Accessorial fees

Key takeaways

Definition: Accessorial fees are extra charges in transportation that go beyond the basic line-haul costs. These fees cover specialized services or conditions that may occur during shipping.
How it works:

- - Pre-shipping discussion: Shippers and carriers discuss potential fees.
  - Contract: Fees often specified in agreements.
  - Trigger events: Specific actions or conditions activate these fees.
  - Billing: Fees are itemized separately on invoices and usually paid with the main shipping

Types: Accessorial fees vary depending on the transportation mode, such as trucking, air freight, ocean freight, and rail. For example, trucking may include fuel surcharges and detention fees, while air freight often has security and hazmat fees. General fees like pickup/delivery charges or oversize fees can apply across multiple modes.
Pros and cons: Accessorial fees can boost a company's revenue and offer flexibility to adjust for real-time costs like fuel. They also make costs transparent and encourage efficient shipping practices. However, they can complicate billing, alienate customers with unexpected costs, and may make a company less competitive if fees are too high or confusing.
Explore your options: To navigate accessorial fees effectively, always review your shipping contracts and compare carrier options. Proper planning and negotiation can help you avoid some fees and budget more accurately.

How it works

Accessorial fees in transportation are additional charges levied for services or conditions that fall outside the standard shipping cost, also known as the line-haul cost. These fees come into play in various ways. Before shipping, both the shipper and the carrier usually negotiate these potential extra costs, which are often specified in the shipping contract or service agreement.

Once the shipping process is underway, certain conditions or actions can trigger these additional fees. For instance, if a truck has to wait for an extended period at a loading dock, a detention fee may be applied. Some fees, like fuel surcharges, are dynamic and can be adjusted in real-time based on market conditions.

When it comes to billing, accessorial fees are usually itemized separately on the invoice for full transparency. These are typically paid alongside the main shipping charges unless a different payment arrangement is in place. By understanding how accessorial fees work, shippers can more accurately budget for shipping costs and avoid unexpected financial surprises.

Accessorial fee types

Trucking

- Fuel surcharge: Fee adjusts for fluctuating fuel prices. For example, a surcharge of $0.25+ per mile when fuel prices rise.
- Detention fees: Charges incurred when trucks wait too long at a loading or unloading site. Charged after two hours of waiting, say $50+ per extra hour.
Layover fees: Charged when a driver must stay overnight to complete a delivery. A flat fee, like $200+, for an overnight stay.
Lumper fees: Fees for hiring workers to load or unload cargo. Maybe $100+ for hiring additional staff to unload cargo.
Tarping fees: Charges for covering a shipment with a tarp for protection. Around $50-$100+ for covering a lumber shipment with a tarp.

Air freight

Security fees: Charges related to the screening and protection of cargo. A $20-100 fee for screening and x-raying a package is not an unusual charge.
Hazmat fees: Fees for shipping hazardous materials. An extra $75+ for shipping chemicals is typically included.
Dimensional weight fees: Charges based on the size, not just the weight, of a shipment. This can vary but it’s not unusual to see at least a $30 charge for a bulky but lightweight package.

Ocean freight

Demurrage: Fees for extended container use at a port. For example, $100+ per day for a container kept over allotted time at a port.
Documentation fees: Charges for processing shipping documents. A $50+ fee for handling bills of lading.
Chassis rental: Fee for using a container chassis for transportation. A daily rate, say $25+ per day, for chassis use.

Rail

Storage fees: Charges for storing a shipment at a rail yard. A charge like $40+ per day for keeping goods at the rail yard.
Switching fees: Costs for moving a railcar within yard limits. A $200+ fee for moving a railcar from one track to another within the yard.
Reconsignment: Fees for changing the destination of a shipment en route. A $150+ fee for rerouting a shipment to a different destination.

General

Pickup/delivery charges: Fees for non-standard pickup or delivery services. For instance, a $20+ charge for home pickup.
Inside delivery: Additional charges for delivering items beyond the loading dock. An extra $15+ for carrying a package upstairs.
Oversize fees: For items that exceed standard dimensions. A $100+ fee for shipping a large sofa.

Pros and cons

Pros

Revenue boost: Accessorial fees linked to line-haul costs help transportation companies cover specialized or unexpected expenses. This added revenue can significantly improve margins and sustain the business.
Cost transparency: When fees are itemized and directly related to line-haul costs, it becomes easier for customers to understand what they're being charged for. This fosters trust and clearer communication.
Flexibility: Having a structure for accessorial fees allows companies to adjust charges in real-time. For example, fuel surcharges can be updated regularly to reflect current market prices.
Incentivizes efficiency: When customers know that certain behaviors—like inaccurate weight declarations—will incur extra fees, they're more likely to comply with best practices, streamlining the transportation process.
Risk management: By charging for variables like fluctuating fuel costs or special handling, companies can offset risks. This ensures that unforeseen expenses don't eat into the operating budget.

Cons

Customer distrust: Too many accessorial fees or complicated pricing can create confusion. Customers may feel nickel-and-dimed, reducing their willingness to engage in future business.
Price inflation: While fees may be justified, they can significantly inflate the overall cost for the customer. Budget-sensitive customers might struggle with these unexpected increases.
Operational complications: Managing a complex fee structure requires sophisticated billing and tracking systems. Human errors in these systems can result in billing disputes and customer dissatisfaction.
Market competition: Companies with simpler, all-inclusive pricing models can attract customers who are turned off by complicated fee structures, potentially eroding a firm's market share.
Unpredictability: Customers may find it hard to accurately estimate their total shipping costs due to fluctuating accessorial fees. This unpredictability can affect their own business planning and budgeting.

Explore your options

Now that you've gained a deeper understanding of accessorial fees and their impact on transportation costs, you might be considering how to manage these fees effectively.

Ratings collaborates with esteemed companies like AtoB, eCapital, and TAFS, who are industry leaders in offering financial and logistical solutions tailored to the complexities of shipping and transportation. Partnering with these companies provides you with expert guidance, reliable services, and competitive rates to help you navigate accessorial fees and optimize your transportation budget.