Surprising Costs that Can Impact Your Bottom Line
As a direct shipper, you're already familiar with the basic shipping costs—the price of the goods, transportation, and delivery. But what about the additional charges that pop up unexpectedly during transit? These often-overlooked costs are called accessorial fees, and they can quickly add up, making your shipping expenses more complicated than you might expect.
Accessorial fees are those extra charges that carriers apply for services beyond the standard delivery. You might not always see them coming, but understanding and anticipating them can help you avoid costly surprises. In this article, we’ll break down what accessorial fees are, why they exist, and how direct shippers can better manage them to keep their shipping budgets under control.
What Are Accessorial Fees?
Simply put, accessorial fees are additional charges imposed by carriers for services or actions that fall outside the standard freight delivery. These fees cover everything from special handling to unexpected delays or added delivery services. While they’re common in the logistics and shipping industry, they’re not always easy to anticipate, which can make managing your shipping budget a challenge.
These charges are often tied to specific situations or customer requests, like needing to deliver to a remote area or requiring extra handling for fragile goods. The key takeaway here is that these costs aren’t always included in the original price of shipping and can vary depending on the specifics of each shipment.
Why Do Accessorial Fees Exist?
You might be wondering: why don’t carriers just include all costs in their standard shipping rates? The answer is simple: flexibility. Not every shipment requires the same services, and accessorial fees allow carriers to provide tailored services while keeping base shipping rates lower. This way, customers only pay for the services they actually use.
In essence, these fees allow carriers to handle special situations or requests that would otherwise complicate standard shipping prices. From residential deliveries to needing extra labor, accessorial fees ensure that the shipping process is more flexible and customized for different needs.
Common Types of Accessorial Fees for Direct Shippers
As a direct shipper, it’s essential to understand the various accessorial fees that might apply to your shipments. Below are some of the most common ones you’ll encounter:
1. Residential Delivery Fee
Deliveries to residential addresses often incur an additional fee, as they require more time and effort than standard business deliveries. Since trucks are typically larger and harder to navigate in residential areas, this fee compensates for the extra effort involved in completing the delivery.
2. Liftgate Fee
If the delivery requires a liftgate to unload goods (especially heavy or oversized items), the carrier will charge an additional fee. This is typically applied if the delivery location doesn’t have a loading dock or forklift capabilities.
3. Delivery Area Surcharge (DAS)
Remote or rural areas often come with extra delivery costs. If you’re shipping to locations that are farther off the beaten path, carriers may charge a Delivery Area Surcharge (DAS). This fee accounts for the increased cost of transporting goods to less accessible areas.
4. Fuel Surcharge
While fuel surcharges are sometimes included in the initial shipping costs, they are also often applied as an additional accessorial fee. These surcharges fluctuate based on the current price of fuel, and they can significantly impact shipping costs.
5. Sort and Segregate Fee
This fee applies when a carrier is asked to sort and segregate products based on specific customer needs. It’s typically charged when the delivery involves handling multiple products that need to be organized or split into different shipments.
6. Waiting Time or Detention Fee
This fee occurs when the carrier is delayed due to factors beyond their control, such as waiting for a dock to become available. The longer the truck has to wait, the higher the detention fee.
7. Redelivery Fee
If a shipment is unsuccessful (e.g., if no one is available to accept the goods), the carrier may charge a redelivery fee to make a second attempt. This fee helps compensate for the extra time and resources used for the follow-up delivery.
8. Inside Delivery Fee
An inside delivery fee applies when the shipper asks for goods to be moved beyond the doorstep. For instance, if the delivery is required to be brought inside a building or placed in a specific location, this extra service comes with an additional fee.
9. Over Dimensional Charges (ODC)
If your shipment exceeds standard size limits—whether it's too large, too long, or too heavy—you could face an ODC. This fee compensates for the extra equipment and handling needed to transport oversized items.
10. Storage Fees
Storage fees are charged if goods are stored at a warehouse longer than initially agreed. This usually happens when a shipment is delayed or when the consignee cannot accept the delivery in a timely manner.
How to Manage Accessorial Fees as a Direct Shipper
Understanding accessorial fees is half the battle. The next step is figuring out how to manage them effectively to avoid unexpected expenses. Here are some strategies for minimizing or managing these fees:
1. Negotiate Contracts Upfront
One of the best ways to manage accessorial fees is by negotiating them upfront with your carrier. Be clear about which additional services you might need, and try to get the fees defined in your contract. This way, you won’t be caught off guard when they appear on the bill.
2. Track Shipping Costs Regularly
By regularly reviewing your shipping invoices and identifying which fees are being charged most frequently, you can get a better sense of where your costs are increasing. This data will help you make more informed decisions about whether to adjust your shipping methods or renegotiate contracts with your carriers.
3. Consolidate Shipments When Possible
If you’re shipping smaller quantities of goods, consider consolidating shipments to minimize the frequency of accessorial fees. For example, combining shipments into a single delivery could help you avoid multiple residential delivery or redelivery fees.
4. Plan for Delays
Anticipating potential delays and mitigating them ahead of time can save you from costly detention or waiting time fees. Ensure that the consignee is prepared for the delivery, and work with your carrier to avoid additional wait times.
5. Review Your Delivery Locations
If you frequently ship to remote or rural areas, look for ways to reduce those costs, such as finding alternative delivery hubs or regional distribution centers closer to your customers.
Conclusion: Stay Ahead of Accessorial Fees
Accessorial fees can be tricky to navigate, especially when they appear unexpectedly. However, as a direct shipper, understanding these fees and planning ahead can help you control your shipping costs more effectively. By knowing what to expect and taking steps to negotiate, consolidate, and optimize your shipments, you can reduce the impact of accessorial fees on your bottom line.
If you’re looking to streamline your shipping processes, start by closely evaluating your current carrier agreements and understanding where additional costs may arise. With the right approach, managing accessorial fees becomes less of a headache and more of an opportunity to fine-tune your shipping operations.
FAQs
1. How can I avoid accessorial fees?
To avoid accessorial fees, ensure that your shipments are well planned, with proper delivery information, timing, and locations. Consolidating shipments and negotiating upfront with your carrier can also help.
2. Are accessorial fees negotiable?
Yes, many accessorial fees can be negotiated. It’s a good idea to discuss these fees upfront with your carrier to avoid surprises later.
3. What is the most common accessorial fee?
The most common accessorial fee is the residential delivery fee, as many shipments are made to residential addresses that require extra time and effort.
4. How do I reduce fuel surcharges?
Fuel surcharges fluctuate with fuel prices, but you can reduce their impact by consolidating shipments and negotiating for a fixed surcharge rate in your contracts.
5. What happens if I don’t pay accessorial fees?
If you don’t pay accessorial fees, it can lead to delayed shipments, penalties, and damage to your relationship with the carrier. Always ensure these fees are accounted for to avoid disruptions.
Managing accessorial fees doesn’t have to be a complicated task. By understanding what these fees are, how they work, and how to manage them, you can take control of your shipping expenses and streamline your operations. Start today by reviewing your current shipping processes and looking for areas where you can reduce unnecessary costs!