Cost of Freight Accessorial Charges: Definitions & Tips on How-to Avoid Blog Feature
Rick LaGore

By: Rick LaGore on March 4th, 2019

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Cost of Freight Accessorial Charges: Definitions & Tips on How-to Avoid

Accessorials | Freight Accessorials | intermodal, accessorials | Truckload Accessorials | LTL Accessorials

Accessorial FeesOne of the least favorite topics of any logistics team, whether a shipper or freight service provider, is accessorial charges.  The reason people dislike accessorial fees is they have an immediate impact on the bottom line and a negative impact on service.

The first step in managing accessorials is understanding the various accessorial charges that could hit your freight invoices, which then sets you up in how to avoid, mitigate or negotiate them to decrease their impact on your business.

An accessorial charge is a fee added to a shipper’s freight invoice for services the motor freight carrier performed beyond the standard pick-up and delivery operation designated at the time a shipment is tendered.  The additional charges cover a wide variety of services outside of the line haul charge and fuel surcharge that are in connection with the transportation of goods.

Accessorial charges come in many forms and impact all modes of freight transportation services.  Some accessorial charges are a on-time fee, while others escalate on a daily basis until the situation is resolved and closed.

At times, accessorial charges are known when the shipment is tendered, such as residential, liftgate, and inside delivery, while the majority of times accessorials are not known until the shipment is complete and invoiced.   

frieght accessorial chargesExamples of charges that are unknown and therefore unplanned include detention, demurrage and storage.  These accessorials are often not discovered until the shipment is complete and invoiced.

The fees are an immediate hit to a company’s bottom line budget since they were not planned for by the shipper and therefore not added to the price charged to its customer for the delivery.

The unknown and unplanned factor of accessorial charges bring tremendous pressure on what is typically the top two key performance indicators logistics teams are often measured: quality of service and profits.  

With that said, when the accessorials “hit the fan” tensions can run high for both the shipper and the logistics provider. 

 

Freight Accessorial Fees 

Assessorials in Detail

While accessorial charges run across all modes of freight, there are some that are specific to certain modes and others that can be found with all modes of freight.

To help work through the details of each accessorial charge, we broke them down by the mode they primarily reside and provided definitions.  

All Freight Modes

  • Advanced Notification

    • This is an additional fee when the motor carrier is required to notify the consignee before making a delivery.

  • Bill of Lading (BOL) Correction Fee

    • Imposed when an incorrect BOL is used or is a correction is required after the load has been picked up.

  • Hazardous Materials

    • Products that are composed of various materials that if not properly controlled, stored or transported that may be a potential hazard to human health, safety or infrasture are called off as hazardous materials (hazmat).  There are nine hazmat classifications. There is typically a flat fee between $100 to $250 for hazmat shipments because there is specific driver and equipment requirements that increase the cost for the motor carrier.

  • Liftgate

    • The standard commercial truck is designed to load and unload from warehousing and distribution docks that are positioned at the same height as the truck.  When a shipment is made at a location other than a dock, the freight provider needs to utilize a truck with a hydraulic liftgate that is affixed to the back of the truck that can raise and lower the product from the truck’s trailer to the ground.

      • The majority of commercial trucks are not fitted for a lift gate, so it is imperative to notify the freight provider at the time of tender that one is needed, or other accessorials will be added and the shipment will deliver late because the product will need to be loaded to another truck to make the delivery.

  • Limited Access Fee

    • Pick-up or delivery locations, such as a school, convention center, construction site, etc. are often difficult to access, which is what drives this accessorial.

  • Inside Delivery

    • This fee is added to a shipment when the motor carrier driver is required to go inside, meaning beyond the front door or loading dock) to pick up or delivery the shipment.

  • Residential

    • Motor carriers add this accessorial charge when they are required to make a delivery in a residential area.  The reason is the delivery density is far less, meaning more miles are required to make each delivery versus when delivering the a DC or warehouse there are typically many within just a few miles and positioned next to a major highway exit. 

Truckload & IntermodalTruckload & Intermodal

  • Detention

    • A detention charge is made on trailers/containers held by or for a consignor/consignee for loading or unloading, forwarding directions or any other purpose. Typically, there are 2 hours free time before detention becomes an issue.

      • Detention is billed on an hourly basis and a negotiable charge at time of contract, not at time of invoicing.

  • Driver Assist

    • This charge becomes a part of shipment if the driver’s labor is needed to either load or unload the shipment from their trailer.  

  • Driver Load Count or Verification

    • If the driver is required to count or verify the contents of a load, while unloading or loading their trailer.

  • Driver Clean

    • When it is required for the driver to clean their trailer as a result of moving a shipper’s load, there will be a charge for their labor.  Often times this is a known requirement for a particular business, which lends itself well to negotiating the rate down as part of the overall service contract.

  • Layover

    • If a carrier is required, by the action of the shipper or consignee,

  • Lumper

    • When a carrier is required to hire labor to perform loading or unloading.  This is fairly typical with some industries and is a straight pass through invoice.

