the PartnerShip Connection blog
the PartnerShip Connection blog
the PartnerShip Connection blog
the PartnerShip Connection blog
the PartnerShip Connection blog
Common Accessorial Fees Explained
10/22/2018 — Leah Palnik
Additional services required outside of the standard shipping and receiving procedures result in additional fees called “accessorial fees” to cover the extra costs incurred by the LTL carrier. These fees make up just one part of your freight costs, but can be a challenge to account for since they are often applied after the shipment has been delivered. We’ve compiled a list of common accessorial charges with a brief description of each, so you can learn how to plan for them and avoid them when possible.
- Lift Gate Service
When the shipping or receiving address does not have a loading dock, manual loading or unloading is necessary. A lift gate is a platform at the back of certain trucks that can raise and lower a shipment from the ground to the truck. Having this feature on trucks requires additional investment by an LTL carrier, hence the additional fee.
- Inside Pick Up/Inside Delivery
If the driver is required to go inside (beyond the front door or loading dock) to pick up or deliver your shipment, instead of remaining at the dock or truck, additional fees will be charged because of the additional driver time needed for this service.
- Residential Service
Carriers define a business zone as a location that opens and closes to the public at set times every day. If you are a business located in a residential zone (among personal homes or dwellings), or are shipping to or from a residence, the carrier may charge an additional residential fee due to complexity in navigating these non-business areas.
- Collect On Delivery (COD)
A shipment for which the transportation provider is responsible for collecting the sale price of the goods shipped before delivery. The additional administration required for this type of shipment necessitates an additional fee to cover the carrier's cost.
Shipments containing articles greater than or equal to twelve feet in length. Since these shipments take up more floor space on the trailer, additional fees often apply.
- Fuel Surcharge
An extra charge imposed by the carriers due to the excessive costs for diesel gas. The charge is a percentage that is normally based upon the Diesel Fuel Index by the U.S. Energy Information Administration.
- Advance Notification
This fee is charged when the carrier is required to notify the consignee before making a delivery.
- Limited Access Pickup or Delivery
This fee covers the additional costs required to make pickups or deliveries at locations with limited access such as schools, military bases, prisons, or government buildings.
- Reweigh and Reclassification
Since weight and freight class determine shipment base rates, carriers want to make sure the information on the BOL is accurate. If the carrier inspects a shipment and it does not match what was listed, they will charge this fee along with the difference.
Your PartnerShip dedicated team of shipping experts is here to help you navigate the many nuances of LTL freight accessorials fees to determine which services you do or do not need and ensure the most cost effective price. Carriers generally publish a document called the "Rules Tariff 100" which provides a list of current accessorial services and fees. PartnerShip representatives are well versed in these documents and are happy to help with any questions you may have. Contact us today for a free quote.
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- Lift Gate Service
The Impact of Natural Disasters on Freight Shipping
10/15/2018 — Jerry Spelic
Our economy relies on the reliable transportation of goods and materials to link suppliers with manufacturers, manufacturers with retailers, and retailers with consumers. When natural disasters happen, they can negatively impact your carriers, your lanes, your supply chain, and your cost of moving freight.
The natural disasters that have the most profound impact on the movement of freight are floods, hurricanes, blizzards, earthquakes, and ice storms. Each of these natural calamities produces dangerous road conditions that make driving hazardous, and in extreme cases, can wash away roads or make them completely impassable.
Here are 6 ways that natural disasters can impact your freight shipping operations.
Rates. Obviously, your freight shipping rates will increase in a natural catastrophe. If roads become impassable, alternate routes will need to be taken, increasing fuel consumption and lengthening driver on-duty time, both of which are costs that will be passed along to you. Your freight rates will also increase due to tighter capacity with demand outstripping equipment or carriers refusing to travel to areas with impending, or predicted, severe weather. If you do find a driver and / or equipment willing to take the risk, you will pay for it.
