Today’s ground transportation environment has seen the impact of not only a lackluster economy but also the effects of other factors leading to increased cost of Less-Than-Truckload common carrier transportation services. As a result, carriers are focused on margin retention and improvement and sacrificing market share by culling low margin business. We should expect to see increases in prices within the next few months as trucking companies ensure their prices are compensatory to the services they provide.
Just as we are seeing in the deregulated airline industry, fares differ by carrier and many additional services or conveniences such as checked luggage or food come at an additional expense. As a result, finding a low airfare to board one plane may, overall, end up costing more when you add a checked luggage fee and business class seating, than a higher airfare with lower or waived luggage and business class fees.
Carrier rate bases can vary significantly, depending on their lane balance needs and the cost of performing standard services in their geographic service regions. LTL discount percentages can mean little at face value as most rate bases vary considerably from carrier to carrier. In addition to class less discount rates, carrier accessorial charges will vary, some significantly, allowing a quote with a low base rate to end considerably higher with the addition of accessorial charges such as fuel surcharges, limited access fees, residential delivery fees, weight and class change fees, over length, hazardous material or lift gate charges as well as many other requested services. These accessorial charges often lead to surprises on carrier invoices. These charges can be found in a carrier’s rules tariff and buyers will find that rules tariffs are lengthy and subject to change without notice.
Here are a few examples of surprises that shippers find on their freight invoices:
- Limited Access – Limited access fees can be assessed on both commercial and non-commercial delivery sites. A flat or per hundred weight charge may apply. Generally speaking, a limited access location is defined as meeting any of the following conditions:
- Not open to the walk-in public during normal business hours.
- Not having personnel readily available to assist with the delivery or pickup function.
- Not having access to loading dock or platform.
- Sites where carriers are delayed with security related inspections and processes prior to freight tender.
- Examples would be private residences, camps, churches, government facilities, farms, schools, prisons, carnivals, mini-storage facilities, nursing homes, outpatient medical facilities and other such locations.
- Over-Dimensional or Excessive Length Charges – Varies by carrier rules tarrif and can apply on shipments with a single handling unit with lengths generally in excess of 10 linear feet. These charges are subject to a minimum fee and can increase depending on the length of the product.
- Weight Change Charges – Shipments subject to a weight change after inspection may be assessed a flat fee to cover the cost of carrier invoice changes in addition to the increased cost associated with the higher shipment weight .
As a result of the wide variances of rate bases and accessorial fees, it is important to evaluate carrier options prior to tendering shipments to an LTL carrier. Short of checking each quoted carrier’s rules tariff for accessorial price application, the most practical tool available is a transportation management system (TMS) that houses a comprehensive listing of additional fees. Accessorial charges such as limited access, over-dimensional or excessive length, and weight change charges may not be known at time of carrier tender. However, you have the ability to control the costs that you know up front. Consequently, whichever method you choose to utilize, accessorial and special service charges can add up and potentially cost more than a shipper may anticipate. A good 3PL and TMS can help you navigate through the myriad of additional charges and protect your margin by helping you with quote your shipments accurately.