enroute
stay ahead of the growing array of
“accessorial” charges, fees carriers
tack on to their base rates to compensate themselves for services separate
from the basic pickups and deliveries
within easy-to-reach ZIP codes.
Today, there are an estimated 50
accessorial charges, compared to one
or two in the mid 1980s. Accessorial
charges can add as much as 25 percent to the total cost of a shipment if
fuel surcharges at present-day oil
prices are factored in, experts say.
Nearly 25 years ago, an industry
emerged to help shippers level the
playing field. Today, there are 48
companies providing some type of parcel
consulting, according to estimates from
AFMS, a pioneer in the field. Many are
small-timers who provide services on an
ad hoc basis. The larger players offer a
broader menu ranging from carrier negotiating and freight auditing and payment,
to service analysis and bundling.
Some have branched out into other categories such as less-than-truckload analysis and negotiations, as FedEx and UPS
expand their own service offerings. “The
successful consultants will build expertise
across all modes of transportation,” says
Douglas Kahl, vice president, strategic initiatives for Tranzact Technologies, a consultancy based in Elmhurst, Ill.
While consulting services vary depending on the consultant, the mission is the
same: save money for the customer. The
consensus is that a knowledgeable, experienced consultant with powerful IT tools
should save a shipper at least 10 percent a
year on its annual parcel spending by
identifying areas of potential over-spend
as well as opportunities to strike a better
deal for the traffic it tenders.
Sometimes, savings come from seemingly simple requests. Jerry Hempstead,
founder and president of Hempstead
Consulting, an Orlando, Fla.-based parcel
consultancy, said he knew of a case involving two shippers in the same industry
where the company tendering smaller volumes actually got better rates because it
negotiated fuel surcharges out of its contract and its rival did not.
Many parcel consultants still charge a flat
rate for their services. However, the marketplace is migrating to a “gain-sharing”
fee formula, where the shipper pays only if
the consultant negotiates cost savings. The
two then divvy up the spoils. This form of
“contingency” pricing has become popular
because it essentially puts shippers in a no-lose situation, experts contend.
Most consultancies are staffed with former high-ranking parcel carrier executives
intimately familiar with the strategies and
tactics of their former employers. These
consultants, which see themselves as extensions of their customers’ traffic departments, prefer to build long-lasting relationships with clients rather than perform
transactional triage and depart from the