Capacity. After a natural disaster, there is substantial competition for limited transportation resources and equipment. This limited capacity will naturally push costs up, but even if you can afford it, the capacity might be impossible to find.
Transit time. If your regular Atlanta to New Jersey lane is two days, it may stretch to three, four, five or more if a hurricane is bearing down on the east coast. The driver may need to wait it out inland until roads are passable, until the warehouse or factory is open again for business, or may just be caught in traffic. This will increase your transit time.
Fuel. Diesel prices always rise in the wake of a natural disaster, especially hurricanes, because refineries are frequently located near where hurricanes make landfall. This can close a refinery or damage it, making fuel more expensive. In 2017, Hurricane Harvey shut down about 17% of US oil refining capacity in Corpus Christi, Port Arthur, Lake Charles and Houston, TX. The disruption to oil refining drives up fuel prices and the fuel surcharges carriers charge you for every load.
Refused loads. Many times carriers will refuse to pick up or deliver freight in the event of a natural disaster. If your carriers refuse your loads, your supply chain will suffer. Your plants can go idle, waiting for materials or components; your customers’ plants can go idle, waiting for you; retailers can run out of inventory; all of which result in opportunity and revenue lost.
Inbound delays. Your flight from Dallas to Los Angeles will be delayed if the inbound flight from Chicago is late due to weather. Inbound freight can be impacted in the same way. Even though your area might not be facing weather issues or a natural catastrophe, if your inbound freight is delayed due to facility shutdowns or power outages caused by severe weather, you will be affected.
Here are some suggestions to deal with the effects of natural disasters on your shipping:
Working with a freight broker can help you mitigate the service interruptions, capacity issues and increased costs associated with natural disasters and severe weather. Contact PartnerShip at 800-599-2902 or request a quote to see how we can help you ship smarter so you can stay competitive.
- Two tactics to manage unexpected increases in your freight rates are 1), accrue for contingencies in your annual freight budget and 2), shop around. Working with a broker that has access to thousands of carriers can help you move a load when your regular carriers cannot.
- To alleviate difficulties due to a lack of capacity, think through different transportation options before disaster strikes, such as lining up backup carriers for different regions of the country or shipping lanes, and working with your existing carriers to map out alternate routes.
- Build slack into your supply chain. Just-in-time inventory control is easier when you manage the assets moving your freight but is much more difficult to control when you are relying on carriers which can be delayed to natural disasters.
- Leverage your freight spend. Giving more freight to fewer carriers can help you negotiate lower fuel surcharges.
- Plan your transportation to optimize transportation modes. For example, it might be less expensive to ship your freight as multiple LTL loads rather than full truckload. Or moving everything in one truck might be the better alternative.
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How to Reduce Shipping Costs: Are You Sabotaging Your Freight Spend?
09/27/2018 — Jen Deming
Shipping expenses are one of the top expenditures for most businesses, which comes as no surprise because it can be extremely challenging to determine how to reduce shipping costs. So far in 2018, US companies spent 6.2% more than they did year-over-year, totaling a record $1.49 trillion in shipping- related expenses. Many common shipping practices sabotage a business's ability to get ahead by protecting their bottom line. What are some important mistakes to avoid when figuring out how to reduce your shipping costs?
It's not always what's inside that counts.
Proper packaging is critical in helping to reduce shipping costs. We are all familiar with the risk of damages - used boxes that have holes or older labels still attached are asking for trouble. Make sure you are using the correct type of packaging materials for the product that you are moving. If you have more than a few boxes, it's a good idea to palletize all of them together, and wrap with shrink wrap. Freight shipments are loaded and unloaded at several terminal stations in route, and palletizing can keep them from being separated or lost along the way. It's also critical to use the right size packaging to help shippers reduce shipping costs. Make sure you are packaging your product with enough space inside to include proper cushioning, but not so much as to allow room for shifting or that make it difficult to handle - a carrier will charge for that too.
You are clueless about your customer's location.
