ACCESSORIAL SERVICES

Fort Erie, ON – January 2004 – The Freight Carriers Association of Canada’s Tariff Advisory Committee (TAC) and North American Transportation Council’s General Rate Committee (GRC) recently recognized that many shippers, consignees and carrier employees needed to acquire a better understanding of tariff rules, accessorial services and accessorial charges.  In order to provide assistance in promoting a better understanding, in this and subsequent newsletters, we plan to highlight a specific rule and related accessorial services and charges, what the service entails and why it is important to capture the information necessary to bill the customer for the service.  We will approach the project by treating first the accessorial services that have the best possible payoff and/or the easiest to implement.

INTRODUCTION

Services performed by a motor carrier “over and above” picking-up, transporting and delivering freight are commonly called “accessorials”, for which a separate fee should always be charged.  They are sometimes called “Value Added Services” to help customers better understand them and accept the cost associated with them.  For may years, accessorial charges have been published in “Rules Tariffs”, which provide the conditions and circumstances under which such fees apply.  FCA publishes Rules Tariff No. 100 and NATC publishes Rules Tariff No. 172 which contains generally applicable rules and related accessorial charges.  These rules tariffs are continuously updated as market conditions evolve.

Some carriers have adapted these rules tariffs to fit their circumstances and maintain their own rules and accessorial charges while many rely on FCA or NATC tariffs.  The latter group of carriers are using either general application items or request publication of variances for their own account.  In any event, FCA and NATC rules tariffs are an excellent source of information and guide for carriers and users of transportation services.

Important points to remember regarding accessorial services are as follows:

• Any deviation from normal operations most always entails additional costs;
• Regardless of whether a fee is charged or waived, the cost of providing these services still remains.
• Accessorial services are generally required by the shipper or consignee  and sometimes necessitated  by the type of freight.  This is why a “user pay” approach is the most efficient way to deal with them since they cannot, and should not, be incorporated into a rate structure.

We are beginning this new program with an accessorial charge that is often forgotten or ignored since it is a service provided by default and not one that is specifically requested by the shipper or consignee:
 

Delay at Pick-up or Delivery

Additional costs are due to:
• Cost of idle time for the driver and vehicle.  Every minute over the time normally allotted to pick-up or deliver a shipment is non productive time which entails costs that are not included in the carrier’s rates.
• Cost of “Lost opportunity”.  While the truck and driver are idle they are unavailable to perform revenue producing services.
• Cost of subsequent late or missed pick-ups or deliveries.  Delays most always cannot be made up so they have a snowball effect.  This causes the carrier to be late for subsequent pick-ups or deliveries or to miss them entirely. The harm caused to good customer relations or goodwill is immeasurable but nevertheless a very real and important cost.

To facilitate the recovery of costs related to excess delays, shippers’ and consignees’ dock employees should be informed of the “free time” allotted to pick-up or deliver shipments of various sizes and be aware that they will be systematically billed for any time excess time.

TIME ALLOTMENT FOR PICK-UP & DELIVERY
A generous time allotment is provided to ensure adequate time for pick-up and delivery of your shipments.  Should the actual time exceed…the following charges will apply.

A portion of the FCA Detention / Waiting Time rule is as follows.  Please refer to FCA’s Tariff 100K – Item No. 320 for the complete rule.  When due to no disability, fault or negligence on the part of the carrier, the loading and/or unloading of freight is delayed beyond the free time allowance, the following charge will be assessed the consignor or consignee in addition to all other lawful charges:
 

Billed Weight	Free Time
0 – 500 lbs.	15 minutes
501 to 4,999 lbs.	30 minutes
5,000 lbs. and over	1 hour
Beyond the free time by weight	$50.00 per hour

In order to recover the cost of excessive delays, the carrier’s billing personnel must first be aware that they occurred.  It is important to implement the necessary procedures, systems and training to ensure best possible chances of collecting the additional charges.  The following steps may serve as a guide on how to proceed:
 

• Meet with traffic and sales personnel to explain what the intent is, what the proposed charge is and why it is necessary.  Show and explain the costs associated with performing the service.
• Require sales staff to inform customers of the pick-up and delivery time allotments and the additional charges associated with excess delays.
• Implement a system that will gather the information required to bill the customer if free time is exceeded.  Billing the customer on the original invoice improves the success rate in collecting the charges.  One approach is to require drivers to write the arrival time and the time of departure on the bill of lading prior too obtaining the signature thereby ensuring the customer acknowledges the time elapsed.
• Put systems in place that will allow the charge to be calculated and billed systematically: i.e.  (total time – free time + grace period (if applicable) x hourly charge.
• Review amounts being billed so as to become familiar with the “repeat offenders” or extraordinary circumstances where the additional charges should be waived.
• Follow-up with shippers/consignees to ensure future delays are eliminated.

As an industry it is important that we charge for all the services we perform.  Consistently charging the customer for excessive delays at pick-up or delivery can serve as a deterrent and incite shippers and receivers to implement modifications that will eliminate the practice.   Both carrier and customer would benefit from such a change.  The industry’s thin operating margins do not allow it to absorb these additional costs.

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