Freight Auditing
Also known as: Parcel Audit, Shipping Audit, Carrier Audit
Definition
Freight auditing is the systematic review of shipping invoices to ensure carriers have billed correctly. It identifies overcharges, billing errors, and service failures that warrant refunds, helping shippers recover money and control costs.
Common Billing Errors Caught
| Error Type | Description | Typical Recovery |
|---|---|---|
| Duplicate charges | Same shipment billed twice | 100% |
| Weight errors | Incorrect weight applied | Variable |
| Zone errors | Wrong zone calculated | Variable |
| Late delivery | Missed service guarantee | 100% of shipping |
| Wrong rate | Contract rate not applied | Difference |
| Invalid surcharges | Charges that shouldn’t apply | 100% |
| Address correction | Applied incorrectly | 100% |
Types of Freight Audits
Pre-Payment Audit
- Review invoices before payment
- Catch errors before money leaves
- Delay payment until resolved
Post-Payment Audit
- Review after payment made
- File claims for refunds
- Often goes back 6-12 months
Real-Time Audit
- Automated systems check each invoice
- Immediate exception flagging
- Prevents errors from accumulating
Audit Process
- Collect invoices - Gather carrier billing data
- Validate rates - Compare to contracted pricing
- Check weights - Verify actual vs. billed
- Review surcharges - Confirm validity
- Check service - Compare promised vs. actual delivery
- File claims - Submit refund requests
- Track recovery - Monitor claim status
Typical Recovery Rates
- Parcel carriers (UPS, FedEx): 2-5% of spend
- LTL carriers: 3-7% of spend
- Service refunds: Significant for time-definite
Audit Options
In-House
- Full control
- Requires expertise and resources
- Software tools available
Outsourced
- Audit specialists handle everything
- Typically paid on contingency (% of recovery)
- Access to industry benchmarks
Hybrid
- Automated tools catch obvious errors
- Human review for complex issues
- Balance of control and efficiency
Ready to ship?
Compare shipping rates instantly
Try Free