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Small Parcel Auditing to Identify Cost Savings Opportunity

Key Takeaways:

  • Audit your parcel carrier invoices to recognize cost savings opportunities.
  • There are 3 main options to tackle small parcel auditing: manual, software, or 3rd party.
  • The main items to look for during parcel auditing are: incorrect audited dimensions, unjustified address corrections, incorrect accessorial charges, and frequently audited parcel dimensions.

The Details:

Many businesses, ranging from e-commerce to manufacturing and beyond, utilize FedEx or UPS for their small parcel shipping needs. Most shippers do not realize that UPS and FedEx frequently produce costly billing errors you can dispute for a refund or credit. While it may seem like a tedious task, it is important to review the itemized charges of each package shipped to look for any audited charges. There are several options to handle bill auditing.

3 Options for Parcel Auditing

The most common form of bill auditing is manual auditing. For many businesses, there are few enough shipments that each week’s invoice can be reviewed at an itemized level in hours or less.

If you do not want all the efforts of manual bill auditing, then software solutions are available to automate the process. These software systems allow you to upload your UPS or FedEx invoice into their system. The software will then evaluate your invoice and return all instances of billing errors and outliers (extreme cost, large carrier audited difference, etc).

The final choice to manage carrier bill auditing is outsourcing to a third party auditor. This is generally the most expensive solution as these third parties generally collect a percentage of the refunds and credits that they earn you.

What are you looking for during the small parcel audit?

Below are some of the most frequent UPS and FedEx billing errors (in no specific order).

Incorrect audited dimensions

  • FedEx and UPS audit the dimensions of each carton multiple times throughout its journey through their supply chain network. Many hubs have automated dimensionalizers that read the dimensions of each carton as it passes along a conveyor run. The audited dimensions must match the dimensions entered by the shipper at the time of shipment. If they don’t match, the carrier will adjust the dimensions of the package and correct the billing info to match the audited dimensions.

Unjustified address correction charges

  • Carriers will often assess a hefty address correction fee for unnecessary address corrections. Examples of unjustified address corrections include: changing Unit # to STE, moving the STE # to the second address line, adding a period (.) to the end of acronyms (ST, AVE, STE, DR). At times carriers will even access an address correction fee when there is no visible difference between the original and audited address!

Incorrect accessorial charges

  • There is a wide range of accessorial charges that UPS and FedEx may apply to a shipment. These charges range in cost but each result in valuable lost profits for the shipper. Frequently, “Additional Handling” fees are a surcharge charge applied. This charge is generally the result of shipping a large package, a package not encased in corrugated, or a package with a single side that is long.

Frequently audited parcel dimensions

  • Although this is not a billing error, it is worthwhile to watch for during bill auditing. UPS and FedEx each round up in instances of a fraction of an inch. IE a 5x5x5 carton actually measures 5.5×5.5×5.5 so UPS and FedEx consider the dimensions to be 6x6x6. If you or your team are consistently entering incorrect dimensions on the same carton size then you may be losing money. If you enter the correct dimensions during shipping then you can be confident that the price you are seeing during shipping is the final price; you will then compare this price to any alternative rates. Calculating with incorrect rates when comparing, will cause issues. The main issue is costs may be more expensive after the real audited dimensions are recorded. Be careful not to select a carrier that is actually more expensive.

If you need help evaluating your carrier rates or understanding your carrier invoices, please contact us here.

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