By Larry Kerr, president of EBE Technologies
Accessorial expenses, which often are not collected from shippers, can represent an enormous revenue leak to carriers. Many carriers feel they are reimbursed for less than 40% of their accessorial charges.
Based on the number of trucks, such charges represent millions of dollars forgone. The loss is compounded when carriers pay drivers for an accessorial such as detention and do not collect the fees from shippers. This activity has a direct impact on carriers’ operating ratios and the retention of drivers who are not paid for specific accessorial expenses, for which they believe they are due.
Given the potential amount of revenue forgone, why do carriers struggle to bill for accessorial expenses? There are several reasons for the shortfall.
The first is carriers make it difficult to claim accessorial expenses. Many times carriers must claim an accessorial expense by filling out a form on a web portal by a specified period. If the expense occurred after hours or carriers are short-staffed and cannot respond within the time frame, the revenue is forgone. In other cases, specific documents must be sent to the location where the expense is occurring. These documents may be accompanied by alerts at specific time intervals informing shippers of pending detentions or other accessorials. Given that many dispatch systems do not manage the accessorial expense process on a load level, this duty falls to dispatchers and carrier routing systems (CRS) to complete manually. As mentioned, staffing levels directly impact the ability to respond in the specified time frame.
When carriers do invoice for an accessorial expense, shippers may short pay the invoice or not release the payment if going through a third-party payment intermediary based on additional document requirements. Such requirements may include contract terms or other approval documents. To receive payment, carriers will have to rebill shippers with the additional documents or upload documents to a website.
True to any industry, where there is a problem there is an opportunity for a solution. Solutions have been created that have integrated carriers’ transportation management systems to shippers’ web portals. These integrations will monitor the TMS and log into the web portal to claim the accessorial expense. These applications become a CRS that is dedicated to tracking the carriers’ claims and reimbursement for the expense. In addition, these solutions can review payment statuses within these portals when invoices are sent via electronic data interchange. When available, documents can be uploaded to the portal or placed in a workflow for a CRS to make the needed adjustments. These solutions provide 24-hour monitoring of carriers’ TMS systems and shippers’ portals, ensuring carriers’ receipt of each accessorial reimbursement, which greatly improves their revenue.
Solutions have been developed to work with carriers’ TMS to provide the ability to manage accessorials on a load level. These systems monitor the stop code, bill-to code and commodity code to determine if an accessorial would occur, what information needs to be provided at a local level as well as at the shipper’s corporate level. These processes are configured in a workflow and provide the needed information at specified times without the need of carrier staff. Through consistent management of accessorial claims, better relationships among carriers, drivers and shippers are established. In addition, carriers’ accounts receivable departments run more smoothly in that staff are not manually trying to collect for expenses that are not documented properly.
These systems can automatically provide instructions to drivers when accessorial expenses occur. These instructions can include having documents signed, calling dispatchers or making comments on a proof of delivery before a signature noting the expenses.
As integration among the TMS, the shippers’ portals and workflow processes becomes more seamless, monitoring and managing accessorial expenses becomes an automated process much like core billing and settlement. As carriers adopt the new solutions, their unrealized revenue from accessorial expenses will decrease accordingly.
In today’s labor market, “throwing people at the problem” does not work. These solutions eliminate the need for carriers’ staff to manage the manual processes and allow them to focus on revenue-generating activities.
These solutions provide a compelling return on investment and provide standardization, which is a win for all parties.