Automatically adding carrier payable shipment costs as customer billable costs on associated orders

During the course of shipment execution, and all the way until billing, new carrier cost items for services, accessorials, or other costs can be incurred on the shipment. If you have contracts in place with your customer for these kinds of costs, to avoid lost revenue, your transportation orders need to convert payable carrier costs on the shipment into billable customer costs on the order. To assist in billing your transportation orders accordingly, Turvo can automatically pass the carrier shipment cost on to the transportation order based on customer’s contracted rate for that cost item type.

Important note: If there is not an existing contract, lane rate, global rate, or fuel surcharge that covers the added cost item type for the customer, this conversion does not occur.

Prerequisites for the automatic customer billable re-rating to occur

The automatic rating described in this article requires some configurations to be in place for the  customer order re-rating to occur automatically:

1. There must be a transportation order tied to the shipment.
2. You must have shipment-to-order cost allocation configured for your tenant.
   1. See our Order-to-shipment planning - Allocate costs article to learn more about configuring this feature.
   2. Note: Allocated shipment-to-order costs are used to calculate your margin on orders by allocating carrier costs on the shipment(s) created from the order(s) during order-to-shipment planning.
3. For fully automatic re-rating, Order rating Autopilot rules must be enabled in Admin Console > Rules > Orders > Autopilot that apply to the customer’s orders for the following scenarios:
   1. When an order is updated
   2. When an order status is changed
   3. Note: If you do not have Autopilot rules in place, this process still occurs if you click the RE-RATE button in the transportation order’s Details > Costs section. 
   4. Protip: See our Autopilot: Automatically Rating Orders and Rate a shipment or an order articles to learn more about configuring Autopilot rules for order rating and manually re-rating an order or shipment.
4. The order’s customer’s account must already have a connected contract, lane/global rate, service rate, or fuel surcharge plan that covers the same cost item type as the payable carrier cost type added to the shipment.
   1. Learn more about creating these contract items using the following articles:
      1. Create a contract
      2. Create global rates 
      3. Service plans in Turvo  
      4. Add a lane rate to contracts or global rates 
      5. Add services to contracts or global rates 
      6. Create and assign fuel surcharge plans 
5. There must also be a markup or passthrough rule enabled for the customer that matches the cost item’s type.
   1. See our Cost Plus Rating article to learn more about creating markup and passthrough rules. 

Triggers for this rating process

This automatic rating process occurs upon the addition of a carrier payable cost to the shipment’s Details > Carriers > Costs segment, such as an accessorial or a service for the equipment level or at a specific stop. This can be done via any of the following methods:

• The planner manually adds a carrier cost item to the shipment.
  • Learn more about manually adding cost items to a shipment in our article on rating a shipment or an order.
• The planner adds a contracted carrier cost item by manually rating or re-rating the shipment or Turvo adds a payable cost to the shipment via an Autopilot rule.
  • See our article on assigning a contracted carrier rate to a shipment to learn more.
• The shipment carrier requests a cost on the shipment via the Cost request feature and the cost is approved manually by the planner or automatically approved by an Autopilot rule.

See our articles on Requesting and approving carrier shipment costs and Autopilot: Automatic rules for accessorial acceptance and rejection  to learn more about the carrier cost request feature and the approval processes.

How the rating works

Once the cost is added to the shipment’s Details > Carriers > Costs segment via one of the methods described in the section above, Turvo follows the process below to determine if a new customer billable cust should be created for the order:

