Shippers Told to Pay Up

Jerry Moyes, chairman, president and CEO of Swift Transportation and a vice president of the American Trucking Associations opened the National Industrial Transportation League (NITL) annual meeting with an only slightly veiled plea for shippers to pay more, saying in part, “driver shortage cost has to come from cooperation with shippers.” In a later session addressing accessorial charges, shippers raised questions about what should be part of the transportation rate and just how much shippers should pay of accessorial charges.

“Are we paying for requested services?” asked Richard Macomber, strategic distribution projects manager, IBM Corp. “How do we know the work was actually performed?” he continued. Macomber offered some arguments to differentiate between work actually completed and revenue-generating accessorial charges. Security surcharges should be resisted, he said, citing a freight forwarder association’s advice to its members. It’s a cost of doing business, he argued. But infuriating to Macomber a case where a driver with an appointment to deliver a shipment to dock 7 of a distribution center was redirected to dock 33. Macomber questioned the redelivery charge and the carrier responded, “How do you expect me to make money on this shipment?”

Macomber continued, saying not all fuel surcharges should be passed through to shippers. He said shippers need to agree to pay for value added services, but there should be some standardization – even within he shipper’s organization. He pointed to a 50% turnover rate in logistics buyers and the confusion that creates. His own organization lists 33 different accessorial charges in surface contracts and another 23 in air contracts. When he looked at carriers’ service guides, he found one carrier listed 112 different accessorial charges and another lists 99.

He said shippers are willing to pay for requested extra services, but he doesn’t expect to be nickel-and-dimed on the rate – especially for things that should be in the rate itself.

Addressing the issue from a rail shipper’s perspective, Doug Kratzberg, rail transportation manager for ExxonMobil Global Services Co., said shippers have expressed concerns for years with no significant progress in addressing issues. Offering as justification for change, he said processing accessorials is a very manual process that creates billing accuracy concerns. While there is a lack of timely and accurate payment of accessorials, he echoed Macomber’s question, “Did the work actually get done?” stating that verification is a very difficult process.

Kratzberg called for the process of charging accessorials to be reengineered and simplified. The industry needs to develop a standard for submitting and handling accessorials electronically. Any effort on the issue will not address the charges and rate levels out of concern for antitrust issues that must be considered when a number of carriers are involved.

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