Dotting your i's and crossing your t's

I had a conversation this afternoon with a client about a problem we were having collecting an overcharge for them. They had some Pallet Rates published for their freight, both inbound and outbound. Unfortunately the carrier's pricing only named one location - 1070 Main Street, whereas this freight was delivered to them at 1067 Main Street. The carrier was refusing to honor the pricing because that address wasn't listed in their Pricing Agreement with the customer. I was directed to contact their sales representative to ask him to pursue a "business management decision".

I called the rep and told him I thought it was silly to have to jump through hoops to get the pricing applied when the freight was clearly routed based on this pricing. I continue to wonder why carriers who began business in a heavily regulated environment that permitted no deviation from the published and filed rates are unable to operate in the fully deregulated environment. In any other business, if a price was agreed to for a particular customer, the invoice would be corrected if one location was overlooked or they had additional street numbers (as this client does).

The client had called me back to tell me they had only one building - the entire facility was in one building. The two addresses were a vestige of its original construction where the developer could divide the building for two companies if necessary.

I sympathize with a carrier's desire to rate things correctly in the first place; to set in their computer system the information it needs to do that. But the reality is, sometimes every contingency isn't known (or someone doesn't think to say we've got two street numbers here). It's one of the reasons that I've suggested clients write language in their contracts that essentially says "when XYZ Corporation pays the bill, this pricing will apply." No "ifs", "ands" or "buts" - keep it simple.

We Make Your Carriers Better

It's a hazard of our work as freight bill auditors that we help your carriers rate your bills correctly. I was reminded of this today when one of my staff told me she spoke to one small carrier who we had filed an overcharge claim against. Our claim for a bit over $100 had prompted them to review the client's other bills and they had found other overcharges too. So instead of recovering about $113 for them, the carrier is sending them a check for $1374!
Not only that, but now they will probably not make that mistake again.

We had one account we began auditing a few years ago and one carrier was regularly charging their standard Liftgate charge. The problem was their contract named a different charge and the carrier was overlooking that. We filed claim correcting those bills and recovered that money for the client. Now the carrier rarely misses that contractual charge - an added benefit which costs our customer nothing.

Give us a call to discuss how we can make your carriers better with our freight bill audit.

Are Overcharges on Freight Bills Really Prevalent?

Are overcharges prevalent? For many years, we sent an article to prospective clients from Colin Barrett's old Questions & Answers columns from Traffic World magazine titled The Need for Auditing Services. In the answer he mentioned a book he and J.S. Traunig wrote about paying freight bills.

There he wrote, "we offered evidence indicating that the aggregate amount of such overpayments may add up to as much as one percent of the entire U.S. Gross National Product!"

I don't know if that number holds up today some twenty plus years later, but as I've said, every time I think I've seen every way possible for a mistake to be made, we find another. ***

Contact us for more information about our Freight Bill Auditing service.

*** Just to highlight this statement, when I was reviewing a client's bills this afternoon, I found a bill with a Fuel Surcharge at 814.96% - a mistake their freight payment company caught (no good for me!), but I wondered where that percentage number came from. It was the Contract number they had with this carrier. Like I said, you never know what you're going to see. The bill was a $796.88 overcharge.

Inspected Shipment - Bumping up the Weight

This may be a bit obscure, but I've been encouraging my clients to add a clause to their contracts that requires a carrier to bump up the weight of a shipment subject to a class rating based on density when that shipment is inspected.

Item 171 in the NMFC states articles rated by density and make reference to that item may have their weight "bumped" up to secure a lower rating. For instance, a shipment which has a density of 3.60 lbs. PCF (class 250) can have its cube multiplied by 4 lbs. PCF and bump the weight up to receive a class 150 rating. That bumping of the weight is required to be noted on the Bill of Lading at the time of the shipment.

The problem comes when carriers' Weight & Inspection departments inspect a shipment which shows one density and find it's a different density. Many times, shippers calculate their density based on the packaged product whereas the carriers are determining the density based on how it is palletized for shipment. That is correct but it reaps a considerable windfall for the carriers. Understandably, carriers are hoping for that "Gotcha" shipment as their revenue goes up, needless to say.

Some years ago, we wrote a clause into a client's contract to buffer this effect. The provision stated that if a carrier inspects the shipment and finds that the density is incorrect, they are required to bump the weight up to secure the lower rate. Other clients have also used the same language.

This is very "outside the box", but I think more companies should consider this approach. The benefits are clear for shippers who have this language.

Here's an example from yesterday. A client's supplier shipped six pallets of plastic drums without any formal NMFC description, showing a total weight of 1800 lbs. The carrier inspected the goods and found it had a cube of 469.44 Cubic Feet for a density of 3.83 lbs. PCF at class 250.

Ironically, the bill was rated as 2000 lbs. and if you used that weight, the density would be 4.26 lbs. PCF. Of course, that's not how it's done. Using the bumping clause language for inspected shipments, the weight would bump to 1878 lbs. and move at the same 2000 lbs. rate albeit at a class 150 rate. In this case, it would reduces the bill by more than half.

As you can see such language in your contract can control your freight costs a great deal.

Besides our Freight Bill Auditing service we provide consulting to review your contracts and make recommendations to improve them - helping you keep your transportation expense down.

Check us out at http://www.tscinti.com/

No need for an audit?

I was reading an article in the October 2007 issue of Logistics Management magazine by Ray Bohman about Cube based LTL pricing. The article looks at an alternative to the standard pricing using class ratings established by the National Motor Freight Classification (NMFC). It was an interesting article and worth reading.

What jumped out at me while reading it was this line: The system is also designed to eliminate freight bill auditing by outside firms. While I understand what the system's creators are getting at, I would suggest that there is always a need to have someone look at your bills. We have found mistakes under any number of pricing systems, whether class rated shipments under the NMFC; mileage rates, flat rates. As I said in my initial post on this blog, as long as human beings are pressing the buttons, there will be mistakes. Simpler rating systems might reduce the possible ways mistakes can happen, I don't think they will ever go away completely.

Our Freight Bill Auditing Service

For some time I have contemplated starting a blog to highlight some of the work I do as a Transportation Consultant and as a Freight Bill Auditor. I started my firm in 1979 after working some years for a company my father founded. I took over the auditing and consulting side of Dad's business and he continued working directly with trucking companies.

So who needs freight bill auditing? Anyone who ships and receives freight and pays the bill will find our services valuable. The introductory line at the top of the blog remains true: Every time I think I've seen every way possible for a mistake to be made, I find another! These mistakes can made by either the carrier or the customer.

Some years ago, as the move to personal computers was underway, a carrier rep came in and gave me a rate diskette. He asked, "Won't this put you out of business?". I laughed and told him not as long as human beings are pressing the buttons!

I will update the blog periodically. I hope you enjoy my thoughts on this subject. Feel free to ask me any questions!

Many years ago, I read an article in a magazine about what was then the second oldest written document - a clay cuneiform tablet. Archaeologists determined it was a bill of lading - and it had a mistake on it! The livestock were added up incorrectly.

The moral of the story? Mistakes will always happen and we're here to help recover your money when they happen on your freight bills.

I will add posts as time goes by, not just on the adventures of freight bill auditing, but also some of my thoughts on controlling your freight costs too.

In the mean time, check out our website at http://www.tscinti.com/