Know the “Rules” or You May Pay the Dues

The truth of the matter is that there are some shipments that will simply cost more to deliver due to the nature of the product and special handling requirements, such as shipments that require expedited service or temperature control. However, sometimes people think they know what the transportation charge will be only to find out the cost was much higher than anticipated. Often overlooked culprits are the accessorial fees or surcharges.

All carriers will generally have a Rules Tariff or Service Guide that lists all the additional services and associated fees, as well as how they may address specific situations when handling the freight. The carriers will typically take a general rate increase, also known as a GRI, on an annual basis. It is, therefore, important to evaluate the Rules Tariff or Service Guide annually to determine if any of the changes will have a service or financial impact.

Different modes of transportation have various types of fees for the additional services they provide. Some fees may be similar in nature across various carriers and modes of service. For example, some less-than-truckload (LTL) carriers assess a high-cost delivery region surcharge for areas that may be remote or that may be difficult to deliver to, such as zip codes in Washington, D.C. or in New York City. Parcel carriers will assess a delivery area surcharge, or even an extended delivery area surcharge, for such destinations. These fees are similar to the beyond fees charged by freight forwarders that were discussed in a prior post.

However, it’s worth noting that not all carriers charge for the same accessorials, and even when they do, the fee may vary significantly between them. For example, not all LTL carriers charge a high-cost delivery region surcharge. Even when two different carriers do charge for the service, it’s important to review when the fee is applicable. Not only may the fee itself be different, but one may assess the fee to more destinations than the other.

Not understanding the “rules”, and their associated fees, could be quite detrimental. For example, let’s say your manufacturing facility has been running behind and decides to work a weekend to get product shipped out to customers. They plan to prepare 1,000 parcel cases for shipping. They could pack the orders and ship them on Monday and meet the delivery requirement, but they thought it would be even better if they could ship them out on Saturday. They place a call to their parcel carrier to ask if those packages could get picked up on Saturday. The carrier promptly replies “Yes, we can pick those up for you”. However, they fail to mention that there will be a fee…on each and every package! That decision just cost you an extra $16,000.00!

While discounts off a published freight rate are important, don’t discount the importance of understanding the carrier’s rules tariff. It may cost you if you don’t.