Are you aware whether your receiver has a dock? How about a forklift? Are you delivering to a school, church, or another hard-to-reach area or location that risks being designated as "limited access" by the carrier? Will a 53' dry van be able to maneuver around that location? In addition to that, are hours of operation restricted for pick-ups or delivery? Every one of these variables can make a delivery potentially more difficult and more damaging to your bottom line due to costly accessorial charges. Keep in mind, the more difficult it is to get the delivery completed, the more you need to be prepared for additional fees. Planning ahead and knowing exactly what your carrier will charge for any additional services will help keep your shipping costs where they need to be.
Assuming that delivery estimate is a guarantee.
Shippers have to keep in mind that the estimated delivery day is just that - an estimate. Just as with your everyday postal service provider, business days are those included in a work week - weekends and holidays are not included. A more reliable measure to figure out shipment delivery is to take a look at transit times. When scheduling with a carrier, be sure to ask for this rather than relying on the estimated delivery date. That way, you know if your 5 day freight transit picks up on Monday, and an unexpected storm kicks up along the way, a 1 day transit delay actually results in a Monday delivery. Keep things safe by factoring in a couple extra buffer days when communicating to your customer. If you are truly in a crunch, shop the different expedited service options among different carriers, but be aware anything last minute will cost you, especially as weather worsens as we head into winter and the holiday crunch. Avoiding last minute rush shipments is always the quickest way to reduce shipping costs.
It's about 500lbs...ish?
The old adage, "measure twice, cut once" isn't just a cute lesson in being diligent - it's a very important rule for shippers to live by. Guessing just doesn't work in an industry where being a few pounds or inches off can potentially double your freight bill. Carriers check weight and dimensions once, twice, and once more just for fun with calibrated scales every time your pallet is picked up by a forklift at a terminal. If the weight of your shipment doesn't add up to what's on the BOL, you can pretty much rest assured you will be billed for the difference. If you've already quoted your customer and billed them on shipping you estimated based on inaccurate measurements, you're playing a risky game. Be sure your warehouse scale is calibrated and reset often. If you don't have a large enough commercial scale at your place of business, measure each component of your load (including pallets) and add them up. Be as thorough and as accurate as possible to avoid any surprises.
Handing the reins to your vendor.
You may love your vendors, but lots of businesses take for granted the cost- cutting potential that's available by managing their own shipping. If you are able to do so, it pays to take a look at what carrier and service your vendor is using to deliver your freight and take control of your inbound options. Some carriers have more competitive lanes in certain regions, while others may offer additional options and less expensive fees for extra services your business may require. If you are responsible for your inbound freight costs, it's worth it to put in the time to measure which carrier and service really work best for you. The additional responsibility doesn't have to be a headache, either. By working with a quality 3PL, you can make sure you are using the correct carrier, correct service level, at the most competitive price. It's a surefire way to be sure you are reducing your shipping costs where you need to.
Figuring out how to reduce shipping costs starts with some simple best practices. Double checking your specs, being knowledgeable about your transit and locations, and researching carrier options help keep you prepared and proactive about avoiding higher freight costs. When you are stuck or simply need some experts on your side, PartnerShip can help make sure you are setting yourself up for success. To speak with a specialist to learn more about where you can cut your shipping costs, call 800-599-2902 or email sales@PartnerShip.com.
Learn more about common freight shipping challenges!
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FedEx and UPS Peak Season Surcharges: The Important Differences
08/09/2018 — Leah Palnik
FedEx recently announced that for the second year in a row, it won’t be applying a peak season surcharge on residential shipments. This is good news for retailers who expect a significant amount of e-commerce orders over the 2018 holiday season.
UPS, however, will be instituting a surcharge on residential ground shipments from November 18 through December 1 and then again from December 16 through December 22. UPS will be charging $0.28 per package for most residential shipments using ground services. For UPS air services the fees are as high as $0.99 per package.
