When shipping, it is almost guaranteed that you are going to get charged for things that you should not get charged for at one point or another.
Is there a way to prevent this from happening 100% of the time? Unfortunately, not. Like death and taxes, it is inevitable. Carriers will send bills that include charges you are not responsible for.
It's not just small shippers who are often billed incorrectly. There are companies, like Jarrett, who specialize in auditing freight invoices to ensure that the shipper is billed correctly. These companies still experience carrier billing mistakes a significant amount of the time that need to be resolved, as high as 20% of the invoices received.
It is imperative for companies to have a thorough pre-audit and post-audit in place in order to identify any unnecessary freight charges that may have been billed and get them corrected with carriers quickly and efficiently.
Here are 7 steps to help you minimize unnecessary freight invoice errors:
1) Understand Your Shipment Characteristics
The first step to avoiding unnecessary freight errors is to know your product's shipping characteristics. If you don’t know the following information about your shipment, there’s a high probability you’re going to end up paying higher freight rates than what you may predict:
- Freight Class
- Shipment Weight
- Dimensions of Your Shipment
- If your Shipment is Properly Packaged
Knowing this will reduce the frequency in which mistakes appear on your bill.
2) Ensure Class is Accurate
Each commodity or product type is assigned a National Motor Freight Classification (NMFC) number and a freight class for LTL shipments. This process is designed to get a standardized method of freight pricing for your shipment across many different carriers. There are 18 different freight classes which are defined by the National Motor Freight Traffic Association (NMFTA) based on weight, length and height, density, ease of handling, value, and liability.
It is just as important to know the proper classification as it is to properly list it on the bill of lading (BOL).
Freight class is an ever changing situation and shippers need to constantly stay up to date with these changes as it can significantly affect their shipping costs. On our team, we have Jessica Renner, Lead Claims Analyst, who serves as Regional Director on the Certified Claims Professional Accreditation Council. On this council, she works with cargo claims professionals to provide up to date information on transportation law and current information surrounding what is affecting the supply chain industry the most.
Jessica also helps our customers and Jarrett team stay up-to-date on changes made within the NMFC that helps prevent costly cargo claims or overpaying for freight bills. These changes are reviewed by the NMFTA 3 times a year and cover commodity classification, packaging requirements and pounds per cubic feet.
Carriers are freight classification experts. So, make sure you are aligned with a freight shipping service who is an expert in carrier management and auditing just as much as the carriers you are dealing with.
3) Accurately Weigh Every Shipment
Since weight influences LTL shipping costs, it has become common practice for carriers to re-weigh shipments once they get back to their terminal. This results with the weight listed on the shipping label not always matching what the carrier claims the shipped weight to be.
When this occurs, it is important to get down to the true answer to what the shipment weighed. This is why it is very important to weigh every shipment that goes out and regularly have your scales calibrated with proper certification to help support your credibility for having the correct weight on the BOL.
How often do you calibrate your scales? Do you weigh every shipment?
4) Recognize Who’s Paying the Bill
Another area that you may see billing errors is when invoices are billed to the incorrect party. These are more difficult to identify unless you have a clearly defined process in place to identify shipments that you were not responsible for paying for.
For example, you may have some customers where the freight terms are to ship outbound collect. Your customer is responsible for paying the freight charges, however there are situations where a carrier will mistakenly bill the wrong party. This can also happen for inbound materials coming from your vendors if you do not have a refined process in place to identify them.
In either case, you don't want to be paying for any unnecessary freight charges by mistake.5) Validate Tariffs
There is a wide variety of tariffs that can be used to determine shipping costs. Each LTL carrier has multiple versions of their own published tariffs, there are dozens of different editions of foreign based tariffs (such as the CzarLite tariff).
A tariff is a rate matrix that defines hundred weights (CWT) for all 18 different freight classes for all zip code combinations.
Once you are able to cross reference the proper matrix for your given product characteristics (weight, freight class, origin zip code and destination zip code) then you must determine whether the proper discount was applied. Understanding the complexity of how tariffs work is one thing, but to be able to efficiently audit freight bills against the correct tariff is very difficult to do.
6) Assess Accessorial Fees
Have you ever received a bill at a restaurant and found you were charged for a desert or a drink that you had not ordered? While it doesn't happen every time you go out, it is a very ordinary occurrence. Freight invoicing is similar.
Carrier billing is getting increasingly more complex. There are many more accessorial charges that carriers charge today than there were just five years ago. You need to be able to review the invoice and be sure that there isn't anything unexpected that you're being charged for.
For example, we mentioned the importance of being accurate with your shipping weight and freight class. A carrier will not only correct these, but they will also charge you a fee for their inconvenience when they do so.7) Understand the Impact of Over-Dimensional Freight
Carriers have altered how they consider over-dimensional freight in recent years. One thing that has not changed is that each LTL carrier does it a little different than the next.
It can be an intricate process when trying to determine the best carrier for shipping an over-dimensional product. Not only do the length guidelines change from one carrier to the next, but the cost of those charges will differ widely as well.
Did you consider the over-dimensional fee on your last shipment before making your carrier selection?
There are many complexities to navigate when reviewing your freight invoices for accuracy. 3PL companies, like Jarrett, and audit providers, can help.
Not only are they going to be able to identify errors, but they will work with the carriers to get resolutions to ensure you are not paying any unnecessary freight charges. They are also going to tell you what your costs would have been had they not been there to prevent those excess charges. This is cost savings you could use throughout the business on other strategic opportunities.
Take control of your supply chain management. Talk with one of our experts at Jarrett about shipping solutions today!