Picture this: You’re a logistics manager at a growing business, trying to make sense of your shipping costs. You thought you had it all figured out—your budget, your timelines, your routes. But then you get the bill, and it’s higher than expected.
Enter the world of intermodal accessorial charges. These are the hidden fees that can creep up and wreak havoc on your carefully planned budget without proper planning.
If you’ve ever felt frustrated or blindsided by unexpected shipping costs, you’re not alone. We see situations like this all the time and we’re here to help you navigate these tricky waters to help you stay focused on your supply chain cost, capacity, and sustainability goals.
We touched on the topic of intermodal accessorials in a recent article and thought there was more to say about common accessorials that we often see hold people back from using intermodal in their logistics strategy.
By the end of this article, you’ll walk away with a clear understanding of the 10 most common intermodal accessorial charges, what they mean for your business, and most of all … how to manage or even avoid them.Â
Top 10 Most Common Intermodal Accessorial Charges
Detention
Demurrage
Storage
Chassis Usage
Per Diem
Pre-Pull
Peak Season
Overweight
Scale Ticket
Flip Charges
Detention Charges
What Are Detention Charges?
Detention charges occur when a truck is held up longer than the allotted free time during loading or unloading. Think of it like a taxi meter running while the driver waits for you to finish your errands. Typically, there are two free hours at origin and another two free hours at destination before charges begin.
How Detention Charges Affect Your Shipping Costs
Every minute beyond the free time costs you money, adding up quickly and inflating your shipping expenses. These charges can range from $50 to $100 per hour, depending on the carrier and the circumstances.
Best Practices to Avoid Detention Charges
Pre-load and Pre-unload: Have your goods ready to go before the truck arrives.
Utilize a Drop Pool: Another method to have your product ready for your freight driver.
Efficient Scheduling: Plan your pickups and deliveries during off-peak hours to help ease the pressure on your operations team to avoid delays.
Clear Communication: Keep an open line of communication with your carrier to update them on any potential delays.
Demurrage Charges
Explanation of Demurrage Charges
Demurrage charges are fees incurred when your cargo stays at the terminal beyond the free time allowed. Imagine leaving your luggage at the airport for too long and being charged for it.
Impact of Demurrage Charges on Shipping Budgets
These charges can quickly escalate, often costing $75 to $200 per day. They can significantly impact your bottom line if not managed properly.
Tips for Minimizing Demurrage Charges
Monitor Shipment Status: Use tracking tools to stay updated on your shipment’s status.
Timely Pickup: Ensure that your goods are picked up within the free time to avoid additional charges.
Efficient Documentation: Have all necessary paperwork ready to expedite the process.
Storage Charges
What Constitutes Storage Charges in Intermodal Shipping?
Storage charges apply when your cargo remains in the terminal’s storage facilities beyond the free period. It’s like paying for parking when you leave your car in a lot for too long.
Comparing Storage Charges: Intermodal vs. Truckload
While both intermodal and truckload shipments can incur storage charges, intermodal tends to have more structured free time and clearer guidelines, potentially reducing the risk of unexpected fees.
Strategies to Reduce Storage Charges
Prompt Retrieval: Arrange for timely pickup of your cargo.
Monitor Shipment Status: Another instance where using tracking tools to stay updated on your shipment’s status is worthwhile.
Efficient Coordination: Work closely with your logistics team to ensure smooth transitions.
Pre-arranged Storage: If you anticipate delays, arrange for extended storage in advance to get better rates.
Chassis Usage Fees
Understanding Chassis Usage Fees
Chassis usage fees are charged when a chassis, the framework that holds and transports your intermodal container, is used beyond the free period. It’s like renting a dolly to move heavy furniture and being charged if you keep it too long.
How Chassis Fees Influence Overall Freight Costs
These fees can add up, especially if the chassis is in high demand or you need it for extended periods. They typically cost $20 to $40 per day.
Managing Chassis Usage to Cut Costs
Return Chassis Promptly: Return the chassis as soon as possible to avoid extra charges.
Plan Ahead: Schedule your container moves to minimize the time a chassis is needed.
Chassis Pooling: Consider using chassis pools, which can offer more flexibility and lower costs.
Per Diem Charges
Explanation of Per Diem Charges
Per diem charges are daily fees for using a carrier’s equipment beyond the free time. It’s like paying daily rent for a piece of equipment you borrowed.
Financial Impact of Per Diem Charges on Freight Operations
These charges can quickly accumulate, ranging from $25 to $100 per day depending on the equipment and carrier.
Ways to Manage and Mitigate Per Diem Charges
Efficient Turnaround: Ensure quick loading and unloading to return equipment promptly.
Track Free Time: Keep track of free time allowances to avoid unintentional overruns.
Communicate with Carriers: Negotiate longer free time periods if you anticipate delays.
Pre-Pull Charges
Explanation of Pre-Pull Charges
Pre-pull charges occur when a container is picked up from the terminal and stored temporarily off-site before final delivery. It’s like moving your belongings to a storage unit before finding a permanent home.
Situations Where Pre-Pull Charges Apply
These charges typically apply when there are delays at the final destination, or when the terminal needs to clear space. Under the thinking of minimizing accessorial fees, your intermodal provider may suggest this action and fee if your destination location absolutely cannot take the delivery and storage is the only alternative.
The reason to take this step is because pulling the container from the intermodal ramp to an off-site storage location is significantly less expensive than fees associated with on-ramp storage.
