Transportation Industry Fees — Why You Should Be Paying Attention
As a small business owner, it's crucial to create effective transportation strategies that evaluate the most cost-effective methods to move your products. Unfortunately, the transportation industry doesn't always favor small businesses. Recently I was able to help a growing business negotiate with a large international transportation company, where excessive fees and confusing wording put the client in a bind. A shipment needed to be processed or her company would be out of stock and out of commission or she had to take a price that would have eaten away any margins. I see this kind of injustice daily. It has become my passion to change this by educating owners and entrepreneurs on the questions to ask, fees to look for, and identifying alternatives for entrepreneurs so that they can focus on more important issues. These vendors should be your partners for long-term growth.
Here are three pricing strategies to be aware of from transportation and customs brokers:
Account Set-up Fees
In recent times, I've seen set-up fees soar as high as $300 per account. Imagine paying this multiple times if you have multiple accounts within the same company! Don't let larger shipping companies entice you into paying upfront with these uncommon and burdensome fees. Instead, negotiate or explore alternative options, especially when cash flow is tight.
Volume Pricing
Entrepreneurs, especially women-driven companies, often underestimate their potential sales, trying to balance business expectations. I encourage you to envision the best-case scenario instead. Consider working with a company that combines your business with other small businesses to capitalize on group volumes. Additionally, explore packaging and weight dispersion possibilities. Expand your options and maximize your savings.
Accessorial Fees
How is it possible that your product is sitting at the border and all of a sudden you owe more money than you anticipated or maybe even than you were quoted? Logistics quotes with pages of possible fees are not uncommon. From Bond Entry to Special Handling and FDA Notice, the list seems endless. A good customs broker or transport company knows your business and requirements and advises you before shipping; this is why good partnerships are important. There are charges that can be last minute and cannot be anticipated such as random customs inspections or a slight difference in anticipated weight but these should be very rare and communicated to you as soon as possible.
Disbursement Fees
These are sneaky fees that a logistics company, customs broker, or other shipping firm will charge when they pay a fee on your behalf. For example, if there is an additional tax or tariff to be paid, most quotes include a disbursement fee (usually a percentage) to have those fees paid for you upfront to “save time”. This fee is usually optional but many people do not know this and pay it anyway. However, you need to know that if you choose not to have this fee you will be required to pay additional fees as they come up for your product to be released and/or delivered, which can sometimes be inconvenient.
Remember, never settle for the first rates you're given. Push back and build strong relationships with your logistics suppliers, demonstrating a long-term strategy. Engage experts who can guide you through the transportation process, ensuring you don't pay more than necessary. By implementing these strategies, you can reduce transportation costs, avoid excessive fees, and focus on the growth and success of your small business.
