When it comes to paying bills, no one likes paying more than they should. Your freight bills should be no exception, as transportation costs average around 10% of an organization’s expenses. At AFS, we typically find over 20,000 errors a week processing over 4 million, which means trusting the accuracy of carrier billing could be costing you money.
Besides being overcharged for your shipments, auditing your freight bills has the added benefit of providing a greater visibility into your supply chain, potentially identifying areas for other cost savings that are necessary to stay competitive in today’s market. Are you using the most appropriate packaging for your shipments? Are you properly classifying your shipments? Are you shipping a volume in certain lanes and areas that you could use to leverage a discounted rate?
A freight audit is simply the examination of freight bills, either manually or through an automated process, and verifying the accuracy of the charges. What complicates this process is the fluctuation of fuel costs and semi-annual general rate increases. Meaning your audit metrics need to be updated on a weekly basis to ensure you’re staying accurate. Add hundreds or even thousands of weekly freight bills to the mix and you’ve got yourself a full-time position or three.
Here are a few common areas that could be costing you money:
- Duplicate Shipments Invoiced: Are you being charged double for a shipment? This happens more than you might think, especially when using electronic services.
- Accessorial charges: Are you plagued by incorrect additional charges, such as delivery area surcharges, additional handling charges, address correction and residential delivery? Carriers charge extra for extra services, but your audit will check to make sure your shipment actually required these extra services and they weren’t tacked on by mistake.
- Incorrect Contract Pricing: Are you being charged the rates you and the carrier negotiated. AFS recently discovered a client was being charged a rate much higher than their contracted rate, and identified over $400,000 in savings.
Most 3PLs utilize a mix of manual auditors with advanced auditing software that catches 99% of errors, and using their services can potentially save you on overhead costs as well as freight costs. In addition, an audit offers peace of mind that you aren’t being overcharged for your shipments. An audit will also provide you with valuable data you can utilize to forecast your future shipping spend, adjust your shipping processes as necessary and leverage for contract negotiations with carriers.
If you aren’t regularly auditing your freight bills, or aren’t living with the peace of mind that your process is best-in-class, give us a call today at 877-242-3383 and one of our representatives will walk you through how to get started. AFS has been auditing freight bills for almost 40 years and has established itself as a leader and innovator in the industry, maximizing cost savings for over 1200 clients of all industries, sizes and sectors.