How LTL shippers can reduce invoice surprises

“Reducing Invoicing Surprises,” the third session of the SMC³ LTL Online Education webinar, featured Tyler Limbaugh, Truck Audits Manager at American Rail & Truck Audits (AMTR).  He got to the bottom of what can go wrong in pricing freight — and how shippers and carriers alike can avoid mishaps.

AMTR works with shippers after freight has been paid to resolve any disputes concerning overcharging. While auditing is sometimes necessary to recover lost freight dollars, Limbaugh pointed to several measures that both shippers and carriers can take to avoid auditing.

In general, Limbaugh’s advice boiled down to common sense: know your freight, report it accurately, and make sure you do due diligence during the contracting phase.

Most common errors

The two largest and most common errors in pricing freight pertain to classification and accessorials. It is easy for freight to be misclassified. It’s also easy for a contract to have accessorials tacked on that aren’t appropriate for the freight. Many of these fees are added in error, often by shippers themselves.

For example, a shipper might use a template that marks their freight for inside delivery, but the freight itself only needs to go to a distribution center or a warehouse. Similarly, a template may have a “protect from freezing” clause that’s clearly not appropriate for shipping in a warmer climate.

How shippers and carriers can protect themselves

Stopping these errors from happening takes collaboration and communication between shippers and carriers.

For shippers, Limbaugh stressed the importance of knowing their freight as well as their carriers do. While carriers often have advanced tools like dimensioners to exactly measure freight, shippers often rely on templates for classification. Misusing templates often comes down to rushed or sloppy work that could have been corrected on the front end. Shippers should carefully review their Bill of Lading for accuracy before freight goes to carriers. Limbaugh advised shippers to have as much information as possible when negotiating pricing with carriers. Correct assumptions about the freight will deliver accurate pricing. 

It’s also important that shippers provide accurate information on freight dimensions and density. The latter is particularly important because NMFTA heavily relies on it as a unit of classification. In general, shippers must keep abreast of the latest classification changes implemented by NMFTA, which frequently updates its system. Limbaugh noted that NMFTA plans to make major changes to its system — primarily simplifying classification by density. Shippers will need to monitor these changes to optimize their freight pricing efficiency.

But accuracy isn’t solely on shippers. Limbaugh said that carriers need to help by communicating errors in classification and accessorials to the shipper — errors they’re more likely to spot. Both shippers and carriers must carefully monitor freight to ensure the charges align with what’s being actually being shipped. They also need to communicate openly about legitimate charge disagreements.

“Make sure you know your freight just as well as the carrier will. Every carrier has a weigh-in and inspection division,” Limbaugh said. “They will inspect your freight if they think that it’s wrong. It is in everyone’s interests to make sure that freight is accurate. Maybe you guys have a disagreement on what your item should fundamentally be classified. When something like that happens, you have to have a conversation, or it’s just gonna keep getting changed by the carrier, resulting in higher classifications for you as well as higher freight charges.”

New tech on the horizon

Limbaugh was optimistic that new technology will help streamline the pricing process. For example, he cited the electronic Bill of Lading (e-BOL) as a positive trend picking up steam. With its basis in validated data, the e-BOL has the potential to ensure that shippers don’t accidentally request the same accessorial every time. E-BOLs also provide detailed, digital records of services rendered, including accessorials.

Limbaugh also brought up AI, noting that the NMFTA is pioneering its use for more precise classification. He stopped short of full-throated praise, however, citing similarly hyped technologies, like blockchain, that fizzled and never gained traction in logistics. 

“But a lot of the AI applications do seem much more practical,’ said Limbaugh.

Interested in joining LTL Hybrid Sessions? Register here: https://smc3.info/LTLedu