Waiting Time Charges are charged for a range of activities during production and warehousing. The intent behind the charge is to assist the company or organization by reducing unnecessary overheads such as travel time, storage time, material handling time, and customer wait times. Waiting Time Charges are often implemented as an internal charge within the company, but can also be implemented as a contractual requirement when procuring new customers. A common scenario is that a company with many branches may incur a separate inventory charge per branch. Similarly, warehousing organizations may also apply a variety of charges based on the distance between various warehouse locations, such as per mile.
The term Waiting Time simply refers to the amount of time an item or items need to be placed in a warehouse before they are ready to be shipped to their customer. Wait time is measured in minutes or hours. Generally, the longer it takes for an item to be processed at the higher the charge per unit will be. For example, a truck driver can legally deliver two loads of freight overnight but if it took him one full day to deliver the cargo that would be payable at the end of the day. On the other hand, a passenger vehicle does not have this same luxury. In a passenger vehicle, the overall cost of the trip from Point A to Point B is the basis of the wait time charge, while in a truck driver's case the cost of the delivery from Point A to Point B would be the basis of the charge.
Most warehouses charge per mile based on a designated arrival time, whereas a vehicle driver's charge would include the cost of fuel consumed during the journey. Warehouses also charge per container based on a designated weight. If a pallet or container is more than 20 tons then the charge is applied per ton. Many warehouses also apply a surcharge of two to three percent to accounts receivable based on the date of purchase and sale. In addition, warehousing costs can include a distribution charge based on the difference between retail and wholesale prices as well as a service charge for a wide array of products. All these factors can result in a substantial portion of your warehouse profits being applied to the bottom line.