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Study Identifies Trends in Freight Charges for Shippers

January 27, 2014

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A new study provides insight into the changes and trends in transportation accessorial charges paid by shippers

The third party logistics provider Transplace has released the results of its annual benchmarking study that includes data from more than 150 shippers, representing more than $12 billion dollars in annual freight spending.

It identifies the customary types of charges and rates paid by shippers beyond the basic linehaul fees.

“Market-driven benchmarks equip transportation professionals with the knowledge they need to best understand their cost position relative to the freight marketplace and position themselves to better optimize  their procurement efforts,” said Ben Cubitt, senior vice president, consulting & engineering for Transplace.

The study revealed that fuel surcharge is the most common accessorial published by shippers, 93% of companies in the study, with the vast majority utilizing a cents-per-mile-based schedule versus a percentage-based fuel method.

For those companies using the cents-per-mile schedule, most still peg their fuel surcharge starting point around the traditional $1.17 to $1.24 range. The vast majority are almost evenly split between five cents and six cents increments beyond the starting peg. The trend is towards 6 cents brackets, recognition of both the increasing burden of fuel in overall transportation costs and the significant increase in average miles per gallon for truckload carrier’s fleets over the past few years, according to the study.

Intermodal fuel surcharges were also included in the study, showing the surcharges between the truckload and intermodal can vary as much as 33 cents and as little as 12 cents.

“A minority of shippers are using the same surcharge programs for intermodal as for truckload, when an optimized intermodal fuel surcharge is generally half that of the truckload fuel surcharge. This indicates that they still have not built into their fuel surcharge schedules the full economic efficiencies of intermodal versus truckload moves,” said Cubitt.

The study also found detention is an important accessorial to manage. Not only is this accessorial important for carriers to manage, but also shippers, who need to examine their detention policies to ensure they are not requiring nonstandard load/unload times for carriers, which could result in penalties and overall access to carrier capacity, according to the study.

It revealed 81% of companies are keeping to the accepted industry standard by allowing two hours free detention, with only 5% of companies allowing less than two hours Two out of three pay in increments of 15 minutes, with an additional 26% of companies paying by the hour. This is up slightly from the 2011 study, which reported 60% of companies paying in 15 minute increments and 30 percent paying by the hour

The study also revealed detention charges have remained stagnant over the last two years, ranging from $25 to $90 per hour, with most shippers allowing $60 per hour.

Stop-off charges for truckload service, were compared for stops one to four on a given load. Fifty-six percent of shippers claimed an increasing charge per stop scale, while 43% held a flat charge per stop, charging various levels between $50 and $100. The most common stop-off charge is $100 for the first stop, $150 for the second stop, and $250 for every stop thereafter. This reveals shippers are migrating away from low, flat stop-off charges, which do not accurately reflect the carrier’s cost per stop, according to the study

For shippers that do not use a truck to which they tendered a load, “truck order not used” charges typically apply. The study showed that of the 64% of shippers who apply these charges, 43% utilize a $250 charge, with $150 being the second most common level at 39%.

 

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