As a shipper, the last thing you want is an unwanted surprise when you get your freight bill. Before the additional fees add up, it pays to know your accessorial charges beforehand

Accessorial charges, sometimes referred to as value-added services, are additional fees that may be added to a shipment’s transportation cost. These charges are applied to cover the cost of extra time, labor, or care required to honour special shipping requests. Accessorial fees vary based on the type of shipment and can quickly add up, making it important for shippers to understand what they are and how they can reduce them.

What Are Accessorial Charges?

Accessorial charges are extra fees that are added to the base price of a service, primarily in industries that involve transportation, logistics, and deliveries. They are typically applied when certain conditions or requirements are not met, or additional services are needed. Essentially, they cover the “accessories” of the primary service. Similarly, these charges are designed to compensate for the extra time, effort, or resources required to complete a job.

Since accessorial charges can significantly impact a shipment’s total cost, it’s essential for shippers to understand them to avoid unexpected expenses. By planning and minimizing these charges, shippers can reduce their transportation costs thus improving their bottom line. In the following sections, we will explore what accessorial charges are, why they are important, and how you as a shipper can reduce them.

Understanding Accessorial Charges

It is essential to note that accessorial charges are not included in the standard shipping rates and are typically added on top of the base cost of the shipment. These fees can vary depending on the carrier and the specific services required, making it critical to review and understand all charges before finalizing a shipment.

Common accessorial charges can include a wide range of fees, such as liftgate services, inside delivery, residential surcharges, and fuel surcharges. Carriers and freight brokers may apply these fees for various reasons, such as extra labor or equipment needed to complete a shipment.

Types of Accessorial Charges

When it comes to shipping, accessorial charges can add up quickly. These additional fees are charged for any services beyond standard pick-up and delivery. To help you better understand what to expect, here are some common types of accessorial charges that you may encounter:

Loading and Unloading Fees

Loading and unloading fees are charged when a shipment requires additional labor or equipment to load or unload. This may include the use of a forklift, loading dock, or extra labor. These fees can vary depending on the carrier and the specific requirements of the shipment.

Delivery Related Charges

Delivery related charges include any additional services required at the delivery location. This may include inside delivery, residential delivery, or liftgate service. Inside delivery is charged when the shipment needs to be delivered beyond the front door, while residential delivery is charged for deliveries made to residential areas. Liftgate service is charged when the delivery location does not have a loading dock or forklift available.

Fuel and Time Related Charges

Fuel and time related charges are fees that are charged based on the distance traveled and the time required to complete the delivery. Fuel surcharges are added to the base rate to cover the cost of fuel, while detention charges are charged when a shipment is delayed at either the pick-up or delivery location. Layover charges may also be charged when a driver is required to wait for an extended period of time.

Special Handling and Equipment Charges

Special handling and equipment charges are fees that are charged when a shipment requires special handling or equipment. This may include hazardous materials, oversized or overlength shipments, or extra services such as reclassification or reweighing. Hazardous materials require special handling and may require additional documentation, while oversized or overlength shipments may require special permits or equipment.

Documentation and Reclassification Charges

Documentation and reclassification charges are fees that are charged when a shipment requires additional documentation or reclassification. This may include the preparation of a bill of lading (BOL) or freight invoice, as well as reclassification and reweighing of the shipment. The National Motor Freight Classification (NMFC) number is used to determine the correct classification for a shipment, and any errors in classification can result in additional fees.

Additional Types of Accessorial Fees

Provided you know the scope of accessorial charges, they can be anticipated and included on the initial bill. Additional reasons for these charges may include:

• Layover Charges
• Re-consignment
• Stop Charges
• TONU (Truck Ordered and Not Used)
• Detention
• Limited Access Pickup or Delivery
• Blind Shipments
• Sort and Segregate

Overall, understanding and being familiar with the various types of accessorial charges can help you better prepare for the total cost of your shipment. By working with a reputable carrier or freight broker, you can ensure that you are aware of any potential fees and can make informed decisions about your shipping needs.

Strategies to Negotiate and Reduce Accessorial Charges

When it comes to reducing accessorial charges, negotiation is key. By working with carriers to establish clear expectations and guidelines, shippers can reduce the number of accessorial charges they incur. Here are some strategies to help shippers negotiate and reduce accessorial charges:

Planning and Communication

One of the most important strategies for reducing accessorial charges is effective planning and communication. Shippers should work closely with their carriers to establish clear expectations for pick-up and delivery times, as well as any special requirements for loading and unloading. By providing carriers with accurate information in advance, shippers can help ensure that shipments are delivered on time and without incident, reducing the need for additional charges.

