Accessorial charges
Accessorial charges are all additional costs, going beyond the normal procedures for transporting in various type of transport, which the customer bears. These charges are called accessorial charges or chargeable services. For example, suppose that client is moving restaurant equipment to a small shopping center. Due to the complexity of the shipment, which required the driver to unload it and deliver it to the building, the carrier will apply an additional fee. Depending on the carrier the cost of the service differs, that is why it is good to know some of the most common fees and its settlement.
Additional analysis
The accessorial charges will help collect detailed informations about the types of additional fees that may be incurred in some situations regarding shippment. Knowledge about it is very important for many reasons. Among other things, these costs are negotiable.
In the case of sending many packages, which undergo higher charges for sending hazardous materials, the customer may apply for:
- a lower price
- abolishment of the fee.
In such a situations, the client should negotiate rates. The analysis will also help to decide if there is an option to change internal processes. Thanks to this, it is possible to avoid fees. Another reason for conducting the analysis is the fact that the sender often bears the punishment for placing the wrong address in the shipment. To remedy the problem, the customer can start using the carrier software to print shipping labels. This will help gain more control and consistency[1].
Basic categories of accessorial charges
Parcel carriers have been collecting data for years and thanks to that they can now impose service fees and get better operational costs. Carriers are aware of the possibility to deliver cheap (in delivery) parcels, which can be delivered simultaneously to one destination. It is known that freight forwarders who constantly send parcels to distant locations or require different additions are more expensive to use. Charging additional fees allows carriers to make up for the lost money they incur in case of hard to deliver parcels.
What's more, the accessorial charges provide carriers with bigger revenues without need to inform customers about price increases. Price increases fall into three basic categories[2]:
- Accessorial charges developed under the rates for delivery to a specific address, special service for shipments exceeding the size and weight limits and when no necessary data is available to deliver the package
- Accessorial charges provided for the service of C.O.D. (Cash on delivery - option of payment on delivery), sorting and segregating, as well as issuing a special notification of delivery.
- Accessorial charges for shipments that generate next operating costs of the carrier, for example, transport of hazardous materials, oversized shipments and delivery to non-residential and rural areas.
Accessorial charges are most often used in the mining industry and refer to:
- general payment rules
- support in the event of a crime
- storage of goods
- weighing and measuring goods
- overcharging or overweight of the means of transport
- transfer and redirection of goods
Charges collected for various additional services vary depending on the transport system and escalate over time. In order to determine the effective fee, it is necessary to consult the appropriate tariff for each system[3].
Purpose
Accessorial charges increase the operating income of carriers, without increasing rates. These fees make the rates fairer, as only customers using additional services incur higher costs. In some cases, the fees apply to each shipment, so that is the way to pass extra costs associated with doing business to clients' costs.
Fuel surcharge is a brilliant example of an additional charge that courier companies use for most shipments. Carriers have the right to charge fuel and possible monthly rate changes. It happens that some carriers apply a fuel charge, which is billed monthly based on the index. Other suppliers are based on fuel prices published by Departments. In this way they calculate the monthly fuel fee for ground and express services[4].
Examples of Accessorial charges
- Accessorial charges related to Shipping: These include charges for residential delivery such as lift gate service, redelivery, inside delivery, and notification prior to delivery. Some carriers also charge for limited access, such as deliveries or pick-ups at schools, military bases, construction sites, and other restricted sites.
- Accessorial charges related to Warehousing: These include charges for receiving and inspecting goods, put-away, storage, pick and pack, order assembly, palletizing, and inventory management. Additional fees may also be charged for special services such as kitting, repackaging, and labeling.
- Accessorial charges related to Truckload (TL) and Less-than-Truckload (LTL) Transportation: These include charges for hazardous materials handling, oversized loads, over-length shipments, and special equipment. A fuel surcharge is also often applied to the base freight rate.
- Accessorial charges related to Air Freight: These include charges for over-length, over-weight, and hazardous materials handling, as well as for the preparation of air waybills and customs clearance. A fuel surcharge is also typically applied to the base freight rate.
Advantages of Accessorial charges
Accessorial charges provide several advantages for shippers, carriers and customers. These include:
- Increased convenience and flexibility for customers, as they can request additional services such as packing and loading, beyond the standard services of the carrier.
- Improved efficiency and accuracy of the delivery process, as carriers can easily charge customers for additional services.
- Carriers can increase their revenues by charging accessorial charges for services that were not previously included in their standard rates.
- Improved safety on the road, as carriers can now provide additional services such as additional security or special handling services.
- Shippers can better manage their inventory and plan their shipping needs, as accessorial charges can be used to offset the cost of additional services.
- Improved customer satisfaction, as customers can easily find out about accessorial charges and the types of services available.
Limitations of Accessorial charges
Accessorial charges typically come with certain limitations, such as:
- The services are often limited geographically and/or by type of shipment. For instance, accessorial services may only be available in certain cities or regions, or for certain types of shipments, such as air cargo.
- The services may also be limited in terms of the type of carrier the customer is using. Some accessorial services may not be available for certain carriers, such as those operating under specific contracts.
- Accessorial services may not be available for certain types of freight. For example, hazardous materials may be excluded from accessorial services.
- The customer may also be limited in terms of what type of accessorial services they can request. For instance, some carriers may not provide certain services, such as special delivery services or rush delivery services.
- The customer may also be limited in terms of when they can request accessorial services. For example, some carriers may only offer certain services during certain times of the day or week.
Other approaches related to Accessorial charges include:
- Automation of Accessorial Charges: Automation of Accessorial Charges enables companies to use software to track and calculate the accessorial charges associated with their shipments. This helps the company to streamline their processes and reduce costs.
- Negotiation of Accessorial Charges: Companies may be able to negotiate accessorial charges with their carriers if they are willing to commit to a long-term relationship. This could potentially lead to lower fees and better service.
- Analysis of Accessorial Charges: Companies can analyze their accessorial charges on a regular basis in order to identify areas where they could be spending less. This could lead to cost savings in the long run.
In conclusion, Accessorial charges are additional costs incurred during transportation of goods. Other approaches related to Accessorial charges include automation, negotiation and analysis. These approaches can help companies streamline their processes and reduce costs.
Footnotes
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| Accessorial charges — recommended articles |
| Container lease — Door to door service — Bonded warehouse — Transit shipment — Delivery note — Freight out — Container depot — Freight carrier — Liner terms — Communications objectives |
References
- Dennis W.T. (2011), Parcel and Small Package Delivery Industry , CreateSpace Independent Publishing Platform, p. 108-109
- Kogel J.E. and others (2006), Industrial Minerals & Rocks, 7th edition, Commodities, Markets and Uses, Society of Mining, Metallurgy, and Exploration, Inc., p.90
- Payne J. (2012), Managing Indirect Spend , John Wiley & Sons, Inc., p. 345.
Author: Justyna Urbanik
