EYE ON LOGISTICS BLOG

3 Steps to Reduce LTL Accessorial Fees

Brett Bauer

26 October 2018

Know which accessorial fees in LTL shipping are avoidable and which are negotiable to reduce your overall spend.

LTL shipping can be a cost-effective and flexible way to transport freight. In fact, the ability to add special services beyond dock-to-dock delivery is a big benefit. If you’re not careful, however, accessorial fees for additional services can add up quickly. Suddenly that low base rate for your LTL load isn’t so low anymore.

Accessorial fees are charges levied against a shipper for any services that cause inefficiency. Lost time on special services equals lost money for carriers, so these add-on charges protect them. When you examine your own inefficiencies that contribute to accessorial fees, you can not only reduce your LTL spend but also improve your carrier relationships.

Common special services and accessorial fees in LTL shipping

Here are some of the most common accessorial services in LTL shipping and their associated costs.

  • Fuel surcharge: This is one of the most commonly charged accessorial fees by LTL carriers. LTL carriers apply this charge to stay within profit when the cost of diesel gas is excessive. This fee is calculated as a percentage based on U.S. Energy Information Administration indices. Fuel surcharges vary by transportation provider, so we can’t provide an average range. Also for this reason, it’s important to prioritize healthy carrier-shipper relationships and outsource your transportation to a reputable 3PL.
  • Oversized: Freight that is too large to fit on a standard pallet or oddly shaped will incur a fee. (8-12’) $85; (12-16’) $125; (16-20’) $250
  • High-cost delivery areas: If your shipment requires travel into a metropolitan or residential area that would result in lost time for the carrier, the carrier will charge you extra. $70-125
  • Limited access: Certain places, like construction sites and schools, only have limited hours in which the carrier can deliver, which may not be the ideal time for peak efficiency. $5.00cwt/$70-450
  • Notification requirement: Sometimes the consignee may require a phone call, text, or even a specific window of time. $15; $30-100 for an appointment
  • Detention: Shipments cannot detain your carrier for longer than about 15-20 minutes, although you get more free time as the weight and shipment size increases. $1.50/min
  • Correction fees: If the carrier believes your freight weight and/or class is inaccurate on your bill of lading (BOL), they will charge a fee to reweight and re-class it. $25-$30
  • Lift gate/pallet jack fees: You’ll be charged extra when the carrier requires a lift-gate mechanism or a pallet jack to load. $3.00 cwt/$70-225
  • Redelivery: If at any time the intended shipment is unsuccessful, a carrier will charge for another attempt. $75

There are many other accessorial fees: inside delivery, crossing the border, hazardous materials, etc. Many of them can’t be avoided, but all of them are negotiable. Our best advice for reducing these kinds of costs — and thus your overall LTL spend — is best explained in three tips.

3 steps to reduce accessorial fees

1. Know your product

As a manufacturer you live and breathe your product. But knowing your product to minimize your shipping inefficiencies is another thing altogether.

If you haven’t done one recently, consider an expert freight analysis to review packaging, freight classification, minimum density requirements, etc. A strategic 3PL partner can offer an expert, third-party perspective that’s hard to achieve on your own.

2. Know your contracts

The complexity of carrier contracts can be dizzying, but it’s important to have someone on your team that can do a careful, in-depth, regular review of these documents.

In the same way an expert freight analysis examines every detail of your product, an expert contract analysis reviews the fine print of your contracts to check for special services you’re no longer using or where there might be some room to negotiate fees, for example.

3. Go to the negotiation table

Every accessorial fee is negotiable, and certain special services can be negotiated into the front-end of a contract. Don’t come to the negotiation table empty-handed, though. You must come prepared with data. Remember that the more profitable your freight is for the carrier, the more successful your negotiations will be.

You can tackle growing accessorial fees related to special services in LTL by minimizing the inefficiencies within your organization, increasing your familiarity with your product and contracts, and maintaining clean, end-to-end transportation data. Doing so will not only reduce the financial impact of your accessorial fees in the short-term, but it will also improve your carrier relationships and lower your LTL rates in the long-term.

Brett Bauer

Brett is the VP of Business Development at Evans Transportation.

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