  • Misuse Charge

    • Equipment spotted at customer location by Carrier A but used instead by Carrier B.

  • Out of Route Miles

    • Additional services that require the motor carrier to be more than 10 miles outside of the contracted rate.

  • Overweight

    • Overweight charges come when the combination of tractor, trailer and cargo weigh in excess of local, state and federal requirements.  80,000 pounds is the standard in total or if the weight is not properly distributed over various points of the equipment, unless a heavy haul permit is pulled.

      • 12,000 pounds average single axle weight.

      • 17,000 pounds per axle.

      • 34,000 pounds per tandem axle.

weight limits

    • While overweight accessorial charges can come from a truckload shipment, they are associated with domestic 53’ shipments more often. As a matter of fact, weight is the number one issue shippers fail on with intermodal and because of this suggest reading INTERMODAL Weight & Damage Prevention eBook: A Look into the Most Common Issues in Intermodal.

    • There is an automatic $200 for stops and scaling and then accumulating charges depending on the rework solution.  

    • The added frustration is once a shipment is flagged as overweight, then there will be a host of accessorials that will be added to make the load weight legal: rework, redelivery and stop-off fees.  In other words, an overweight shipment can add up quickly, but can be avoided through education.

  • Pool Setup or Teardown

    • Charges associated with establishing or terminating an equipment pool at a customer’s location.

  • Redelivery

    • For whatever reason, an issue arises that a shipment needs to go back to a location to be unloaded.  If that occurs, the shipper will be charged to redeliver the load to consignee location.

  • Rework

    • The time and material charge required when either a load shifts, there is damage or their is an overweight situation that needs to be corrected before the carrier can complete the load.

  • Stop-Off Charge

    • The fee for an extra pick-up or delivery, multi-stop.

  • Storage

    • Storage charges are assigned to the shipper or consignee for holding containers or trailers at an intermodal terminal beyond the free time allotted to them.

  • Truck Order Not Used (TONU)

    • TONU - truck order not usedThis is one of the easiest accessorials to avoid and comes down to communication.  When a motor carrier or drayman goes to pick up a trailer / container or make a delivery and for some reason leaves without performing the shipment requirements, then there will be a charge because the shipper did utilize the equipment.  They just did not load or unload the product, which is not the cost carriers are charging, meaning motor carriers charge when the wheels are moving or if sitting for extended time at the request of the shipper.

      • Examples include:

        • The driver is dispatched for pick up/delivery, but carrier advised that the load is not ready

        • The driver is refused or load is canceled after the placement of rail owned equipment which requires a return to retrieve the rail owned equipment

  • Yard Pulls

    • The carrier pulls a container to their terminal/yard from a port or rail ramp.  While this may be an additional expense to a load, by the time a freight provider makes this call it is less than the storage fees that would continue to accrue. 

Intermodal

  • Chassis Charge

    • This accessorial is associated more with ocean shipments.  The fee is often a no charge item from the ocean carrier, but not always so ask the question when evaluating quotes.

  • Demurrage

    • Demurrage is a charge assessed for cargo that is left at the terminal beyond the allotted free time.

      • It is important to know that congestion at pick-up or delivery or the location being closed is not a free pass.  The clock will continue ticking, so it is imperative to address demurrage quickly.

    • Demurrage is billed at a daily rate, which often times escalates as the number of days increase.  

    • Demurrage fees need to be paid before a container can be pulled from the yard and the clock keeps running until the bill is paid.

  • Per Diem

    • This fee is a fixed rate per day that a carrier charges against another carrier or customer for use of its containers, trailers or chassis.  

      • Per diem charges accumulate until the equipment is returned to the port or rail terminal.

  • Scalescale accessorial charge

    • One way to get avoid overweight issues is to request scaling on every load, but be aware there is an additional charge for this request

 

  • Additional Thoughts on Intermodal Accessorial Charges

     

    • While accessorials have a negative impact on shippers’ freight budgets, they also keep some shippers on the sidelines of using some freight modes because of the fear of excessive accessorial charges.  These fears are unwarranted and costing shippers more money by not converting some of their freight from truckload to intermodal.
    • The biggest fears are around demurrage, detention, per diem and storage charges, but where the charges can add up are with accessorials associated with an overweight load.

LTL

  • LTL freightOversized / Overlength

    • When a shipment occupies more than a standard pallet position on a trailer a fee is accounted for to address the additional volume the shipment is occupying within the trailer.  The fee is often cited when the shipment is over 12 feet.

  • Reclassification & Reweigh

    • Oftena shipper will misclassify their LTL shipment or report the incorrect weight of a shipment.  Typically the charge only comes across as a change in the total cost, but there are some LTL carriers that will automatically include the fee or if the situation continues will drive a fee for every time the LTL carrier has to change the invoice.  There are a number of free classification systems to utilize to avoid the issue.

