More carriers making accessorial charges stick: OTA

TORONTO, (Aug. 19, 2004) — A recent survey of motor carriers by the Ontario Trucking Association indicates that carriers are becoming more successful in tipping the expense side of the balance sheet back their way through accessorial charges.

Accessorial charges — or “behaviour-based pricing” as some carriers are dubbing it — have generally been more associated with LTL operations. But now they’re piquing the interest of the truckload crowd to cover costs associated with services that are over and above the standard movement of freight — the time that a driver spends waiting to load or unloaded at the dock or sitting idle at a congested border crossing, for example.

A survey conducted by the OTA indicates that 89 per cent of respondents openly inform their customers up front about what kind of accessorial charges apply when rates are presented. It also indicates that three-quarters of companies have fully recovered the intended costs by applying an accessorial charge initiative.

Ninety-eight per cent of respondents indicated that they charge some type of accessorial fee for downtime associated with driver wait time and/or accompanying tractor detention time. The vast majority (92%), charge by the hour at an average rate that approaches $60. In addition, reports the OTA, 80 per cent of respondents apply some type of accessorial charge for trailer demurrage, with the vast majority applying a daily rate which may be as high as $300, but averages out at nearly $70.

The OTA survey also shows that carriers are frequently asked to make additional pickups or deliveries. Eighty-five per cent said they apply additional charges for this service, with 93 per cent applying a flat fee, which could be as high as $300.

Over three-quarters of respondents indicated they charged for trucks that were ordered, and then not used. The survey also found that it is not uncommon for carriers to charge for specialized services such as temperature-controlled trailers, cargo protection such as tarps, or for weekend or statutory holiday service.

As for fuel surcharges, it was only a few years ago that the industry was fighting to just get them recognized, notes the OTA. Now, 97 per cent of respondents utilize a fuel surcharge to help offset the escalating cost of fuel.

Bob Gauthier, president of 16-truck overnight specialist Seaway Express in Corwall, Ont., says he’s in the camp of carriers who see invoices come back with less and less red ink these days. He estimates that in 2003, about 10 per cent of total revenue recovered was in the form of accessorial charges. That’s compared to only 3 per cent recouped in 1999.

“What used to worry me five years ago doesn’t bother me anymore, which was that my competitor is not charging for something and getting away with it,” he told Today’s Trucking in a recent interview. “There’s always the customer that’s going to switch carriers as soon as they get the first bill. But what we’re seeing is that they’re starting to run out of carriers that will do every little thing they want for nothing. So now they’re coming full circle. Many of them end up calling back because they’re finding the same thing everywhere they go.”