1. Turvo re-rates the carrier costs for the shipment, either manually or via Autopilot rules, based on applicable contracts, rates, or fuel surcharge plans tied to the carrier account.
2. Turvo applies the configured allocation rules and calculates the allocated costs for the carrier costs and adds them to the order’s Details > Allocated costs section.
3. If an Autopilot rule for re-rating the order is applicable, Turvo re-rates the order automatically. If there is not, the planner must manually re-rate the order after the allocated costs are added. 
4. While re-rating, Turvo checks the customer account for contracts, lane/global rates, service rates, and/or fuel surcharge plans that include the cost item type added to determine how the billable costs are calculated for the order: 
   1. If the customer account does not have a contract item matching the cost type, then no billable costs are added to the order.
   2. If the customer account has a contract item matching the cost type but does not have a passthrough/markup rule matching the cost type, then no billable costs are added to the order.
   3. If the customer account has a contract item matching the cost type and;
      1. The contract has an exact rate that exceeds the markup or passthrough applied to the allocated cost, then Turvo creates a billable cost item using the allocated cost item’s quantity at the contracted rate. 
      2. If there is a markup rule on the customer account for the added cost type, Turvo creates a billable cost item using the allocated cost item’s quantity and cost with the configured markup applied.
      3. If there is a passthrough rule on the customer account for the added cost type, Turvo creates a billable cost item that matches the allocated cost item’s quantity and cost exactly.

Important note: If the cost item is missing necessary information, such as an item with a rate qualifier that is missing quantity information, and an Autopilot rule covering this information gap is configured, an exception is raised on the order and the billable cost is not added.

Protip: The workflow chart above will help you visualize the rating workflow. Click on the image to expand it.

Example scenario

Here’s an example scenario of this feature in action:

Your have two orders for two different customers, each have similar pickup times at the same location and different delivery locations are along the same general route. Using Turvo’s Order-to-shipment planning feature, these orders were planned into a single shipment. Your tenant also utilizes the shipment-to-order cost allocation feature, so allocated costs will be considered when re-rating the customers’ billable costs.

The two customers have the following contracts in place and passthrough/markup rules assigned:

• Order 101, for the customer Artemis Wholesale, goes from Location A to Location B and contains 5 pallets of items.
  • Your contracts and configurations with Artemis Wholesale include:
    • A lumper fee of $50 per pallet for loading/unloading cargo.
    • A 10% markup on detention fees incurred.
    • A passthrough for all toll fees.
• Order 102, for the customer Big Deals Warehouse, goes from Location A to Location C and contains 6 pallets of items.
  • Your contracts and configurations with Big Deals Warehouse include:
    • A lumper fee of $50 per pallet for loading/unloading cargo.
    • A $60 per hour for detention fees.
    • A passthrough for all toll fees.

To cover these orders, Turvo’s order-to-shipment planning feature created Shipment 201, which is assigned to the carrier QuickShip Logistics. You have the following contract rates with this carrier:

• A lumper fee of $40 per pallet for loading/unloading cargo.
• A $50 per hour for detention fees.

Shipment 201’s Cost items:

In the course of the shipment, the carrier incurs $100 in toll fees and two hours each of detention at Locations A & B. These costs were approved by Autopilot rules for carrier cost acceptance.

How the cost items are applied to each order:

After the Costs segment in Order 101 for Artemis Wholesale is re-rated,

• The lumper fees at Location A for both orders are rated based on the customer’s contracted rates of $50 per pallet. These are the original cost items added to the orders at creation.
  • The carrier’s allocated cost of $40 per pallet is not used to create a new billable cost item on the order, but is instead used to calculate your margin on each order against the carrier’s shipment costs.
• Two hours of detention fees for Location A are applied to both Order 101 and Order 102, but at different rates. Allocated costs are created for both orders.
  • Because the allocated costs + markup exceed the contracted detention fee for Artemis Wholesale, the allocated costs are used to calculate the detention fees at the location using the 10% markup rule on their account.
  • The contracted rate of $60 per hour is applied to Order 102, instead of using the allocated costs.
• The detention fees for Location B only apply to Order 101. The entire detention fee is passed through and applied with the 10% markup.
• In this scenario, the shipment-to-order cost allocation settings split the toll fee evenly between both orders. Both customers have passthrough rules for toll fees with no markup.

The tables below outline the billable cost items that appear in both orders’ Costs segment after each are automatically re-rated. Note that the combined allocated costs for both orders equal the total payable carrier costs on the shipment.

Order 101 cost items

Order 102 cost items