Hot Button Fees in Third-Party Logistics

How transactional fees and surcharges may be saving you money

Oct 12, 2014
In my 30 years in shipping, I don’t think anything stirs more passion than rates. Everyone usually has one hot button that is important to them, and it varies from customer to customer.

It is rare that I get someone that tells me that rates don’t matter. but of course, they should. There are two things about rates that I hear a lot of complaints about, which I think if customers understood better, they would have a much different perspective on.

The two things are surcharges and transactional fees. They are actually somewhat similar in that they are both charged on an as-used basis. Customers get their bill and see the surcharges and transactions fees from either us, ProPack, or the shipping company we use, and say that they feel it would be much easier, maybe even fairer, if we just charged a flat rate. Here’s why that may not be good for you.

If you look in a shipping carriers service guide, you will see pages and pages of additional charges that you could be assessed with. If you look at your bill, you will rarely see any of those charges on your bill unless you have some unique needs. There are customers that ship hundreds of hazardous material a day, which carry huge surcharges. Some get hit with additional handling for large boxes. There are address corrections, declared value, signature options… the list goes on and on. Certainly the carrier could simply figure out how much is billed to all in a given year and just split it evenly among everyone but why should you pay for hazardous materials or oversized packages when you don’t ship them? The answer is, you shouldn’t, hence the individual charges. Those that use them get hit with the bill. They use services that take extra time, labor, or space, and should be billed accordingly.

The same goes for transactional billing. This means you get billed for every transaction you incur. You pay for exactly what you use. No more, no less. Take labor, for instance. The converse to transactional billing is having hourly employees, who you guarantee 8 hours a day. If you have few orders, you either make busy-work, or you have employees getting paid to do nothing. If you have too many orders, you wind up paying overtime, and may be rushing to get the job done, putting it at risk of doing a poor job. With transactional billing you have the exact amount of labor you need every day. That also applies to your warehouse space.

These fees and surcharges are always spelled out in detail, giving you the opportunity to know where your shipping dollars are spent and possibly reducing them. No one should worry about these fees. They save you from paying for services you don’t use and only those that you do.

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