If you’re going to conduct a transportation sourcing event, you need to understand the changes that have occurred when it comes to the carriers use of accessorial charges to augment their revenues.
First, know that the carriers have great data. With dimensionalizers they know how much space your freight consumes and with ELDs they know how much time is spent when they pull up to your dock or the docks of your suppliers and customers. In short, they know their cost to serve you in detail. We've outlined a number of these items in our Carrier Yield Test Worksheet.
Second, understand that carriers aren’t following market-based pricing principles. You may be thinking “I have one million, ten million or fifty million dollars in freight for the carriers so my company should get great rates.” What the carriers really prioritize is freight that fits in their network and gives them a reasonable return.
The third thing you need to know is that accessorial charges can have a huge impact on your freight costs. Since carriers have great data they can use these accessorial charges to make sure they recoup all of their costs in serving your business.
Recently I was having a conversation with a customer about how we could help them save money on LTL shipping. They were concerned because their LTL costs were rising despite the fact that their rates had not really changed that much. Using the great data we had from our freight audit and payment system, we were able to identify the culprit.
Their LTL carriers had significantly increased their accessorial charges for services such as accommodating over-dimensional freight and/or delivering freight to their extended service areas. These charges were definitely impacting their costs and transportation budgets.
We recommended our LTL Strategic Assessment as a way of helping them manage these accessorial charges and bring their LTL freight costs back in line. And with our Constellation TMS that helps optimize their LTL shipping costs and identifies many accessorial charges in advance, they now have the tools they need to get the job done.
We are an industry thought-leader on LTL procurement and management best practices and processes. With our LTL sourcing event expertise, we have helped scores of companies like yours realize the lowest rates combined with the best service, especially in today’s changing market.
If you want to get control over your accessorial charges and drive better opportunities and savings to your transportation budget bottom line, give us a call at 630-833-0890. We would be happy to share the principles and best practices we’ve used to help shippers like you reduce their LTL costs.
BY MIKE REGAN, CO-FOUNDER OF TRANZACT
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