Winning the Logistics Battle Against Accessorial Charges

Posted - February 25, 2014

Winning the Logistics Battle Against Accessorial Charges

A lot of small equals big.  Without innovative strategy and a watchful eye, accessorial charges quickly add up, whittling away at your profits. Consequently, it is important to work with providers that will fight hard to ensure that your bottom line does not suffer from these avoidable extra costs.

Accessorial charges present obvious complexities, but understanding how they are trending can empower logistics management teams to reach new standards in mitigating these add-ons.  To that end, Transplace’s Consulting & Engineering team recently conducted the Accessorial Benchmarking Project – a study that revealed accessorial charge trends by identifying the most common core and miscellaneous charges, the percentage of shippers actually billing those charges and the rates they are charging. These insights not only assist in negotiating transportation spends on the front end, but also serve to inform transportation management strategists where to focus their efforts in avoiding them all together.

Is your 3PL partner armed for the fight?  Simply knowing the trends is not enough.  It’s what your transportation partner does with that information that matters.  While the intricacies of your product category will dictate what accessorial charges are most relevant to your transportation spend, your partner’s logistics technology will determine how well they can protect your bottom line.  For example, if the trends show that a combination of detention and stop off charges along with lumper maximum, undelivered loads and re-delivery charges pose the highest probability of hurting your bottom line, cutting edge software and order management systems are being used by your partner to plan the most efficient routes.  In addition, your 3PL’s transportation management system must provide complete transparency to maintain open lines of communication and enable them to proactively address potential charges.

“A global consumer packaged goods shipper used the accessorial benchmarking data to evaluate and optimize its fuel surcharge program, realizing over $3 million in annual transportation cost savings. The study allowed them to benchmark their program against the emerging industry standard, which led to a fast-paced initiative to close this gap. The benchmarking data also allowed them to make changes in their program with confidence that the changes were aligned with standard industry practices and would not alienate or take advantage of their core carrier partners.”

— Ben Cubitt, SVP, Consulting & Engineering, Transplace

Bottom line.  Don’t get stuck with a logistics provider who isn’t prepared for battle.  Choose one that is utilizing innovative technology, providing complete transparency and benchmarking their efforts to provide the best value for your transportation spend.

Question:  On a scale of 1-5 how important are accessorial charges to your bottom line?