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The Refund of the Jedi (Part 3)

By September 8, 2017

 

What percentage of my shipping costs are made up of accessorial fees?
Accessorial fee surcharges for additional, supplemental or value added services can easily account for up to 40 percent of your overall FedEx or UPS invoice costs. After doing some research with our own data, we found something interesting. FedEx invoices consistently proved to have higher percentage of accessorial fees over similar sized UPS invoices. Our random sample data for FedEx produced a 25 to 35 percentage accessorial fee cost from the invoice total. UPS invoices produced an 8 to 16 percentage accessorial fee cost from each individual invoice. The chart below will show you many different invoices that we split into three main categories: transportation charges, fuel surcharges, and accessorial fees.

 

 

This leads us to another question, does FedEx charge for more fees as a whole or are the fees charges just more expensive than UPS? This is a topic we will explore in depth down the road. Fuel surcharges are also a key component of your accessorial charges. It will typically account for 3 to 6% of the total invoice cost as you can see from our sample data.

How to reduce accessorial fees:
The initial step is to quantify the financial impact of accessorial or value added surcharges on your invoices. How much of your yearly shipping cost goes to additional fees? After identifying the scope of impact on your business, you’ll have the capacity to distinguish which accessorial are avoidable. Finally budget for the accessorials that you cannot avoid so that there are no surprises on your bill at the end of the month. In terms of accessorial surcharges, here are a few things you need to know:

  1. What percentage of your cost per package is made up of accessorial?
  2. Is there a trend? Is that percentage trending higher? Have there been any recent spikes or unexpected drops?
  3. Which accessorial charges have the the largest impact. Which occur most frequently? Which is costing the most?
  4. Is there a specific class of service that attracts more accessorial charges than others, or on specific accounts?

 

Your own shipping data is the best weapon available to you to reduce budget-busting impact of these additional charges. Refund Retriever’s free logistic reporting which is included with our parcel audit can determine what accessorial charges have the largest cost of transportation impact. Regardless of whether it’s a UPS audit or FedEx audit, you’ll see that there are more than 100 of these accessorial charges, comprise roughly 10 to 40 percent of your overall shipping costs. 

All accessorial charges are negotiable, so review those with the carrier. But make sure the fee reduction you negotiate has an impact on your shipping costs. Some clients will ask for lower additional handling or address correction fees, then reduce the usage of the fees internally so there is no quantifiable reduction from the previous negotiation. If you want a $.50 reduction in your residential surcharge fee, know exactly how many packages that will affect and how much it will save you in one year. In addition to late shipment refunds, Refund Retriever can assist you in the negotiation process with your carrier reductions by targeting specific discounts and concessions. We can help identify the biggest bang for the buck.

Since 2006, Refund Retriever’s parcel audit refund technology has been providing business shippers the transportation insight they need to reduce logistics and freight spending.  We thoroughly understand today’s complex carrier pricing environment and have helped large and small business shippers achieve best in class pricing.

Part 1 / Part 2

Brian Gibbs

Author Brian Gibbs

More posts by Brian Gibbs

Brian Gibbs | President of Refund Retriever

Brian Gibbs founded Refund Retriever in 2006 while running his first eBay based business and seeing the shortcomings of other shipment auditing companies. Refund Retriever's primary focus is FedEx and UPS parcel invoice auditing. After graduating from Texas A&M University in 2001, he then graduated from the University of Houston in 2004 with a JD and MBA. Gibbs has been featured in Forbes, Entrepreneur and other publications discussing parcel auditing, shipping, e-commerce and more. Learn more at www.refundretriever.com or call (800) 441-8085 for more information.

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