KNNX Freight Enhancements: Automating Accessorial Charges

Invoices.

When most of us look at them, we briefly examine the descriptions, the costs, and then the total. If it aligns with our expectations, it ends there. Seldom, though, do we appreciate what goes into the creation of each line item. 

If we consider the charge for a burger and fries at a restaurant — how many different decisions and processes had to be fulfilled to harvest the wheat, grow the lettuce, produce the meat, and then combine all of that into a single, consumable food item? 

When you think about it, it’s extraordinarily complex. One can draw the same conclusion from a shipping invoice. Similarly, charges are represented as line items and combined, producing a final outstanding amount. But, if you look a little deeper, you’ll realize that this is the result of a range of processes involving different people, organizations, and systems all combined to produce a single representation of the shipping cost. 

Mix in cross-border routing and multiple loads to numerous destinations with the added impact of traffic, weather, supply, rates, currency fluctuations, and scheduling — the complexity increases exponentially. 

Now, we are looking at a document that comprises the results of hundreds, if not thousands, of manual and machine-executed processes. All of which are subject to the risk of human error, leading to disputes and, ultimately, payment and delivery delays.

While we cannot control all the factors that affect the final production of an invoice, we can control manual, error-prone processes.

The Accessorial charge: Unavoidable and unpredictable.

Typically, charges on a shipping invoice fall into two main categories: direct shipping charges and accessorial charges. The shipping charge covers the cost of physically getting the load from point A to point B and is normally a fixed fee based on the shipment’s weight, size, distance, and the time of year. 

The accessorial charges (think ‘accessory’ to the main charge — waiting time, after-hours delivery, etc.) are additional charges incurred during the shipping process. Accessorial charges can be a fixed charge, like stop charge, while other accessorial charges are variable (e.g., waiting time) and only added once the shipment is complete. 

The variability of these accessorial charges makes them unpredictable and error-prone due to the manual processes that are used to add them to the final bill.

Two common accessorial charges, predominantly found in road haulage, are Waiting Time (WTG) and Demurrage (DEM). WTG is charged when a driver waits for a certain amount of time, usually less than 10 hours, before offloading their trailer at a store/distribution center (DC). 

Demurrage is charged when the driver must leave their trailer and return at a later time; this can be anything from 12 hours to 12 days or more, depending on how busy the drop-off point is. In most cases, both the WTG and DEM accessorial charges are manually added to the invoice through human intervention.

The Typical Waiting Time & Demurrage Processes

The standard Waiting Time process:

In this process, information such as emails, the addition of charges, and approvals are all captured manually, increasing the risk of human error and impacting the accuracy of the final invoice. This problem is then compounded further by multiple concurrent shipments resulting in complex disputes and shipment delays across your supply chain.

How we create a dispute-free process: Automation

Our mission at DLT Labs is to continually iterate and improve on our platform. With a significant increase in the demand for certain shipments over the last year, we knew that to improve the customer and carrier experience of DL Freight — we needed to automate the manual addition of accessorial charges. 

Through a significant amount of product redevelopment with a specific focus on process engineering, our team succeeded in evolving the error-prone, manual addition of accessorial charges into a fully automated process. Concentrating specifically on the Waiting Time and Demurrage accessorial charges, DL Freight now automates all the email-based accessorial-related steps in the invoice creation process. 

The new process is faster, more predictable, and at a substantially lower risk of errors and omissions that lead to disputes.

Updated Waiting Time Process: Initially 10 steps, now reduced to 7

Updated Demurrage Process: Initially 6 steps, now reduced to 3.

The key to automation: Blockchain

One of the key features of DL Freight is that it’s built on blockchain. The robust and powerful framework, known as Hyperledger Fabric, is capable of managing and executing processes known as “smart contracts.” These self-executing contracts are predefined and directly support the automation feature in DL Freight, ensuring that previous manual practices are now actuated without human or manual intervention. 

Due to the powerful nature of Hyperledger Fabric, the system can easily process thousands of complex calculations or smart contracts without impacting processing, ensuring that the right information is delivered to the right place in real-time. Further, DL Freight verifies all the necessary approvals required to make the accessorial data error-free, and in the highly unlikely event that there are any inconsistencies, the system provides the flexible option for manual review.

A note on structured data

Another key enhancement to DL Freight is the provision of structured, organized data. While the problem of unstructured data might seem innocuous, working with messy data has a direct impact on decision-making and causes unnecessary operational friction, ultimately impacting day-to-day business operations. Fortunately, part of the evolution of our platform included the creation of DL Freight’s Intelligent Reports Engine that provides “clean data,” which is consistent in format and delivered in the ideal structure for operational data. 

Customized data can be extracted from dashboards, widgets, and reports on DL Freight at any point in time, making it substantially easier to work with complex, detailed information.

The DL Freight accessorial charge enhancements in action

The automated accessorial charges process is currently being used in Walmart Canada, across the country, and over certain US borders. The enhancements have streamlined a considerable number of their processes and helped to significantly reduce the friction of working with their carrier fleet. 

The reduction in manual processes due to automation reduced the overall processing time and resulted in a 90% reduction in disputes across their delivery network. Further, their mandatory driver waiting time at a DC or drop-off point has been cut from 45 minutes to 15 minutes, contributing to a 65% increase in the stores and DC’s ability to manage incoming shipments.

Keep up to date on the continuous enhancements to DL Freight by subscribing to our blog or visiting our website HERE. If you would like to speak to someone at DLT Labs about the solutions DL Freight provides, send us a quick email, and we’ll be happy to set up a demo for you.