Retail logistics managers sometimes have a thankless job. With logistics written off as a cost center by many leaders, logistics managers are already facing an uphill struggle to be recognized for the strategic work they do to keep this vital function running smoothly. The last thing they need, then, is hidden costs whittling away at the bottom line and undermining their ability to keep expenses in check.
In the second of our two-part series on hidden retail logistics costs, let’s explore the true impact of unexpected freight fees—and what supply chain managers can do about them.
Misclassification: A common and costly mistake
Misclassification of freight is a common problem in the retail logistics world—and one that has bigger ramifications than many realize.
Although retail logistics managers and their teams rely on National Motor Freight Classification (NMFTA) guidelines or other regional standards when planning shipments, mistakes do happen. And if a shipper isn’t paying close attention to their invoices, they may not realize that they’re repeatedly misclassifying a certain type of freight—causing their shipping costs to far exceed their estimates time and time again and making budgeting almost impossible.
Re-measuring and re-weighing freight also creates extra work on the carrier’s part, which may result in them charging an additional fee. If this happens enough times, they may decide to sever the relationship with the shipper to save themselves the trouble—which can be a devastating blow if the carrier was cost-effective and reliable.
And it gets worse. For international shippers, improperly classified freight can result in penalties, lengthy delays at the border, and even goods being rejected and sent back. This can have a significant impact on customer satisfaction—and in the case of perishable freight, could result in costly waste.
Taking the time to understand freight classification standards is critical, especially when entering a new market that may have different rules. For shippers lacking experience in a particular region, international consulting services can make a huge difference, ensuring freight is always correctly classed, labeled, and accompanied by the proper paperwork to streamline its journey through customs.
It’s also worth investing in freight audit and payment solutions that scrutinize every invoice and can help you identify repeat problems. That way, if one type of freight is repeatedly being misclassified, your team can evaluate what’s going wrong and fix the problem—before it gets out of hand.
Accessorial charges: The holes that sink the ship
Another critical reason to invest in freight audit solutions is to minimize the impact of accessorial charges.
These extra fees might not look like a lot on their own, but when they’re added to dozens or even hundreds of invoices, they quickly add up. While some shippers are aware that they’ll be charged accessorial fees on certain shipments and work this into their budget, many don’t realize these fees are coming—especially if they’re charged erroneously. And if shippers don’t audit their freight bills regularly, identifying these additional costs can be tricky, leaving logistics managers tearing their hair out wondering why their freight costs are always so much higher than anticipated.
If you’re allowing invoices to be processed without oversight, you may be throwing thousands of dollars out the window. World-class freight audit solutions allow logistics managers to not only recover the cost of unwarranted accessorial fees and other incorrect charges that appear on the invoice but also to gain a more accurate picture of their actual freight spend, improving forecasting. The insights derived from regular auditing can also help managers to identify carriers who repeatedly overcharge, allowing them to have proactive conversations or find alternative options.
Freight audit: A goldmine of retail logistics savings
CTSI-Global’s cutting-edge freight audit and payment solutions shine a light on hidden costs—putting money back in shippers’ pockets and helping supply chain managers see exactly where they can trim expenses.
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