:
Team TS. LTL Shipping: What Is An Accessorial? SupplierWiki. Accessed April 29, 2024. https://supplierwiki.supplypike.com/articles/ltl-shipping-what-is-an-accessorial
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.