Transplace study takes deep dive into various accessorial charges for shippers
February 03, 2014
A recent study issued by non asset-based third-party logistics (3PL) services provider Transplace sheds light on the myriad freight-related accessorial charges shippers shell out in order to move product from point A to point B.
Data for this study was based on feedback from more than 150 shippers in various sectors, including consumer packaged goods, retail, and manufacturing, among others, with more than $12 billion cumulatively in annual freight spend. And Transplace said that the study endeavored to identify customary types of charges and rates implemented by shippers beyond basic linehaul fees to help shippers better understand how their accessorials match up to market competitive standards.
Transplace Senior Vice President, Consulting and Engineering Ben Cubitt told LM that Transplace’s having a nice combination of a very large amount of data gathered through shipper interactions, consulting projects, bids it has participated in have been drivers in a concentrated effort to mine this data to gauge what it is saying about things like trends and best practices.
“Accessorials is especially interesting as every shipper has them,” he said. “They all try to find that ‘happy’ spot between being competitive and being good purchasers but also not being a bad actor or punitive to carriers or impact their ability to obtain capacity. More and more supply chain folks have a seat at the table when it comes to expenses like a few years ago when fuel prices ran up and fuel surcharges had a real material impact on a company’s margins, profits, and quarterly results. This type of data helps shippers to tell C-level executive bosses at their company to know they have a competitive fuel surcharge or freight payment terms or are not over- or underpaying their carriers for key accessorials. We have seen our shippers save millions of dollars by qualifying their accessorials while at the same time not alienating their carrier base.”
Chief among the study’s findings was that the fuel surcharge was the most common accessorial published by shippers-and was identified by 93 percent of shippers participating in the study.
Transplace said that the majority of surveyed shippers used a cents-per-mile schedule compared to a percentage based fuel method. And companies using the cents-per-mile schedule mostly target their FSC starting point around the traditional $1.17 to $1.24 range, with 73 percent divided between $.05 and $.06 increments beyond the starting point. The company explained that the trend is towards $.06 brackets, which is a recognition of both the increasing burden of fuel in overall transportation costs and the significant increase in average miles per gallon for truckload carrier’s fleets over the past few years.
Some other findings included:
-surcharges between truckload and intermodal can vary by as much as $0.33 and down to $0.12;
-81 percent of shippers stick to the accepted industry standard of allowing two hours free detention and five percent of carriers allowing less than two hours;
-66 percent of shippers pay in 15-minute increments and 26 percent pay by the hour for detention charges and going back two years detention charges have been between $25-$90 per hour, with the average at $60 per hour;
-for truckload stop-off charges, based on stops one to four on a given load, 56 percent of shippers claimed an increasing charge per stop scale, and 43 percent held a flat charge per stop between $50-$100, with a typical example being $100 for the first stop, $150 for the second stop, and $250 for each stop after. Transplace said this is indicative of shippers moving away from low, flat stop-off charges that do not accurately reflect a carrier’s cost per stop; and
-shippers not using a truck to which they tendered a load “truck order not used” charges typically apply, with of the 64 percent of shippers applying these charges, 43 percent utilize a $250 charge, and 39 percent using a $150 charge
When looking at accessorials, Transplace’s Cubitt explained that there are often differences in charges according to industry.
“Manufacturing-related industries are more cost-driven and often have the most aggressive breed of accessorials, whereas CPG and some retailers are a bit more mainstream in their accessorials with things like time-sensitive delivery and need access to carrier capacity,” he said. “There also laggards, too, with non-competitive market accessorials.”
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