Strategies to Minimize Pre-Pull Charges
Coordinate Timing: Ensure your delivery location is ready to receive the container.
Efficient Planning: Avoid delays by planning the final delivery in advance.
Use Off-Peak Times: Schedule pre-pulls during off-peak times to reduce costs.
Peak Season Surcharge
What Is a Peak Season Surcharge?
Peak season surcharges are additional fees charged during high-demand periods. It’s like paying more for a hotel room during a popular holiday.
Impact of Peak Season Surcharges on Shipping Costs
These surcharges can significantly increase shipping costs, especially during holiday seasons or industry specific peak times.
Tips for Planning and Budgeting for Peak Season Surcharges
Plan Ahead: Schedule shipments before or after peak seasons.
Budget Accordingly: Include peak season surcharges in your budget planning.
Negotiate Rates: Work with carriers to negotiate better rates during peak seasons.
Put the Intermodal Lane Under an Annual MCP Contract: An annual MCP (Mutual Commitment Program) agreement guarantees the shipper its rolling 8-week period demand throughout the peak season, thus reducing the risk of being hit with a peak season charge. The rate would only come into play if the shipper went over its weekly allowance, then only those containers over the allowance would be hit with the peak accessorial.
Scale Ticket Fees
What Are Scale Ticket Fees?
Scale ticket fees are charges for weighing your shipment. It’s like paying to use a public scale to weigh your vehicle.
Situations Requiring Scale Ticket Fees
These fees are often required when shipping companies need to verify the weight of cargo to comply with regulations or ensure safe transport.
Tips for Handling Scale Ticket Fees
Pre-weigh Shipments: Weigh your shipments in advance to avoid surprises.
Have a Scale on Premises:Â If all or a majority of all shipments need to be scaled, then it may make sense to install a scale at the origin facility.
Accurate Documentation: Provide accurate weight details to reduce the need for additional weighing.
Choose Reliable Facilities: Use certified and reliable weighing facilities to avoid discrepancies.
Overweight Charges
Explanation of Overweight Charges
Overweight charges apply when your shipment exceeds the weight limits set by the carrier or by state, federal and international (if applicable) regulations. It’s like paying extra for overweight luggage on a flight.
How Overweight Charges Affect Freight Costs
These charges can be substantial, potentially doubling the cost of shipping if your cargo is significantly overweight and requires the shipment to be re-worked.
Tips for Avoiding Overweight Charges
Accurate Weighing: Weigh your cargo accurately before shipping.
Proper Distribution: Distribute weight evenly to avoid overloading.
Block & Brace: Weight needs to be not only legal on gross, but also per axle – making it imperative to block & brace an intermodal load to ensure product does not shift in transit.
Know the Limits: Be aware of the weight limits set by your carrier, DOT, and individual states.
Flip Charges
What Are Flip Charges?
Flip charges, also known as lift charges, are fees incurred when a container needs to be flipped from one chassis to another.
How Flip Charges Affect Your Shipping Costs
Flip charges charges typically range from $75 to $150 per flip, depending on the terminal and the specific requirements.Â
When Flip Charges Apply
Flip charges commonly apply in situations where:
The wrong type of chassis is initially used for a container.
The chassis is damaged.
Terminals require containers to be on specific chassis types for storage or movement – different from the one the container enters on.
Strategies to Minimize Flip Charges
Correct Chassis Matching: Ensure that the right chassis type is used from the beginning. Double-check the specifications and requirements before loading containers.
Efficient Coordination: Work closely with your logistics team and service providers to plan the transportation route and equipment needs accurately. This is rarely an issue when working with a reputable IMC that is well-versed in intermodal shipping.
Use a Single Mode: Whenever possible, try to use a single mode of transportation that doesn’t require flipping containers between different chassis.
Fuel Surcharge
Call this as number 11 on our top 10 list of intermodal accessorials. With everyone being so familiar with the fuel surcharge on their truckload freight bills, it didn’t seem important to call it out as an intermodal-specific fee. It is, however, on almost every intermodal freight invoice.
Understanding Fuel Surcharges in Intermodal Shipping
Fuel surcharges are additional fees to cover the fluctuating cost of fuel. It’s similar to paying more for a ride-share during peak hours.
Comparing Fuel Surcharges: Intermodal vs. Truckload
Both intermodal and truckload have similar schedules where it is charged either as a percentage of the linehaul or a cost per mile. Freight providers update their fuel charges based on how the EIA (US Energy Information Administration) updates the national diesel fuel rates, which are published every Tuesday morning.
How to Manage Fuel Surcharges Effectively
Monitor Fuel Prices: Keep an eye on fuel price trends to anticipate surcharges.
Optimize Carrier Selection: Plan the most efficient carrier or freight mode to minimize fuel consumption.
Negotiate Contracts: Lock in fuel surcharge rates in contracts when possible.
Conclusion
Managing intermodal accessorial charges can be a daunting task, but understanding these common fees is the first step in controlling and optimizing your intermodal shipping costs. By being proactive, communicating effectively and planning efficiently, you can minimize these charges and keep your shipping budget on track.
Being informed and prepared is the key to successful and cost-effective shipping. At InTek Freight & Logistics, Inc., we understand the complexities and opportunities of modern logistics. Our goal is to help you navigate these to create a more sustainable and efficient supply chain.Â
By understanding and leveraging the benefits of intermodal shipping, your business can not only achieve its sustainability goals but also gain a competitive edge in the market. So, why wait? Request a quote with us today to take the first step to a positive impact on both your business and the environment.
