When Less Is More: How to Avoid Profit-Eating Accessorial Fees

 

This article originally appeared on ParcelIndustry.com.

In fashion, accessorizing is a great way to get noticed. However, in the shipping industry, accessorial fees will make you stand out for all the wrong reasons. Accessorial fees bleed profits from your supply chain and often can be avoided with the right knowledge, visibility, and proper planning.

Address Corrections
When information is left out of an address and the carriers have to fill in the blanks, you will be hit with an address correction charge. Even if only a suite or apartment number is left off a shipping label, it could cost you. The good news is that the shipping industry is going through a digital transformation. New supply chain technology can provide the latest in business intelligence, giving you complete visibility to your shipping data. Updating or outsourcing your technology can help you catch any recurring address correction charges so you don’t continuously pay for the same mistake. With a robust technological edge, surprise surcharges are less likely to occur, and you can then formulate a more accurate shipping budget overall. Additionally, address verification software can allow you to update your records and stop charges before they even happen. Utilizing the right technology in today’s logistics marketplace is crucial to track and avoid unnecessary fees.

Dimensional Weight
As with avoiding address correction charges, properly capturing shipment dimensions on the shipping label is another way to avoid unnecessary accessorial fees. For a given package, the carriers will take the greater of either the actual weight or the dimensional weight (L x W x H/dim divisor). This dim divisor has been steadily declining in recent years, making dimensional weights and, therefore, shipment costs rise. If the dimensions are left off a package and the package dims out, then expect extra charges to occur.

Coupled with this, UPS has recently instituted a new overage fee for shipping charge corrections. According to UPS.com, the audit fee will be assessed if the average shipping charge correction in an invoice week is more than $5.00. The audit fee will be the greater of $1.00 per package subject to a shipping charge correction or six percent of the total amount of shipping charge corrections during the applicable invoicing period.

Unfortunately, capturing accurate shipping dimensions may not be feasible for every company. The best way to mitigate dimensional weight costs is to negotiate a lower dim divisor. This strategy can have a dramatic impact on your shipping spend. Utilizing business intelligence tools that provide the visibility to track whether your packages dim out before they weigh out, and utilizing that information in contract negotiations, is another key money-saving advantage.

Declared Value
Not every declared value is protected equally. While you can assign whatever declared value you want to your shipment (and get charged accordingly), the carriers will only insure certain items up to $1,000. Don’t pay for a declared value of $4,000 if the carrier’s liability is only $1,000. To avoid learning this after your package is lost or damaged, scour the carrier’s service guide thoroughly to understand the liability protection provided for the types of goods you’re shipping and select your declared value appropriately.

Depending on how often you’re declaring value, it may make sense to seek out a third-party insurance provider who focuses on cargo insurance. This can be an effective way to protect yourself from losses on lost or damaged packages. Third party insurers’ rates and liability protection frequently outperform those of national carriers, safeguarding both your goods and your bottom line.

Regional Carriers
There is a surefire way to lower the cost of accessorial fees: get charged less, or, even, not at all. Regional carriers generally not only have lower accessorial fees, but they usually have fewer ones to begin with. The decision of whether or not to shift volume to regional carriers from national carriers can seem like a complicated business decision, but there are many third-party industry experts that stand ready to help determine if shipping with a regional carrier is a good play for you. Properly utilizing regional carriers will not only reduce the assessorial charges that you pay, but it can also dramatically impact your supply chain operations and increase customer satisfaction.

Less Is More
It’s hard enough to receive quality rates in the current marketplace, even before the added costs of accessorial fees. Accurately monitoring your supply chain and identifying extra charges is essential for stopping profits from leaking out of your business. Utilizing the latest technology in combination with the mitigation strategies provided above will give a much-needed makeover for your shipping and can be a lifesaver for your bottom line. Customers are doing more with less today, so if your team is too busy to perform the steps internally, consider using third-party experts to help execute the project for you. Remember, when it comes to accessorial fees, less is always more.

Brad A. McBride has been in the transportation industry for 30 years. He founded Zero Down Supply Chain Solutions in 2003 after many years in high-level sales and operations roles in the logistics industry. Determined to make an impact on traditional industry practices and provide considerable savings for businesses, Brad also launched FreightOptics, the cutting-edge technology that provides one-login access to view and optimize all modes of transportation. Brad and the entire Zero Down team are passionate about helping companies achieve efficiencies and drive bottom-line supply chain savings throughout the organization. He can be reached at brad@zdscs.com.

To read the article in its original version, visit: https://parcelindustry.com/article-5207-When-Less-Is-More-How-to-Avoid-Profit-Eating-Accessorial-Fees.html