Recently, I was talking with a senior executive who called me because his company had a problem.
“Mike, we need some help. Last year we signed a multi-year parcel agreement with one of the Big Two. We worked with a parcel consulting company that guaranteed us savings through a gainshare arrangement. Heck, Mike, we couldn’t lose.”
So, I asked the obvious question. “Why are you calling me?” He responded: “Because we lost! Our parcel costs are higher than they were last year. How can that happen when we negotiated lower rates?”
My answer was simple: Accessorial charges. And that is why this week’s Two-Minute Warning is a reminder to CYA — Cover Your Accessorial Charges.
Lower Rates Don’t Necessarily Mean Lower Costs
If there is one problem that consistently shows up when shippers negotiate a new agreement with their carriers, it is that they overlook—or do not fully understand—how some important provisions in those contracts will affect their total costs.
A shipper negotiates what looks like a very good transportation agreement.
Everyone focuses on the headline discount or base rate.
The spreadsheet says they will have lower rates and save money.
And then the contract gets signed.
Things like accessorial charges or provisions affecting “Released Value Rates” get treated as an afterthought.
That can be an expensive mistake.
For example, many parcel agreements provide that the accessorial charge you pay is the charge in effect when the shipment moves, not necessarily the charge that existed when you signed the contract.
Think about that for a minute.
Do you know how much exposure that creates for your company?
You may have negotiated your base transportation rates for several years.
But do you know what it means when your contract allows for 10%–20% increases in existing accessorial charges—or allows for the introduction of new accessorials such as “Peak Season Surcharges”?
It means those terrific, negotiated savings begin disappearing.
And with higher charges, or changes in how those charges are applied, you get calls like the one I got from that executive.
I had to tell him: “You won the rate negotiation, but you lost the cost battle.” That distinction matters.
At TranzAct, we know transportation management is not simply about getting the lowest rate. It is about managing your total transportation cost. And accessorial charges are increasingly part of that equation.
So Here Is My Challenge
Pull out your parcel agreement. Then pull your actual parcel invoices from the last 12 months. Don’t just look at your transportation rates.
Instead, use TranzAct’s Parcel Spend Management Program to see what you are actually spending on accessorials—which charges are growing, how often they occur, and whether the protections you thought you negotiated are really protecting you. You may be surprised by what you find.
Here is an even better idea. Call us! Give the TranzAct team 30 minutes and let’s look at this together. We have the data, benchmarking, and decades of carrier experience to identify where accessorial charges may be quietly eroding your negotiated savings—and, more importantly, what you can do about it.
The carriers have tremendous amounts of data, and they use that data very effectively when they price your business.
You ought to have somebody on your side who understands that data just as well.
So, before your next parcel negotiation—or if you simply want to know whether the agreement you have today is really delivering the savings you expected, call TranzAct. Because when it comes to accessorial charges, what you overlook can cost you a lot of money.
So CYA. Cover Your Accessorial Charges. And give us a call.
Here's how to get in touch:
☎️ Give us a call at 630-833-0890
✉️ Send us an email at solutions@tranzact.com
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