Traditional LTL freight charges assume there will be a normal dock pickup and delivery. This means the driver can arrive and depart with no delay, readily interact with the shipper or consignee, and load or unload the freight immediately adjacent to the back of the trailer.
When the carrier performs a pickup or delivery that is not “normal," it is expected that additional charges will apply. Some of the most common non-normal pickup and delivery fees applied by carriers are for residential or limited-access locations.
Residential is fairly straightforward and applies to locations where people live. These locations tend to not have a dock, and tracking down the consignee can be challenging. Further, these locations are situated away from the commercial zones where carriers typically operate, and navigating a large truck around residential areas is not always the easiest.
Less straightforward are limited access locations. These are typically locations without a dock, not open to the public, with restricted access such as a guard shack, and with personnel not readily available. These locations can include prisons, mines, construction sites, and schools.
The challenge for LTL customers is that each carrier has its own list of what they consider residential and limited access locations. These lists can vary significantly, and these locations are often unclear. For example, does a Truck Driving School fall in the “school” category? Most carriers have an open statement that defines when they can apply these fees. Take this current rules tariff example for one large LTL carrier.
They clearly define specific limited-access locations such as schools, amusement parks, and even strip malls. But, they also state that this fee can apply to any other location without a dock. Another large LTL carrier has a similar listing of locations, including camps and flea markets like the first one.
However, this carrier lists other locations such as railroad yards and nursing homes. Also, the first carrier lists “lodging facilities” while the second carrier lists “hotels” - are these the same thing? There's a lot of variance from carrier to carrier. Even with just one carrier, the application of these rules is not straightforward. LTL customers must keep up with the varying rule items for each carrier they use.
If an LTL customer uses a TMS, it probably provides a drop-down list of various limited-access locations to select from. However, no TMS can cover all of the unique location types defined and listed by every carrier. This means it is all too common for an LTL shipper to get an invoice with a limited access fee applied that was not on the original quote. The shipper is then forced to either absorb the unexpected charge or ask their customer to pay that fee. Neither option is good.
It’s estimated that upwards of 10% of LTL shipments contain an unexpected residential or limited access charge. That signals a broken system.
Carriers can argue that the shipper should review the delivery location via online maps, converse with their customer about their site, and stay up-to-date on rules and tariffs. That’s a lot of work on the customer and too often still doesn’t solve the problem. Shippers can argue that carriers are the problem. I have seen a carrier assess a limited access fee for delivery to a warehouse owned by “Pepperidge Farms” because they saw the word “farm” in the name.
There is a better way. It all comes down to the verified address. Technology exists today whereby each verified address in North America can be flagged for a specific location type. Two tech companies that do this are www.shiplify.com and www.highlandertek.com.
What the LTL industry needs is to build out a standard listing of location types, with clear definitions for each type. This list of standard location types could be upwards of 100 unique location types. Carriers can then list these specific location types and their codes in their rules tariff. They can also define which technology firm they will use for application.
Shippers would then utilize a TMS that connects to these location-based tech firms and knows which one each carrier utilizes. When the shipper creates a shipment and generates a quote, the verified addresses would allow the TMS to determine accurate residential and limited access applications, by carrier, for every shipment. Invoice surprises would be eliminated.
Simply put, the verified address should be the singular piece of data that both the shipper and carrier need to determine fee application. This approach would be digital, scalable, and accurate. It would eliminate one of the most painful invoice challenges in LTL along with the need to understand complicated and open-ended rules and tariffs. Best of all, it would allow the shipper and carrier to consistently operate in more perfect harmony.
This article was collaboratively written by “LTL Observers” - a collective of industry veterans spanning the carrier, shipper, 3PL, and tech provider spaces who are willing to share their opinions.
These opinions may not always be right, but the intent is to promote critical thinking and engagement that moves the LTL industry forward so that our tomorrow is always better than our today.
One last thing . . .
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