All shippers are in the same boat. With ongoing port congestion, trucking capacity shortages and increased carrier rates, shippers are scrambling to get products to their destinations on time without paying an astronomical price. Given this scenario, haste often creates waste — especially if freight bills aren’t scrutinized for errors or intentional upcharges that could add up to hefty cost increases in the long run.
Whether done in-house or through a freight audit and payment services provider, it’s time to lean into your freight invoices. Digging into the details of freight costs during pre-audit and post-audit can uncover opportunities for significant savings. Here are some of the typical and not-so-typical culprits that may increase freight costs for shippers.
Detention and Demurrage Errors
It’s not the shipper’s fault that cargo is taking so long to be unloaded from container ships. On average, one in 10 ocean invoices for imported goods have errors due to the added complexities caused by port congestion. Detention and demurrage errors abound and some shippers are even charged detention fees after the shipping container has been returned. To protect against these undue expenses, shippers should focus on these service charges during their pre-audit strategy.
Drayage Charges
While these billing errors are mostly aligned with ocean freight, drayage is not strictly limited to ports. Keep a close eye on chassis sizes and other services charges (including detention) to ensure there’s nothing afoul in your freight invoice.
Less Than Truckload (LTL) Errors
Approximately one in four LTL invoices have errors. The typical errors are unwarranted reclassification, inaccurate base rates, and additional accessorial and service charges. Some of these errors can be attributed to human error or misinterpreting a contract amid carrier staffing shortages, however sometimes the carriers are counting on shippers simply paying invoices without diving into the details.
Truckload Rate Hikes
Carriers have increased their rates for 2022 so it’s easy to miss excessive upcharges for truckload shipping. Pay close attention to the rates as spot-buys have increased even with contracted carriers due to capacity constraints. Also, be on the lookout for undue accessorial charges, particularly for shipments with multiple stops.
Parcel Invoice Mistakes
Carrier late fees have all but nullified the need to pre-audit your parcel invoices. However, post-audit remains a very viable option that all shippers should use to ensure their parcel invoices line up with the terms of their negotiated contracts with carriers.
When to Seek Outside Expertise
There’s a lot of room for error when it comes to freight invoices and limitations on the recovery window (six month window to recover savings for most transportation modes—and a four-year window for ocean transport). That’s why freight auditing has become increasingly important to shippers. You need to continually check and recheck your freight invoices to protect against undue expenses and doing so in-house may cost more than the savings found.
Often, shippers rely on third-party freight audit and payment services providers that have a sharp eye for details. They have the expertise to catch errors quickly and file claims on your behalf, allowing your in-house team to focus on other strategic tasks that grow the bottom line.