Accurate Information

Another key strategy for reducing accessorial charges is providing carriers with accurate information about the shipment. This includes the weight and dimensions of the shipment, as well as any special handling requirements. By providing carriers with accurate information, shippers can help ensure that the shipment is loaded and transported safely and efficiently, reducing the risk of damage or delays that can result in additional charges.

Advance Notification

Shippers should also provide carriers with advance notification of any changes to the shipment, such as a change in delivery address or a delay in pick-up. By providing carriers with advance notification, shippers can help ensure that the shipment is delivered on time and without incident, reducing the need for additional charges.

Negotiation

Finally, negotiation is key to reducing accessorial charges. Shippers should work closely with their carriers to negotiate rates and establish clear guidelines for when accessorial charges will be assessed. By establishing clear guidelines and negotiating rates in advance, shippers can help ensure that they are not surprised by unexpected charges and can budget accordingly.

In conclusion, shippers can reduce accessorial charges by effective planning and communication, providing carriers with accurate information, providing advance notification of any changes to the shipment, and negotiating rates and guidelines with carriers. By following these strategies, shippers can help ensure that their shipments are delivered on time and within budget.

Role of Logistics in Managing Accessorial Charges

Logistics plays a crucial role in managing accessorial charges. Accessorial charges refer to additional services that a carrier provides beyond the standard shipping services.

Logistics companies are responsible for managing accessorial charges by negotiating with carriers to ensure that the charges are reasonable and fair. They also work with shippers to identify potential accessorial charges and develop strategies to minimize them. By doing so, logistics companies can help shippers save money and improve their bottom line.

In addition to negotiating with carriers, logistics companies also use technology to manage accessorial charges. They use transportation management systems (TMS) to track shipments and monitor carrier performance. This technology allows them to identify potential accessorial charges and take action to prevent them from occurring. For example, if a shipment is delayed due to weather conditions, the logistics company can work with the carrier to avoid detention charges by rescheduling the delivery time.

Third-party logistics (3PL) providers are particularly adept at managing accessorial charges. They have the expertise and resources to negotiate with carriers and manage the entire shipping process. 3PL providers can also provide shippers with access to a network of carriers, which can help them find the best carrier for their specific needs.

In the logistics industry, managing accessorial charges is essential to maintaining profitability. By working with carriers and using technology to manage these charges, logistics companies can help shippers save money and improve their bottom line. Effective management of accessorial charges requires a combination of negotiation skills, technology, and expertise, all of which logistics companies possess.

Frequently Asked Questions

What are some common accessorial charges in the trucking industry?

Accessorial charges are additional fees that carriers and brokers charge for services beyond standard pick-up and delivery. Some common accessorial charges in the trucking industry include detention fees, liftgate fees, inside delivery fees, and re-delivery fees.

What is the difference between an accessorial charge and a surcharge?

An accessorial charge is a fee for a specific service that is not included in the base rate, while a surcharge is an additional fee added to the base rate to cover fuel, security, or other costs. Accessorial charges are typically more specific and relate to services provided, while surcharges are more general and relate to overall costs.

How do accessorial charges affect shipping costs?

Accessorial charges can significantly impact shipping costs, especially for less-than-truckload (LTL) shipments. Truckload accessorial charges are often added to the base rate and can vary depending on the type of service required. Shippers should be aware of these charges and factor them into their shipping costs.

Can accessorial charges be negotiated or waived?

Accessorial charges can sometimes be negotiated or waived, especially if a shipper has a long-standing relationship with a carrier or broker. However, it is important to note that not all charges can be waived, and carriers and brokers may have different policies regarding negotiation.

What is the typical range of accessorial charges for LTL shipments?

The typical range of accessorial charges for LTL shipments can vary depending on the carrier or broker and the specific service required. However, some common charges include detention fees ranging from $25 to $100 per hour, liftgate fees ranging from $50 to $100, and inside delivery fees ranging from $50 to $100.

Are accessorial charges the same for all carriers and brokers?

Accessorial charges are not the same for all carriers and brokers. Different carriers and brokers may have different policies and fees for specific services. Shippers should be aware of these differences and factor them into their shipping costs when comparing carriers and brokers.

Whether you’re looking to brush up on your freight shipping and logistics vocabulary, or just looking for information as you get your feet wet,  this guide is for you. Here’s a few of the most common freight shipping acronyms, what they stand for, and the situations where you might find them.

