I continue to hear rumblings from shippers (users of freight shipments) about these things called accessorials, or surcharges. Let me try to give my view on this ever-increasing percentage of total freight costs.
First of all, as a historian of the freight industry and how it’s evolved over the years, let me first say it’s amazing to me that it has taken so long for the carriers to zoom in on additional expenses they incur on top of just picking up freight and delivering it to some far-off point. I believe some of these accessorial costs may be justified.
But let me clarify.
For so long, I think those of us in the shipping industry have expected a number of freebies from carriers, who willingly accepted this premise. Since 1980, and the deregulation of the trucking industry, the carriers seemed slow to warm up to this free competitive market. That has changed significantly in the last few years; again, predicated, I believe, on the market forces of supply and demand–or in freight verbiage, capacity.
An example I faced just this week was booking a hotel in Lexington, KY, for this next weekend. Normally I’d pay just over $100 per night, but because some event is going on, it’s now $260. Same hotel, same room, but over double the price! Which brings us to where we are today, with so many of our clients, and others scratching their heads over these multitude of surcharges.
I believe the parcel carriers led the way in developing this area of freight costs. The LTL carriers have now jumped on the bandwagon with the truckload carriers following closely behind. As CMG works with its clients in all modes of transportation, we’ve been privy to watching this animal grow. It seems we’re seeing new accessorial charges almost monthly from some mode. While some seem to be justified, a number are just questionable. I’ve been told a shipper was charged a “dead flowers return” accessorial. Why would someone return dead flowers? Keep in mind these curious charges don’t include one that I believe to be justified, which is a fuel surcharge (FSC).
What drives these new costs and where are they coming from?
Without proof it appears to us that this area has become its own profit center for carriers. It’s kind of like the W&I groups (weight & inspection) of most carriers. Their motivation is to find the perceived ‘wrongs’ and charge not only a new accessorial charge but a fee for doing so. It’s become a constant back/forth on who’s right. The one cost not calculated is the time involved trying to resolve on who’s right for both parties.
An example, this week, is reweigh issues for one of our clients and accessorial charged. The carrier is saying 58% of this clients’ shipments need to be reweighed. The client has a certified scale they weighed each shipment. Who is right?
My opinion again is this area has changed from accounting for additional expenses for the carriers to a bona fide profit center that is not communicated to the shippers OTHER than it shows up on their freight bill.
This commentary should help you understand the need to manage your freight, which involves in part regularly reviewing your freight bills and notating those extra charges. There are too many of them to list heres. Need help finding them and knowing what to do next? We’re happy to help!
Marv Sawyer is the Managing Partner of Corporate Management Group. Corporate After 15 years in the world of Fortune 500 companies, Marv wanted to use his expertise to partner with companies to strategically help them save time and money on freight, distribution and transportation issues. Marv founded CMG in 1987 on a foundation of values and principles that uphold integrity, honesty, and looking out for others before yourself. CMG has now been in business for over 32 years and manages over $600 million of freight annually. Our team of freight experts serves clients across the United States and around the world.
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