UPS delivered around 700 million packages during the 2017 holiday season – a huge jump compared to the rest of the year. Ordering online has become so commonplace and easy for shoppers, and the carriers are feeling the effects. The increase in volume over the holidays drove UPS to introduce this new peak surcharge for the first time last year.
Typically UPS and FedEx have comparable rates and surcharges and will mimic each other’s changes, so this is a notable distinction between the two small package giants.
FedEx is sending a clear message to shippers. “FedEx delivers possibilities every day for millions of small- and medium-sized businesses,” said Raj Subramaniam, executive vice president and chief marketing and communications officer at FedEx Corp. “We are demonstrating our support for these loyal customers during this critical timeframe by not adding additional residential peak surcharges, except for situations where the shipments are oversized, unauthorized or necessitate additional handling.”
It’s important to note that both carriers are implementing charges on larger packages. With the rise of e-commerce, people are ordering items online that they would’ve exclusively purchased in-store in the past – including televisions and appliances. FedEx and UPS have made several adjustments to account for these trends, including a pushback on larger packages. Heavy and bulky packages don’t move through their automated systems and require more attention. FedEx and UPS are putting a price tag on that loss in efficiency and shippers need to stay aware.
FedEx will apply peak surcharges for larger packages from November 19 through December 24:
- $3.20 per package for shipments that necessitate additional handling
- $27.50 per package for shipments that qualify as oversize
- $150.00 per package for shipments that qualify as unauthorized
UPS will apply peak surcharges for larger packages from November 18 through December 22:
- $3.15 per package for shipments that necessitate additional handling
- $26.20 per package for shipments that qualify as large
- $165.00 per package for shipments that qualify as over maximum limits
If you’re not careful, the surcharges can add up fast. These peak surcharges are in addition to the already existing surcharges that apply to larger packages, and any others that may apply including delivery area and residential surcharges.
Retailers should take note of these peak season changes to ensure a profitable 2018 holiday season. If you see a significant amount of online orders over the holidays and ship with UPS, you’ll be paying an extra $0.28 per package, which will eat into your bottom line.
To prepare, take a look at what you shipped last year around the holidays and determine a forecast for this season. From there you’ll be able to see how much more you can expect to spend during the designated peak season. You may find that switching from UPS to FedEx for the busiest time of the year will provide you with a decent cost savings. Depending on the billable weight of your shipment and the destination, the base rate could be lower with FedEx – compounding the savings during peak season. It’s worth evaluating the options, when the holiday season can make or break your year.
There are many factors to consider when deciding how to ship your small package shipments. You need an expert on your side. ParterShip manages shipping programs for over 140 associations, providing exclusive discounts on small package shipments to their members. To find out if you qualify or to learn how you can ship smarter, contact us today.
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Factors Contributing to the 2018 LTL Rate Increases
06/19/2018 — Leah Palnik
LTL freight rate increases are unavoidable. And in this current tight capacity market, it’s no surprise that many carriers have taken their general rate increases (GRIs) earlier than in previous years. Just like in the truckload market, costs are been driven up by the ELD mandate, the driver shortage, and hours of service (HOS) rules. Coupled with the strong U.S. economy, freight demand is surging and straining the market.
Along with the tight capacity market, trends towards shorter supply chains and smaller, lighter loads have led to more demand for LTL services. The rise of ecommerce has played a large role in the increased demand. Products that consumers never would have dreamed of ordering online years ago, like furniture, have now become commonplace for ecommerce. However, these types of shipments are less desirable for carriers. With more deliveries being made to more remote areas without backhaul opportunities, the costs are significantly higher for them.
With the driver shortage, it is easier for carriers to find and recruit LTL drivers, compared to truckload. They are more appealing jobs, with shorter lengths of hauls and less time away from home and families. However, there are fewer LTL carriers entering the market when compared to truckload. The complex networks of terminals that LTL carriers rely on are much more difficult to establish, making it a significant barrier to entry.
With all of those factors to contend with, LTL carriers have been announcing their GRIs throughout the first half of 2018.
