Surcharges in Contract negotiations

Surcharges: an integral part of carrier contract negotiations

by BlogCost Optimization

Are surcharges having a direct impact on your shipping costs? Is your company’s bottom line affected by additional fees? Then, it’s time to negotiate shipping surcharges as a part of the carrier contract negotiations. This blog will focus on the different kinds of shipping surcharges and their need to be a part of the carrier contract negotiations. Further, we will discuss the importance of third-party auditors in understanding shipping characteristics.

Surcharges

Surcharges are the additional fees applied by shipping carriers to each package. They appear on the shipping invoices along with the base shipping fee. Parcel carriers announce shipping rates and surcharges increase annually. If a business ships several packages, these surcharges will affect its profits. Moreover, as e-commerce is booming, businesses need to understand the surcharges in detail.

Surcharges are of different categories and depend on a company’s shipping characteristics. For example, a Ground package may cost 10 dollars, but an additional handling charge will cost 80 dollars extra. Shippers can opt for some services as extra charges. But, some surcharges are imposed by the shipping carriers, like fuel surcharges, due to volatile market fluctuations.

Shipping surcharges are many and may confuse many shippers. However, with the help of shipping analytics, common shipping surcharges can be predicted accurately. Shippers can use the predicting tools to manage shipments and reduce costs.

Here are some common surcharges imposed by parcel carriers

  • Demand surcharges

Demand or Peak surcharges will apply to packages shipped during the peak season. In addition, the service levels, shipping zones, and package weights are a part of the shipping invoice. Shippers can negotiate for these surcharges so they do not pay extra during the peak holiday season.

  • Additional handling surcharge

Shipping carriers such as UPS, FedEx, and USPS have additional handling charges as a part of the surcharges. They force the shipping surcharge on shippers depending on the parcel weight, dimensions, and packaging. While FedEx imposes shipping rates based on shipping zones, UPS does it based on the parcel weights. High-volume shippers can avoid this surcharge by negotiating in advance with fee reductions.

  • Address correction surcharge

This fee is applied when parcel carriers have to update the customer address for package delivery. Further, extra efforts and resources are required to amend the address and re-route the package. Shippers can avoid this surcharge by using different parcel carriers like USPS. Or, they can bargain for a surcharge discount during carrier contract negotiations.

  • Fuel surcharges

This surcharge is a variable fee that changes weekly depending on the market fuel prices. Fuel surcharges vary from carrier to carrier. Companies can negotiate for a fixed or variable fuel surcharge. In addition, shippers can choose the shipping carriers that offer discounts on fuel surcharges.

  • Residential surcharges

This fee is for Package delivery to a home or private residence. Shipping carriers charge additional fees as there are few package deliveries to residential areas. If there are several residential deliveries for some businesses, they can negotiate for a surcharge discount.

  • Delivery Area Surcharge

This surcharge is applied to packages when the package delivery is for remote locations or distant ZIP codes. Shippers have to evaluate their strategies for the delivery of packages. Negotiating with parcel carriers on discounts for this surcharge is possible with the relevant shipping data in real time.

  • Saturday or Sunday Delivery surcharge

Weekend deliveries are costly for shippers and are passed onto the customer frequently as part of the shipping costs. It may lead to customer dissatisfaction and loss of business. Shippers can opt for USPS, which does not charge for weekend shipments, and gain benefits.

The above are a few of the common surcharges. Different shipping carriers have several names for shipping surcharges. So, to understand the shipping surcharges, businesses have to ask for discounts at the negotiating table. Shippers keep their shipping data handy when asking for a surcharge discount from the parcel carriers. For reliable assistance in negotiating shipping surcharges, opt for services from Audintel.

Carrier contract negotiations made easy with Audintel.

It’s common knowledge that surcharges increase annually for all parcel carriers like FedEx and UPS. Some parcel carriers allow discounts for some shipping zones and services. But do businesses know which parcel carriers provide the best surcharge discount for their shipping characteristics? Experts like Audintel guide shippers to negotiate for the best surcharge discounts with shipping carriers. We get statistics for clients like shipping zones, Dimensional weights, and more to help them in carrier contract negotiations. Audintel keeps track of the surcharges of the parcel carriers and aids shippers in negotiating for a lower rate.

To sum it up

Shipping surcharges are part of additional fees imposed on some shipments by parcel carriers. Businesses shipping packages require to pay additional fees to shipping carriers. However, with data-driven information, shippers can negotiate surcharge discounts at the negotiating table. Audintel empowers its clients with innovative solutions to reduce shipping surcharges and boost profits. To know more about shipping surcharges and ways to minimize shipping costs, contact us at +1 (619) 354 8539 or visit our Audintel website.

global freight audit

LTL and TL shipping rates: know more to lower shipping costs

by BlogFreight Audit

Speed is the need of the hour for e-commerce giants such as Amazon. Companies that deal with high shipping volumes opt for faster, cheaper ways of freight transport. Depending on the specific freight requirements, companies opt for the mode of freight shipping. Freight transportation by land is by trucks and sometimes rail.

