Learn how auditing these 3 areas in your shipping process can result in significant cost savings.
Shipping has become the new normal. Everything from soap to socks, from pedometers to pet food are being delivered to COVID-19-imposed, quarantined consumers around the world. Companies are breaking open cases to deliver smaller quantities or enlisting 3PLs to do the piece-picking for them. The result is a huge increase in the number of parcels moving through the supply chain to residential addresses.
Yet, the increase in parcel shipping to residences means there are more errors on more invoices. More errors on invoices means you may be paying more than you should for shipping. What you can you? In this blog post, we’ll take a look at the three most common reasons your bill might be too high, and what you can do to reduce the impact of invoicing errors and overcharges to your bottom line.
Wrong Address Charges
If any part of an address is wrong, your package could be delayed, held up or mis-delivered. This can be due to updated Zip+4s or incorrectly formatted or wrong addresses.
When a parcel is sent to an incorrect address, or delivery is attempted at an address that doesn’t exist, carriers charge a fee to provide the correct, deliverable address information back to you.
2020 Charges for Address Correction by Major Carrier:
- UPS $17.00 per package
- FedEx $17.00 per correction
- DHL $17.00 per shipment
It’s worth updating your database with corrected information for the future, or to consider shipping software that is already integrated with the US Postal Service’s database. Make sure the data you use is CASS-certified, meaning it uses the Coding Accuracy Support System (CASS) to check for accuracy against the USPS database.
Address correction charges only appear after the package is delivered, without any advance warning. That’s why it’s important to review your invoices and record any address changes for future shipments. If your customer provided the wrong address information and already paid for shipping, good luck trying to collect the extra charge! Shipping software that examines and corrects addresses up front can save you money and headaches.
Wrong Method Used
The second most common reason for invoice errors is not selecting the right shipping options from the start. Employees need to be aware of the most current methods, rates and billing programs to be able to find the lowest rates every time. Carriers have long lists of “Accessorial Fees” or what they like to call “Value Added Services” that are a significant portion of most invoices.
These charges are assessed for additional handling requirements, rural delivery areas and more. Some of the more common surcharges include:
- Dimensional (Length or Width) Overage
- Dimensional Weight Charges
- Collect on Delivery (COD)
- Delivery Confirmation (Signature Required;Adult 21+ Signature Required)
- Address Correction
- Delivery Reattempt
- Inside Delivery or Pickup Charge
- Fuel Surcharge
- Third-Party Billing
- Package Rerouting (Phone request; Web Request)
- Delivery Area Surcharges (Remote Area; Metro Service Area; Residential Area; Alaska or Hawaii; International)
- Return Pickup
- Saturday Delivery or Pickup
While it’s easy to know if you should be looking at a Saturday rate based on the expected pickup or delivery date, it’s not always easy to know if you’re selecting the right service from the right carrier for the lowest price.
For example, UPS has 10 different service levels with 12 delivery timeframe options for sending a domestic package, while FedEx has 11 options for U.S. package shipping. Do you know all the differences between SmartPost, SurePost, and SimpleRate shipping and when to use each?
It’s also important to be aware of new offerings for residential deliveries and how those prices compare with standard/saver delivery options with a residential surcharge. It’s not unusual for a warehouse worker to send a parcel using a specific service to save money, only to have two or three additional charges added at the back end. Unless you are actively reviewing carrier invoices, it will keep happening. The key is to use what you learn about those additional charges to improve internal training.
If you don’t have the resources to do that, it’s time to consider shipping software that does the rate shopping for you. To use rate shopping, you would first enter your contract rates for each carrier. Then, when an item is ready to ship, the software identifies the best way to ship it to meet your goals—such as fastest, least expensive, or to meet a specific delivery date.
What if you are keeping your database clean, and you’re always choosing the best rates and minimizing your accessorial fees, but your invoices are still higher than you expect? The truth is, with so many line items, it wouldn’t be surprising if some of the charges on your invoice are just wrong.
Sometimes there are accessorial fees on your invoice that you shouldn’t have been charged. Most of the carrier errors, however, are for packages that were not billed at your contract rates. So what are your options?
You could hire a third-party service to do a line-item audit of your invoices for you. The downside is that they keep a good portion of the money you were overcharged. For some companies, the attitude is that whatever they get back, it’s “found money,” since they don’t have the bandwidth to do their own audits.
A better option is to use invoice auditing software, like Varsity’s ShipAudit. The ShipAudit module is integrated with the company’s ShipSoft® shipping and rate shopping software. With ShipAudit software, all overcharges are credited back to your company, not just half. Plus, having the shipping software gives you the tools you need to validate addresses in advance, keep your database up-to-date, and to find the best rates to satisfy your customers.
One Final Tip: Avoid Overpaying
Shipping costs are inevitable. To get the lowest possible rates based on your shipping volume, it helps to have audited documentation about what (and how much) you are spending by carrier and by service. While this information won’t save you anything on this month’s invoice, it will help immensely when it comes time to renegotiate your annual contract.
Varsity Logistics is the preferred multi-carrier shipping software solution for the IBM i (AS/400) platform. Request a demo with a Varsity Shipping Specialist to learn how Varsity can help you eliminate costly errors and save money.