- FedEx Freight: 4.9% effective January 1
- YRC Freight: 5.9% effective February 19
- XPO: 5.9% effective March 5
- UPS Freight: 5.9% effective March 26
- ABF: 5.9% effective April 16
- Estes: 5.9% effective May 7
- Old Dominion: 4.9% effective June 4
Rates aren’t the only thing on the rise. Many carriers are charging more for accessorials like inside delivery or Saturday delivery. Carriers are also implementing tools and technology that help them determine what types of freight are profitable and which ones aren’t – and charging accordingly. Dimensional pricing is one example of this. Many carriers have invested in dimensioning machines, which calculate the amount of space a shipment will need in the truck, leading to less dependency on the National Motor Freight Classification (NMFC) system.
As with any announced rate increases, the important thing to remember is that the averages may not reflect the actual increases you’ll see in your freight bills. Depending on the lane and shipment characteristics like weight or class, the increase could be significantly more.
To determine what you can expect and what you can do to offset the rising costs, start by taking a look at the increases for your typical lanes. That will give you a better idea of what cost increases you can budget for, rather than relying solely on the reported averages. Then determine ways to reduce those costs. Consider working with a freight broker, to benefit from their industry expertise. A quality broker will have the knowledge to help you navigate the market and will be able to find solutions that can help to reduce your costs.
PartnerShip can help you ship smarter. For a competitive rate on your next LTL shipment, get a free quote!
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High Freight Rates and Tight Capacity: What You Can Expect
01/22/2018 — Leah Palnik
If you’ve been experiencing sticker shock from unpredictable freight rates lately, you’re not alone. Shippers are seeing a lot of volatility in the truckload and LTL market, with no end in sight.
2017 ended with tightened capacity and record rates. By December, the average van rate was $2.11 per mile (DAT) – an all time high. The load-to-truck ratio was also breaking records at the end of the year, with 9 load postings for every truck posting in December.
Coming off of a record high December, capacity continues to be tight in January – particularly with reefers since they’re needed to keep freight from freezing in the coldest parts of the country. DAT reported that the national load-to-truck ratio at the beginning of the year was the highest ever recorded at 25.2 reefer loads per truck. During which, the reefer rate was at a high $2.71/mile. Van rates have also been breaking records. According to DAT, they were at $2.30/mile on January 6.
So what can shippers expect going forward? Let’s look at the trends. We saw a bit of a recession in 2015 and 2016 with rates and load-to-truck ratios declining, but that appears to be over. Rates climbed throughout 2017 and we can continue to expect increases in 2018.
Overall, the U.S. economy is healthy right now and is growing, increasing freight demand. In contrast, the trucking industry is dealing with the aftermath of the ELD (electronic logging devices) mandate. Not only do they need more drivers and more equipment on the road to handle the same amount of freight, but they are also contending with a long running driver shortage. All of this equals tightened capacity, which is becoming the new normal in the industry.
Recent weather events have been driving up rates as well. Areas of the U.S. that don’t typically experience extreme cold or snow have been hit by treacherous weather that has led to dangerous conditions including low visibility and icy roads. In a tight capacity market, these conditions drive up rates even more.
In February we can expect to see capacity loosen some (barring any winter storms or other troublesome events), as this is typically the slowest time of year for freight. However, you’re likely to see higher rates than you have in years past, because of the long-term trends.
In April, drivers not complying with the ELD mandate will be put out of service. Up until then, inspectors and roadside enforcement personnel are simply documenting and issuing citations if a truck isn’t equipped with the required device. As a result, we may see some ripple effects. There could be fleets that have held out or hoped to fly under the radar until April. There could also be another wave of trucking companies exiting the market, which will leave a void in the already tight market.
Now it’s more important than ever to find ways to mitigate the impact of this tightened capacity. Plan ahead so you can be flexible. Providing more lead time and giving your carrier a longer pickup window rather than a specific time can lessen the strain on its network. Planning ahead can also help you shift to more committed freight and away from the spot market. The spot market is more sensitive to disruptions and subject to reactionary pricing spikes.