Acronyms Used in Shipping Options

Before you send an RFQ (Request for Quote), you should first understand what type of carrier you’ll need. Here are some of the more common freight carrier options:

• TL – full truckload
  Often the most cost-effective method of shipping your products – provided you have enough to fill the entire truck. When you ship TL your freight goes straight to its destination via long haul. Unlike LTL shipments, TL shipments do not transfer to other trucks or stop at any terminals mid-haul.
• PTL – partial truckload
  If you do not have enough product to ship TL, PTL is the next step down. Similar to TL shipping, your products will typically stay on one truck from its pick up point to final destination – but is not accessible during the trip.
• LTL – less than truckload (or less than load)
  For many businesses small and large LTL transportation allows you to ship minimal quantities. But for this method to be effective for all parties, the load must consist of a minimum of 1-6 pallets or weigh under 4,000 pounds. When shipping LTL, your items are combined with shipments from other shippers, plus they may be transferred one or more times before they reach their final destination.
• STL – shared truckload
  The STL method of shipping is a hybrid whereby multiple shipments can be combined onto one truck moving in the same direction. This intent is to bypass the hub and spoke system thereby reducing the number of stops. This helps avoid damage caused through the extra handling of a shipper’s freight.

Typical Freight Acronyms

Once you have a freight quote form in front of you, you may find a number of unfamiliar associated acronyms. In order to communicate clearly and efficiently with your logistics partner, you’ll need to be familiar with these common terms plus a few more:

• FAK – Freight of all Kinds
  The term FAK is used to refer to a pooling of different products into one load for the purpose simplification of rating and pricing.
• BOL – Bill of Lading
  As one of the most important documents associated with moving your goods, a BOL is a detailed, legally binding contract between a shipper and a freight carrier. Every BOL includes details that define the names and addresses of the shipper and carrier, shipment description, packaging details, expected pickup date, freight class, and hazardous material designations.
• NMFC – National Motor Freight Classification
  NMFC is a series of classification codes assigned to commodities by the National Motor Freight Traffic Association (NMFTA). NMFTA created the National Motor Freight Classification tariff to help classify all commodities into 18 different freight classes determined by four factors; shipment density, stow-ability, handling, and liability.
• EDI – Electronic Data Interchange
  At the basic level, EDI is the business-to-business interconnection of computers for the rapid exchange of documents. In the freight shipping industry, this would be items like bills of lading, invoices and tracking information.
• FOB – Free on Board
  FOB is a term used to indicate when ownership and liability of goods is transferred from seller to buyer. When used with a physical location such as a shipping port, FOB specifies which party assumes responsibility for the payment of freight charges, and at what exact point title for the shipment passes from seller to the buyer.

• GVW – Gross Vehicle Weight
  Because weight is such an important factor in freight transportation, GVW is the term used to quantify the total weight of the transport vehicle and its cargo. Likewise, GVWR, or Gross Vehicle Weight Rating is often used to express the maximum operating weight of a vehicle as specified by the manufacturer.
• LG – Lift Gate
  A lift gate is a powered tailgate used to lift pallets from ground level to the same level of a truck trailer deck. Many LTL truck fleets have lift gates as do smaller shipper locations with no loading docks.
• DV – Declared Value
  Declared value refers to the monetary value of a shipment as reported by you, the shipper. Being an extremely important declaration, it serves as a disclosure used to determine shipping charges and as a tool to control carrier liability for damage and loss.

Other Terms Used in Freight Management

As the saying goes, “But wait, there’s more!”. The acronyms don’t stop there. Because documentation and performance are an important part of the evolving transportation and logistics industry, you could benefit from a little familiarity with them. Here are a few important terms worth knowing:

• POD – Proof of Delivery / Port of Discharge / Port of Destination
  Having a number of different meanings within the transportation industry, how this term is used depends on its context.
  The port of discharge or destination implies where the container is correspondingly loaded or unloaded from a vessel and picked up by the consignee.
  Proof of Delivery is the paperwork authorized by the consignee indicating the receipt of a load. In this context, a BOL can often double as a POD upon delivery and must be signed for the carrier to get paid.
• CNOR / CNEE – Consignor / Consignee
  More like contractions rather than acronyms, these are fairly straight forward: a CNOR or consigner is the entity sending a shipment, whereas a CNEE or consignee is the entity receiving a shipment.
• OS&D Report – Overage, Shortage, and Damage
  Mistakes and problems do happen therefor they must be accounted for. For instance, a CNEE can file an OS&D report if there are issues with a shipment they received. As implied, an overage occurs when the recipient gets more product than ordered, while a shortage is the opposite. Shipment items that are delivered unusable or unsellable are considered damaged.
• TONU – Truck Ordered but Not Used
  A common result of miscommunication (hence the need for this article) or happenstance, a truck arrives to pick up a shipment, but the load isn’t ready – that’s TONU. If it’s due to your error, you may find yourself having to pay a fine and compensate the carrier for misuse of their time and resources.