According to the Bureau of Transportation Statistics, “trucks carry most of the tonnage and value of freight in the United States.” In addition, many factors impact trucking freight rates of shipments. This article discusses LTL and TL freight shipping modes and shipping rates. Further, we focus on picking the right freight services to save on shipping costs.

So, let’s learn about LTL and TL shipping rates, but before that

What are TL and LTL shipments?

TL (or FTL) is Truckload or full Truckload shipments. Shipments that require the entire truck are Full Truckload or Truckload freight. A whole truck will exclusively move the shippers’ goods, whether full or half empty. Shippers opt for TL freight when they want their goods to reach their destination in time or when volume of goods shipped is more.

Less-Than-Truckload shipments are known as LTL shipments. Multiple shippers share a single truck to ship their goods. It is ideal for small e-commerce businesses that do not send goods in bulk or want to save money.

TL shipping rates

TL freight delivery is faster and requires less intermittent stoppage. The Full Truckload prices are more predictable than LTL shipping prices.  Further, Truckload shipping rates are easier to calculate from origin to destination. However, factors affecting TL shipping rates include:

  • Mileage

The cost of any shipment depends on the distance it travels. Longer distances incur higher charges due to the high amount of fuel used in delivery, driver time, etc.

  • Capacity

The capacity of trucks shrinks when the trucks are booked ahead for the movement of seasonal fruits and vegetables. Refrigerated trailers, also known as reefer trailers, are set at specific temperatures to ship dairy goods, flowers, fruits, meat, vegetables, and more. These truckload shipments are slightly more expensive due to special conditions such as temperature control.

  • Peak season surcharge

Shippers face a rise in shipping rates during holidays like Thanksgiving and Christmas due to the high demand of consumers. Peak surcharge by shipping carriers raises shipping rates.

  • Flexibility and timing

Shipping rates increase if shipping carriers do not have the flexibility to ship goods, In addition, weekend pick up and odd hour timings will cost more for shippers.

  • Fuel surcharges

Shipping carriers charge fuel surcharges based on the market price of diesel. The government-approved fuel charges change weekly.

  • Accessorial charges

Accessorial charges are expenses incurred for additional work done by shipping carriers, like handling charges, extra attention to freight in loading/ unloading, etc.

TL shipping rates change with the current market and fluctuate even within a day or hour. They also vary from carrier to carrier. And so, choosing the correct shipping carrier is essential for businesses to save money.

LTL shipping rates

LTL shipments are cost-saving as shippers only pay for the space their goods occupy in the truck. LTL freight shipping has frequent pick-ups/ drop-offs at multiple locations, hence longer transit time. As a result, LTL shipping rates are complex and not easily understood by shippers. Nevertheless, the calculation of Less-Than-Truckload shipments depends on a few factors, such as:

  • Weight

LTL freight is consolidated into pallets to protect goods in transit. The weight of LTL pallets is usually between about 100 and 10,000 lbs. The heavier the shipment, the less it will cost per hundred pounds (CWT), but the total cost will increase. Most LTL class rates have six-tiered weight break-off points, including the minimum charge per shipment.

  • Density

The density of LTL freight’s calculation involves dividing the weight of the shipment by volume (length x width x height – DIM Factor). Lower density shipments take more space in the truck and will cost more. The density of LTL shipments increases or reduces LTL shipping rates.

  • Freight Class

Each trucking shipment has a freight classification that affects the trucking rates. In the US, the National Motor Freight Classification (NMFC) has 18 cargo classes ranging from 50 to 500. Determination of freight class is by value, handling, stowability, and liability. The higher the freight class, the more expensive the shipment.

  • Distance

Shipping rates depend on the distance of each shipment. Long distances are more expensive. Shippers need to know the origin and destination zip codes to reduce shipping costs. In addition, knowledge about the shipping lanes or routes having high traffic is essential.

  • Accessorial Charges

Extra services cost more and are a part of accessorial charges. Special fees for pick up or delivery from remote locations, weekend delivery, special handling charges, and fuel surcharges are expenses that contribute to shipping rates.

LTL shipping rates vary from carrier to carrier. Choosing the shipping carrier for LTL shipments is critical for saving money for businesses.

How Audintel helps you choose freight shipping mode and rates

After seeing the above two freight options, it becomes difficult to decide which shipping mode is the best for your business. For this reason, partnering with an audit company, Audintel, benefits shipping businesses to a great extent. Our team monitors the TL and LTL freight shipping rates and guides shipping businesses. We audit fuel surcharges applied by carriers to TL or LTL shipments. Our team of experts helps shippers negotiate the best freight shipping rates with shipping carriers. Further, Audintel helps its clients track, monitor, audit, contest with carrier in case of dispute their freight shipments so that there is no loss of revenue.

To Summarize

LTL and TL shipping rates depend on the shipper’s freight requirements. While LTL shipping mode is appropriate for businesses with smaller loads, it is better to know the shipping rates of TL if the load occupies more than half truckload space. Alternatively, TL shipments reach on time, but they cost more. Partnering with Audintel will help you find a balance in choosing LTL and TL shipping modes and managing their shipping rates. You can reach us for further discussions or you can call us at +1 (619) 354 8539. Further, you can also learn about our services on Audintel website.