Accessorial charges
| Accessorial charges |
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| See also |
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].
Footnotes
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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
