Freight Conversions

Goals

To determine the total amount of fees companies overpay to shipping carriers due to incorrect calculations of freight dimensions.

Early Findings

  • There have several reported cases of companies overpaying for freight due to incorrect calculations of freight dimensions, however, visibility into the magnitude of such overspending is greatly limited.
  • A major reason for the lack of visibility into this particular area in the shipping process is that shipping carriers are not legally obliged to refund overpayments unless the payer itself spots them. Another reason is that companies find it extremely tedious to manually audit invoices from their carriers, as those companies do not think it is worth the time investment.
  • According to a recent study by PR Logistics, as much as 15 percent of carrier invoices are incorrect, and more often than not, the consumer was the party that overpaid.
  • In another independent study by Spend Management Expert, a shipping and logistics consulting firm, it was discovered that 1 to 3 percent of overall net freight spending is directly attributable to incorrect billing adjustments.
  • According to a shipping expert, one of the common errors in freight shipping occurs during freight dimension specification. Companies that err in this regard typically provide the actual weight of the item rather than also calculating the amount of space needed to convey the item.

Summary of Findings

In the course of our research, we discovered that companies do not typically audit invoices from their carriers, and shipping carriers are not legally obliged to refund overpayments unless the payer itself spots them. However, inaccurate invoicing resulting from incorrect calculations of freight dimensions is a common occurrence in the industry.

Proposed next steps:

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