A lot of small equals big. Without innovative strategy and a watchful eye, accessorial charges quickly add up, whittling away at your profits. Consequently, it is important to partner with logistics service providers that will work hard to ensure your bottom line does not suffer from these avoidable extra costs.
Accessorial charges present obvious complexities, but understanding how they are trending can empower logistics management teams to reach new standards in mitigating these add-ons. To that end, Transplace’s Consulting & Engineering team recently conducted the Accessorial Benchmarking Project – a study that revealed accessorial charge trends by identifying the most common core and miscellaneous charges, the percentage of shippers actually billing those charges, and the rates they are charging. These insights not only assist in negotiating transportation spends on the front end, but also serve to inform transportation management strategists where to focus their efforts in avoiding them altogether.
For example, a global consumer packaged goods shipper used the accessorial benchmarking data to evaluate and optimize its fuel surcharge program, realizing over $3 million in annual transportation cost savings. The study allowed them to benchmark their program against the emerging industry standard, which led to a fast-paced initiative to close this gap. The benchmarking data also allowed them to make changes in their program with confidence that the changes were aligned with standard industry practices and would not alienate or take advantage of their core carrier partners.
Simply knowing the trends, however, is not enough. It’s what your transportation partner does with that information that matters. While the intricacies of your product category will dictate what accessorial charges are most relevant to your transportation spend, your 3PL’s logistics technology will determine how well they can protect your bottom line. For example, if the trends show that a combination of detention and stop off charges along with lumper maximum, undelivered loads, and re-delivery charges pose the highest probability of hurting your bottom line, your 3PL partner should use transportation management and order management software to plan the most efficient routes. In addition, your 3PL’s transportation management system must provide complete transparency to maintain open lines of communication and enable them to proactively address potential charges.
Bottom line: Choose a logistics service provider that utilizes innovative technology, provides complete transparency, and benchmarks their efforts to provide the best value for your transportation spend.
Ben Cubitt is Senior Vice President, Consulting & Engineering at Transplace. With more than 20 years of industry and consulting experience in freight optimization, Mr. Cubitt has a deep familiarity with the freight procurement field working for consulting firms and multiple Fortune 500 companies in the consumer products, paper and automotive industries. Mr. Cubitt has led and assisted with bid projects for companies such as MeadWestvaco, Kellogg’s, The Home Depot, Colgate-Palmolive, RockTenn and McCormick Foods. Mr. Cubitt joined Transplace in July 2010 after four years as Vice President, Supply Chain for RockTenn Corporation. At Transplace he leads the engineering and consulting teams. He has been a CSCMP member for more than 20 years and has served as a track chairman at the CSCMP Annual Global Conference.
A version of this post was originally published on Transplace’s Logistically Speaking blog.
Guest Commentary: Winning the Logistics Battle Against Accessorial Charges
A lot of small equals big. Without innovative strategy and a watchful eye, accessorial charges quickly add up, whittling away at your profits. Consequently, it is important to partner with logistics service providers that will work hard to ensure your bottom line does not suffer from these avoidable extra costs.
Accessorial charges present obvious complexities, but understanding how they are trending can empower logistics management teams to reach new standards in mitigating these add-ons. To that end, Transplace’s Consulting & Engineering team recently conducted the Accessorial Benchmarking Project – a study that revealed accessorial charge trends by identifying the most common core and miscellaneous charges, the percentage of shippers actually billing those charges, and the rates they are charging. These insights not only assist in negotiating transportation spends on the front end, but also serve to inform transportation management strategists where to focus their efforts in avoiding them altogether.
For example, a global consumer packaged goods shipper used the accessorial benchmarking data to evaluate and optimize its fuel surcharge program, realizing over $3 million in annual transportation cost savings. The study allowed them to benchmark their program against the emerging industry standard, which led to a fast-paced initiative to close this gap. The benchmarking data also allowed them to make changes in their program with confidence that the changes were aligned with standard industry practices and would not alienate or take advantage of their core carrier partners.
Simply knowing the trends, however, is not enough. It’s what your transportation partner does with that information that matters. While the intricacies of your product category will dictate what accessorial charges are most relevant to your transportation spend, your 3PL’s logistics technology will determine how well they can protect your bottom line. For example, if the trends show that a combination of detention and stop off charges along with lumper maximum, undelivered loads, and re-delivery charges pose the highest probability of hurting your bottom line, your 3PL partner should use transportation management and order management software to plan the most efficient routes. In addition, your 3PL’s transportation management system must provide complete transparency to maintain open lines of communication and enable them to proactively address potential charges.
Bottom line: Choose a logistics service provider that utilizes innovative technology, provides complete transparency, and benchmarks their efforts to provide the best value for your transportation spend.
Ben Cubitt is Senior Vice President, Consulting & Engineering at Transplace. With more than 20 years of industry and consulting experience in freight optimization, Mr. Cubitt has a deep familiarity with the freight procurement field working for consulting firms and multiple Fortune 500 companies in the consumer products, paper and automotive industries. Mr. Cubitt has led and assisted with bid projects for companies such as MeadWestvaco, Kellogg’s, The Home Depot, Colgate-Palmolive, RockTenn and McCormick Foods. Mr. Cubitt joined Transplace in July 2010 after four years as Vice President, Supply Chain for RockTenn Corporation. At Transplace he leads the engineering and consulting teams. He has been a CSCMP member for more than 20 years and has served as a track chairman at the CSCMP Annual Global Conference.
A version of this post was originally published on Transplace’s Logistically Speaking blog.
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