Luckily you don’t have to navigate the freight market alone. When you work with PartnerShip, you benefit from our large network of carrier partners and our shipping expertise. We help you ship smarter with competitive rates and reliable service. Get a quote today!
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The 2018 FedEx and UPS Rate Increases: A Closer Look
11/20/2017 — Leah Palnik
With the New Year approaching, it’s time to look at the UPS and FedEx rate increases for 2018 and how they will affect your costs. In September, FedEx announced an average increase of 4.9% on Express and Ground services. UPS joined the party in October, announcing that they will also be increasing their rates by an average of 4.9%. The new 2018 UPS rates will take effect on December 24, 2017, while FedEx will be instating them a week later on January 1, 2018.
The averages might be the same, but the rates vary. With higher increases for some services and lower increases for others, you can’t budget based on your costs increasing 4.9%. It’s important to look at what services you use, your package characteristics, and the locations you’re shipping to, and then evaluate the new rate charts to find your biggest cost offenders from the 2018 FedEx and UPS rate increases.
On top of the FedEx and UPS rate increases for 2018, there are additional updates that are likely to affect your shipping costs. First, UPS is lowering its dimensional (DIM) weight divisor from 166 to 139 for domestic packages less than or equal to one cubic foot (1,728 inches) in size. With this change, UPS and FedEx are back in line with each other on how they calculate dimensional weight. Both carriers will now use 139 for all domestic and international packages.
It’s been a wild ride the past few years with multiple changes to which packages DIM weight pricing applies to and how it’s calculated, so this is a welcome stabilization. However, a lower divisor means a higher chance that your package will get billed at your DIM weight, rather than your actual weight. If you ship packages one cubic foot or under with UPS, it’s important to take note and make changes to eliminate any unused space in your packaging or consolidate orders when possible.
Surcharges are also increasing, with some at alarming rates. Most notably, in 2018 FedEx and UPS are coming after larger, oversized packages. Not only are they increasing at a higher rate than most surcharges, they are by far the most costly. For example, the FedEx Unauthorized Packages fee is increasing from $115 to $300 and the UPS Over Maximum Limits charge is increasing from $150 to $500. The shipping trends that have resulted from the rise of e-commerce has taken its toll on the carriers and they’re having to move more and more oversized packages that can’t go through their automated systems. Time is money, so they’re tacking on hefty fees to make up for it.
Ahead of the new FedEx and UPS rate increases for 2018, new holiday peak season charges will also apply. UPS is adding peak surcharges on domestic residential packages during the busiest shipping days of the year – from November 19 to December 2 and from December 17 to December 23. These fees will add up quick when you have an increased amount of orders over the holidays.
In a notable departure from UPS, FedEx decided not to add a peak season surcharge this season. Instead they opted to increase surcharges for packages that are big or bulky enough to require special handling. UPS is also increasing the cost of larger packages by adding additional peak season surcharges on top of the already existing surcharges. The 2018 UPS rate announcement included increases for these surcharges for the next holiday season, so you can expect this trend to continue.
The 2018 FedEx and UPS rate increases are proof that the carriers are getting smarter, hitting shippers where it hurts most. Luckily, you don’t have to navigate the changes alone. The shipping experts at PartnerShip have evaluated the new rate charts and we have completed a detailed analysis, so it’s easier for you to assess the impact on your shipping costs. Download our free white paper today!
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Truckload Rates Are Going Way Up. Are You Ready?
10/31/2017 — Jerry Spelic
Truckload shipping costs have been steadily climbing and are poised to go even higher because a perfect storm of events is pushing truckload rates to record highs: the looming Electronic Logging Device (ELD) mandate; the cleanup and aftermath of Hurricanes Harvey, Irma and Maria; and an already significant driver shortage that has stressed truckload capacity.