How to Avoid Losing Money on Freight ChargesWritten by Neal Willis
Ecommerce sellers, especially those selling heavier items being shipped on pallets, face the difficult challenge of accurately quoting and billing customers for freight charges. Because consumers typically pay for online orders at checkout with a credit card and the transaction is closed out once the card has been processed, sellers have no easy way to go back and recoup additional money from a customer for charges that weren’t originally billed at the time of sale.
Perhaps the shipper failed to realize a delivery requirement or didn’t request a particular service on the bill of lading, or the consignee may have requested a service at the time of delivery without the shipper knowing. Either way, ecommerce sellers will sometimes lose money on sales when they’re left with a balance due for services rendered by the carrier that weren’t factored into and billed to the customer in the original selling price at checkout.
Unless the consignee (or other party) has a specific agreement in place with the delivering carrier, the carrier does what’s necessary to deliver a shipment and bills the shipper for the services and equipment utilized to do it. Regardless of who is to blame or why, the shipper remains responsible for the freight charges and can be stuck with having to pay for something that could have been avoided had accurate information about the shipment been obtained up front. This is where understanding your customers comes into play. Knowing your customers and their delivery requirements is a vital component to accurately quoting freight and avoiding unexpected freight charges.
Shippers can best avoid added freight costs with accurate shipment information, which includes accurate weights and dimensions of the freight, including its packaging, as well as any special delivery or equipment requirements and the correct freight class and commodity classification code(s).
Another key component to accurate freight quoting and billing involves shippers educating their customers on freight and the shipping process, which means making sure their customers understand such things as what differentiates a commercial and non-commercial delivery, when they will need to request a lift-gate and/or inside delivery and what constitutes a limited access site, among other things.
Some shippers may think they can recuse themselves of liability for unforeseen freight costs by writing verbiage on a bill of lading (BOL) that states something along the lines that any charges not previously requested or authorized per the bill of lading are to be billed to the consignee (or other party). The use of such language, however, does not protect them from being billed by the carriers for additional charges.
Even if carriers could bill another party for the added services, the accounting problems that could potentially result from splitting up freight bills between two parties is a nightmare to think about, not to mention the fact that there’s really no good way for a carrier to tell at the time of delivery if a consignee already has pricing and/or credit in place, which could mean totally different rates, etc.
Having correct shipment information and delivery requirements and relaying that information to the carrier is ultimately the best practice for improving freight quoting accuracy and avoiding unexpected freight costs. If your shipment information is not accurate, it can drastically affect the rate you end up paying should the carrier catch and decide to correct the invoice. Carriers are increasingly using dimensional machines to inspect freight and check for accurate weights, measurements and classes, and the information that these machines yield is nearly undisputable.