Less Than Truckload (LTL) Accessorial Fees Explained

by logisticsplus | Dec 14, 2015 | News

One of the many factors affecting LTL rates are what are known as “accessorial fees.” These include any charges applied when additional services are required to handle shipments. They are oftentimes applied and assessed after the shipment has been made, thus making them a very challenging factor to include in transportation budgets. While base rates represent the main portion of LTL freight costs, accessorial fees can easily add up leading to a significant increase in the total expense. Understanding the impact that accessorial fees have on your overall expenses can go a long way, and in some instances may even help in reducing or waiving them altogether. Here is a list of just a few of the most common LTL accessorial fees and what you can do to reduce or avoid them.

Common LTL Accessorial Fees:

 Fuel Surcharges: These are the most common accessorial fees charged by LTL carriers and are typically included on every shipment. This additional charge is due to excessive costs of diesel gas and is applied as a percentage that is based upon indices published by the U.S. Energy Information Administration. Fuel surcharges can vary by carrier (or 3PL/broker), so it’s always import to look at your total net costs when doing comparisons.

Lift Gate Service Fees: Lift gates enable carriers to lift and lower shipments from the ground to the truck and vice versa. Shippers usually require this service when the shipping or receiving address does not have a loading dock and since having this equipment costs carriers more money, an additional charge is required from shippers. The cost of this service can vary widely by carrier, so it’s important to find the right carrier with an acceptable fee if you have many of these types of shipments.

Oversized Freight Fees: Most shipment pieces that are equal to or exceed 12 feet in length, usually require more space thus leading to an accessorial fees applied by carriers. Again, this fee varies by carrier and can often be reduced.

Residential Fees: Carriers typically charge additional fees when they are required to navigate residential areas to pickup or deliver shipments. This fee may also apply to your business if it is located in a residential zone (among personal homes). Again, this fee varies by carrier and can sometimes be reduced.

Reweigh and Inspection Fees: If the carrier suspects that the weight or classification of your freight is inaccurate, they will charge a fee to reweight and re-class the shipment. For this reason, it is important to enter accurate weights and descriptions (including NMFC item numbers when available) to your bill of lading.

Limited Access Pickup Fee: Carriers may also charge fees when they pickup or deliver shipments at limited access areas such as schools, prisons, military bases, convention centers, construction sites, airports, ocean docks, wharfs or piers. All of these fees can be negotiated depending upon your specific situation.

Fees for Additional Services: There are many other instances – too many to name here – when carriers will add an accessorial charge. Other examples include; having to enter “inside” a building to pickup or deliver a shipment, collecting (“COD”) the sale price of goods shipped, and notifying consignees before making a delivery (“appointments”). Carriers will generally publish complete details regarding all of their accessorial fees in a “Rules Tariff” and make it available on their website or upon request.

Reducing / Waiving LTL Accessorial Charges

Now that you are aware of the different types of charges that may be applied to your shipment, it is important that you put that knowledge to good use. Take the following steps to ensure you never overspend on your LTL rates:

• Track, measure and record the characteristics, dimensions and weight of your shipments. This way you will be able to foresee potential charges and even dispute any errors in billing by carriers.
• Use an experienced and qualified third party logistics provider such as Logistics Plus to analyze and audit your freight invoices and negotiate rates and accessorial fees with carriers on your behalf.

Our LTL experts help thousands of companies save on their LTL shipping every year. We can provide you with a no-obligation freight analysis for multiple shipments, or we can help you get a quick and accurate freight quote for individual shipments.

What Factors Impact Less Than Truckload (LTL) Rates?

by logisticsplus | Dec 2, 2015 | News

LTL shipping refers to the process of transporting relatively small freight shipments that weigh anywhere between 150 to 10,000 lbs. Unlike Full Truck Load (FTL) prices, which are usually based on a more simplistic rate per mile system, LTL rates are calculated from several variable factors. Knowing these factors can be helpful in setting more realistic expectations and increasing long-term savings. Here are some factors used to determine LTL freight shipping rates:

                                                     Weight & Density

These two basic aspects of your shipment greatly determine how much you will be charged. Freight companies generally rate shipments at the lowest weight category and rate, meaning that the more a shipment weighs the less it costs per hundred pounds. Weight is also used to calculate density, and is one of the main components used to determine the classification of the shipment, which in turn affects the final rate. Logistics Plus provides a helpful, online freight density calculator if you want to quickly know the density of your shipment.

Freight Classification

The National Motor Freight Traffic Association (NMFTA) has established “freight classes” which are used to classify commodities for rating purposes. Classifications are based on the products’ density, stow-ability, value, handling and liability. Each commodity is categorized into one of 18 different freight classifications. Generally, the lower the freight class, the more dense the commodity, and, therefore, the lower the rate per hundred pounds. You can read more about freight classification on the Logistics Plus website.  

Origin and Destination

Shipments that need to travel farther usually have higher rates as well. Shippers should find out which LTL carriers serve their intended destination to avoid interlining; a practice where one LTL carrier resorts to transferring its shipments to other carriers due to their limited reach. Interline shipments often tend to cost more and are more susceptible to loss or damage. Also shipments that require additional time or special equipment at time of pickup or delivery may also incur additional fees (called “accessorial fees” as discussed below). Examples include pickups or deliveries to residential locations, convention centers, construction sites, airports, wharfs, or container freight stations.

Base Rates

Ever since the industry was deregulated in the early 1980s, LTL carriers set their own base rates (i.e.,”list price”) from which discounts can be negotiated. Base rates can vary by company and by lane, making true apples-to-apples rate comparisons very difficult unless you know what you are doing. Logistics Plus provides shippers with the ability to request a free freight analysis if you’re unsure on how to compare rates to ensure you’re getting the best possible deal.

Absolute Minimum Charges        

These are the minimum prices charged by LTL carriers, below which they will not go any lower – no matter what discounts may have been negotiated. The absolute minimum charge (MC) helps ensure carriers cover all of their fixed costs on a particular shipment or lane. If a high percentage of your shipments are small, or move across short distances, absolute minimum charges may play an important factor in your overall transportation spend.

Accessorial Fees

Accessorial fees apply when additional services are required to handle your shipment – those above and beyond the typical dock-to-dock pickup and delivery service most LTL carriers provide. Common examples include liftgate service, weekend delivery, and pickup or delivery at special origin and destination locations (as noted above). Fuel surcharges are the most common accessorial fee that LTL carriers charge since they are typically included on every shipment. Often times specific accessorial charges can be waived or reduced, so it’s important to understand how these fees impact your overall expenses and then include them in your negotiations.

Negotiating Rates

Shippers can save money on their LTL freight spend by negotiating base rates, discounts, and minimum charges with their LTL carriers. Alternatively, a professional freight management company, such as Logistics Plus, can negotiate with LTL carriers on your behalf. Top freight management companies are able to leverage their collective buying clout, analytical expertise, and carrier relationships to provide even greater savings to shippers, particularly those that are small or mid-sized companies.

If you feel like you’re spending too much on LTL freight, or if you lack the resources or expertise to negotiate your own rates, please consider working with Logistics Plus. As a top 50 freight brokerage firm, our LTL experts help hundreds of companies save on their LTL shipping every day. As mentioned earlier, we can provide you with a no-obligation freight analysis for multiple shipments, or we can help you get a quick and accurate freight quote for a single shipment.