Freight Cost Reduction? Consider Standardization of Assessorials
by Nico Scopelliti
A recent survey of shippers indicated that their #1 goal was Freight Cost Reduction. This seems to be a perennial goal for shippers dating back to the beginning of time, and many find it challenging to achieve. One often overlooked area is the opportunity to standardize assessorial charges across the various carriers and modes they utilize.
It doesn’t matter whether you are looking at purely domestic or purely international, or a combination of both. If you are a shipper using multiple carriers that provide similar assessorial services, then ask yourself this question: “Who is dictating the assessorial charge that I am paying?” Do you just blindly accept whatever the carrier's stated tariff or contract rate is? Do all carriers charge the same rate for the same service? Have you ever challenged the carrier's rate(s) and stated what you are willing to pay for a specific service?
Let’s take a simple example that many shippers should be able to relate to — lift gate service. If you are using multiple carriers and require them to provide such a service, it is very likely that a review of the rates charged by the various carriers for lift gate will reveal that their rates vary. The charges might range from “waived” to $125 or more. It might range from a flat charge per trip to a charge per stop. While this may not seem like much on an individual shipment basis, over time it can add up to 5%–10% of your total operating expense.
Now consider the positive cash flow implications of standardizing the assessorial charge at a rate that you are willing to pay AND that is equitable to the carrier. Let's say that rate is $35 per trip for lift gate service capability. Note that lift gate service may not be a requirement for every trip or stop. BUT, it is absolutely necessary for certain customer deliveries. This type of detail consideration helps identify an acceptable standard assessorial charge that both parties can agree to and live with.
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