Transportation Industry Fees — Why You Should Be Paying Attention

I advise small business owners to create their transportation strategies evaluating the most cost-effective method to move product. The industry is changing however not always in favor of small businesses. Just today, I was helping a client who has a growing business negotiate with a large international transportation company. They made their fees so astronomical and their wording so confusing, that she was 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 price herself out of any viable margins. I see this injustice every day. It has become my passion to change this by educating on the questions to ask, fees to look for and identify 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 look out for from transportation and customs brokers,

Set-Up Fees

I have recently seen set up fees as high as $300 per account (so if you have multiple accounts within the same company this means paying this multiple times)! I suggest negotiate or find an alternative option. These fees are not common practice and are used as a way for larger shipping companies to entice small businesses to pay in advance. When cash flow is tight, these fees can add up.

Volume Pricing

A lot of entrepreneurs — and I see this even more with the number of female-driven companies I advise — underestimate their potential sales. It is not because they do not believe in their business but because they are trying to balance business expectations. My suggestion would be to think instead, of the best case scenario. I encourage creativity by working with a company that can combine your business with other small businesses to capitalize on group volumes. We can also play around with packaging and weight dispersion. Know your options.

Accessorial Fees

How is it possible that your product is sitting at the border and all of a sudden you owe more money then you anticipated or maybe even that you were quoted. I have seen pricing sheets with 4 pages of possible fees. Things like Bond Entry, Special Handling, FDA Notice, the list goes on. A good customs broker or transport company knows your business and requirements and advise 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.

Never take the first rates you are given, push back, build the relationship to show a long-term strategy with your suppliers and engage in experts that can help guide you through the process.