DISPATCHER'S BLOG
What Is a Lumper Fee, and How Do Truck Dispatchers Deal with It?
Today, we will discuss what a lumper fee is and how you should deal with one as a truck dispatcher.
Sooner or later, many of our students who start dispatching for their clients run into a situation involving a lumper fee. And quite often, we're asked how to deal with it.
But before we discuss various scenarios, let's define what a lumper fee is.
Some receivers, especially grocery warehouses, hire a third-party company to unload incoming trucks. They believe that this will increase their efficiency, making it easier and faster to process the trucks that come in with their goods.
The company that unloads the truck is called a lumper service, and they charge a lumper fee for unloading the truck.
Why Does a Lumper Fee Matter?
Why should you care about lumper services or fees as an independent truck dispatcher?
Let's review a couple of scenarios. One will be a positive scenario, and one will be negative.
A Positive Lumper Fee Scenario
Let’s say you are booking a load, and the freight broker says something like, "Hey, at the receiver, there will be a lumper, so I need your driver to give me a call when he's there. I will issue a T-check or a Comcheck (remote payment method) to pay for the lumper so he can get unloaded."
Now as the driver arrives at the receiver, he calls the freight broker and tells the broker what the amount for the lumper fee is. Then, the broker issues payment, and the driver passes on the payment to the lumper service.
How Does This End?
The truck gets unloaded and goes on its way. All the driver has to do is scan the copy of the lumper receipt and send it to the broker. Nothing else needs to happen; the load has been delivered, and this scenario is over.
A Negative Lumper Fee Scenario
Now let's examine an alternative, more negative scenario.
You call a broker to book a load, and the broker tells you nothing. Your driver arrives at the receiver, and there is a lumper service saying they want $300 to unload the truck. So the driver calls the broker and tells him about the lumper, but the broker says, “Just go ahead and pay it, and I will reimburse you.”
First of all, the driver may be carrying $300 to pay for the lumper fee. And even if he does, he probably shouldn't pay, so let’s discuss why that is. This is a theoretical example.
Suppose your driver pays $300 to unload the truck. It is being unloaded, and some damage is discovered, so the broker decides not to pay for the load. This means that besides not receiving payment for the load, your client has also invested $300 of his own money into something he didn’t get paid for.
There could be different variations of this scenario. For example, maybe the driver sends a receipt to the broker, and the broker doesn’t receive it. Then a couple of months later, your client gets underpaid by $300 because there wasn’t an original receipt, or it wasn’t readable, or whatever the case may be. Basically, the idea is your client should not be investing any money into the broker's load, which he hasn't been paid for.
There's another reason you shouldn't do this. When factored, $300 will require your client to pay the factoring company about $9 in interest fees. It's not much, but why should your client lose any money because somebody did not notify you in advance or prepare for this situation?
How Do You Solve this?
Well, in my opinion, you should just hold your ground and tell the broker that you are not able to pay the lumper, your driver does not have the money, and you are not able or willing to send the money to the driver.
It is broker's problem, and the broker should solve it. They did not inform you that there will be a lumper. Therefore, you could not prepare for it. Or maybe you can decline to take this load.
In most cases, when you present it this way and you hold your ground, the broker will find a solution to pay for the lumper. They will call the lumper service, provide them with the card information, and do whatever, but usually, it gets solved.
There are some scenarios where you will end up solving it after all. For example, the broker will just disappear and stop taking your calls.
And obviously, your client needs to leave the facility. He wants to get unloaded and go pick up another load, so he may end up paying the lumper. That, of course, may lead to all kinds of negative outcomes.
Prevention of Negative Lumper Outcomes
So to prevent that, you may want to take a couple of other steps.
The first preventative step you can take is to simply ask a broker when you book a load if there will be any lumper fees. If the answer is yes, ask how you and the broker will handle them. If they say no, there shouldn't be any lumpers, you want to tell them, "Look, if there will be a lumper, you will have to pay it because we will not — it's against our policy. The driver does not carry any form of cash."
Basically, you have to tell them you will not pay for it in advance. Now, they have no way of going back and telling you, "Hey, just go ahead and pay it." You have already warned them that you will not. And this preventative step should technically solve any negative scenarios with the lumper fees.
As an independent truck dispatcher, you should now understand what a lumper fee is and what kind of situations can arise. Knowing how to deal with lumper fee issues will help you get through them confidently. Keep the different scenarios in mind, both positive and negative, and be sure to take preventative steps to keep negative situations from occurring.
© By Alfa X Logistics October 2022
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