As you can see, it’s extremely important to be familiar with these terms and how they apply to your business. It would be wise to take a few minutes and learn them so you get accustomed to seeing and hearing them in context throughout your shipping processes.

FAK (Freight All Kinds)

Freight All Kinds, or FAK, is a logistics industry term used to assign a single tariff classification by an LTL carrier for freight that would usually ship under several NMFC codes.

These NMFC codes are the result of how commodities are assigned a classification by the National Motor Freight Traffic Association (NMFTA).

NMFTA created the National Motor Freight Classification (NMFC) tariff to help classify all commodities into 18 different freight classes.

The assigned values range from 50-500, and take into account the difficulty involved in moving the goods.

In short, the higher the classification, the higher the cost per hundred-weight due to the increased difficulty in shipping the product.

Because it’s often difficult to manage multiple classifications for shippers, utilizing FAK a great opportunity for both the shipper and the LTL provider to move the freight more efficiently.

The FAK Averaging Solution

Let’s say you’re a shipper trying to ship different classed commodities on the same skid.

The FAK shipping solution groups multiple classes of freight into a single class. This streamlines the shipping process by reducing the need for re-classifying items. By averaging the specifics of a number of commodities, a more fair shipping rate is achieved for both the shipper and carrier.

Why a Shipper Should Negotiate a FAK Tariff

• FAK simplifies the shipping and invoicing process
• FAK can reduce tariff freight rates being paid.

How to Validate FAK Options

Depending on what you’re shipping, FAK’s are a great means of reducing LTL rates and simplifying the entire LTL process from start to finish.

To assign a FAK class, some freight characteristics need to be in alignment:

• Freight weight and density must be similar across the commodities shipped.
• Shipping of multiple NMFC freight commodities.
• Product stow-ability is similar.
• Cargo liability coverage is appropriate for the freight in total under the FAK.
• LTL minimum freight charges are appropriate for all commodities in the classification.

With these points in mind, the LTL carrier will determine which of the 18 FAK commodity codes make the most sense for the shipper’s freight.

How Can an FAK Help Your Rates?

There are definite benefits for shippers when you negotiate a FAK with your carrier.

Moving certain types of freight can be more beneficial when a FAK pricing strategy is involved. Here are some examples of situations where shippers can use a FAK pricing strategy and determine shipping costs.

• When shipping freight in a low freight class – Carriers can negotiate on low freight class shipments since their operations ratios are better for lower classed freight.
• Shipping density-based commodities – Density-based shippers such as industrial distributors can often achieve better shipping rates through negotiation.
• Shipping mixed freight pallets – When shipping with different classifications, the item with the highest classification is used to determine the class of the entire pallet. Negotiating a FAK in this situation can lead to considerable savings.

When Not to Consider Using FAK

On the other hand, there are shipping scenarios that do not lend themselves to utilizing FAK based pricing strategies. A few of them are:

• If  the majority of your shipment are lower classed freight – a FAK doesn’t make much sense from the carrier’s or the shipper’s point of view.
• Shipping items of high-value – when attempting to file claims for damaged goods, carriers will often only be responsible for the freight class being paid. This means your high priced items will only achieve the protection of the averaged FAK classification.
• If you use a TSM system – A Transportation Management System essentially eliminates the need for FAKs because dynamically rating shipments of multiple classes can be done easily.

Other Areas Where FAK’s are Used

While most of our discussion has been around a shipper’s freight FAK assignment, FAX is also used in the process of freight consolidation.

Multiple entities such as freight forwarders, consolidators, Container Freight Stations (CFS’s), 3PL logistics service providers, and larger shippers can create their own consolidated loads to operate under FAK tariffs.

In these situations, the use of a TMS (transportation management system) can quickly and easily build out the consolidations.

Final Thoughts on FAK and What It Means

FAKs can certainly provide substantial benefits to both shippers and carriers. But you should take care to ensure your particular type of shipments can take advantage of what a FAK has to offer.

If you need further clarification on how to negotiate an equitable FAK for shipping, or are looking for further assistance in gaining the best possible rates for all of your shipments needs, contact Brimich today!