  • Sort / Seg

    • When a carrier is required to sort and/or segregate consignor or consignee shipment.

 

With the background of accessorials defined, we will now step through the process of controlling and eliminating.

Steps to Eliminate, Mitigate and Negotiate Accessorial Charges

Have a Process & Follow It

Logistics process and planningAccessorial charges associated with detention, demurrage, per diem and storage are all about when the freight is on and then when it is off the clock. You’ll want to put a process to plan the load out before the wheels are in motion, and once in motion, have a communication process at to how the freight provider is to communicate before the charges begin to accrue.  If the freight provider does not follow the procedure to allow the shipper enough notice to impact the process, then the accessorial charges would not be valid.

Negotiate the Known Accessorials

The range of charges for the same accessorial can be as much as $500 difference, so know that many freight logistic providers do negotiate their fees.  

For those shippers that have a clear understanding whether their freight will have accessorial charges associated with their freight should negotiate the fees down, then have the logistics provider make them a part of the contracted line haul costs so not to have to deal with them in the future..  

Negotiate Overall Accessorials

Knowing accessorial charges can vary greatly with different logistics providers. Negotiate to the lowest possible numbers, then make that the standard all other carriers used the supply chain operate by the same rules.  While some carriers may try to increase their rate the standardization will simplify rate and route optimization engines for the best price and service. It will also limit the number of questions coming out of the freight audit and pay process where the accounting team will query every difference.

More Ways to Avoid Accessorial Charges

Accurately define and understand the shipper and consignee requirements.  

  • Freight Accessorial SavingsIdentify the challenges the carrier will have at the pick-up and delivery docks and discuss them with the carrier beforehand.  In some cases, accessorials can be negotiated out of the tariff during the contract negotiation period.

  • Here are a few questions/issues to consider:

    • Will the pick-up or delivery require an appointment?

    • Will the driver need to assist loading or unloading the shipment?

    • Are there specific windows that need to be met for either pick up or delivery?  

    • Is the freight floor loaded or on pallets?

    • Are there docks and if so are there enough docks to facilitate the shipment?

    • Hazmat?

    • Etc., etc., etc.

Understand what is in the carrier’s rates and rules tariffs.  

  • Carriers typically list their accessorials in their rules tariffs or on their website.  Shippers and consignees should be aware of the accessorial schedule and monitor closely because carriers will sometimes change fees with little or no notice.

Bring operational efficiencies to your carrier.  

  • Helping carriers become more efficient can reduce/eliminate accessorials.  For example, if the carrier is on-time for their appointment, load or unload them as quickly as possible.  

  • Other items to consider are:

    • Make sure you order the right size of equipment.

    • Have the proper paperwork is in order.

    • Ensure everyone up and down the supply chain understands the shipment and the shipment requirements.

Make the right transportation selection and be diligent.  

  • Develop long term relationships with your partner carriers and be transparent.  On the diligent side, analyze each and every accessorial charge; how does it affect your budget; could the charge been avoided; was this a shipper issue, a receiver issue or a carrier issue.  To find answers to these questions will inevitably lead to reduced accessorial charges, along with a better flow and distribution of your goods and commodities.

Managing the Top Three Accessorial Charges of Detention, Demurrage and Per Diem

  • accessorial money saving ideasTips to Avoid Demurrage Charges

  • Know the rules, meaning know the number of free days allotted within the contract.

    • Large shippers can typically negotiate extending the number of free days, so negotiate well.

  • Pre-clear the cargo by submitting the shipping documents as soon as possible.

  • Align the business with multiple trucking options, so if one trucker falls off the load another one can be found quickly to recover and not incur charges.

  • Keep track of the containers on their arrival and departure.  No one will care more about the freight than you will. Demurrage charges have no mercy and missing a detail on a spreadsheet is not an excuse.

  • Tips to Avoid Detention Charges

    • Schedule the dock, so the operations team is prepared to load / unload the day's cargo.

    • Detention is negotiable at the time of contract, so work the amount of free time required into the agreement.  Carriers can better manage pricing and service knowing the wait and load times they can expect.

    • Dispatch the cargo well in advanced to give the trucking company plenty of time to work the shipment into their schedule.

  • Tips to Avoid Per Diem Charges

    • Like demurrage, keep track of the equipment once pulled from the yard and when they need to be returned.

    • Manage the containers at the locations in a FIFO manner, so once emptied they can be returned quickly within the allotted free time.

Final Thoughts

As we close this article out, we invite you to learn more about about InTek Freight & Logistics through our website or follow us on our weekly blogs for weekly publications on how to improve your logistics and supply chain.

We’d love to be a part of you next conversation on challenges your company may be having with logistics and supply chains, so please keep us in mind the next time around whether it truckload, LTL, intermodal or Managed Transportation Service Solutions.

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About Rick LaGore

Rick is the co-founder and CEO of InTek Freight & Logistics, a company focused on being the place where companies come when faced with a logistics problem.

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