How to conduct a freight and parcel audit

If you work in an office, you probably spend some time each week thinking about how you get there—and how much it costs. Transit, driving, biking, rideshare: Each method has obvious expenses, but you might not know exact figures without doing a little digging. Maybe you add things up at the end of the month and realize your occasional Uber is actually a weekly habit (and you really need to remember to move your car for street sweeping).

A company moving goods around is dealing with much bigger numbers, but unless brands are auditing their freight spend, they might be similarly in the dark. Unwanted charges add up fast, and without regular freight audits, it’s difficult to identify needless spend, or remedy the pain points that lead to recurring accessorial fees.

Freight and parcel audits are crucial for businesses for whom shipping merchandise is a core business function. By regularly reviewing your shipping invoices and processes, you can identify areas for cost savings, improve efficiency, and ensure you’re not overpaying for services. In this guide, we’ll walk through the steps to conduct a thorough freight and parcel audit.

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Gather your shipping data

The first step is to collect all relevant shipping data. The bulk of these documents will be carrier invoices (e.g. FedEx, UPS, USPS, DHL) and shipping manifests. Pay particular attention to details on any accessorial fees or surcharges, and be sure that you’re accurately capturing and categorizing these sneaky charges.

You’ll also want to compile information on any lost or damaged shipments. This, plus carrier insurance agreements, will give a picture of reimbursements that are owed, and ensure that these funds are being collected as owed, in a timely fashion.

There’s one component of shipping data some might not think of: records of any shipping contract negotiations or changes. You want to be sure that you’re aware of the most up-to-date carrier agreements, and that these agreements are being honored across the board. Compiling all of this information will give you a comprehensive view of your shipping spend and history.

Analyze your data

Once you’ve compiled all your shipping data, it’s time to dive into the analysis. First, look closely for any incorrect or duplicate charges on your carrier invoices. These erroneous fees can add up quickly and are often easy to overlook without a thorough review.

Another key area to examine is accessorial fees. Many of these surcharges, such as fuel, residential, or oversized package fees, can potentially be negotiated with your carriers or avoided altogether through process improvements. Identifying opportunities to reduce or eliminate these accessorial fees can lead to significant cost savings.

You’ll also want to scrutinize how your shipments are being classified and rated. Incorrect classification can result in you paying more than necessary, so validate that your packages are being charged at the proper dimensional weight, service level, and other relevant factors. Digging into these areas of potential overspend will be crucial to optimizing your freight and parcel management.

Identify opportunities for improvement

Based on your analysis, the next step is to identify specific opportunities to improve your freight and parcel management. One key area to explore is your carrier contracts: See if you can renegotiate rates, service levels, or other terms to get more favorable pricing. You may also want to research alternative carriers or shipping methods that could provide cost savings.

Another important consideration is your internal processes and infrastructure. Implementing better tracking and reporting systems can enhance visibility into your shipping activities and costs. Optimizing your packaging and fulfillment workflows can also lead to reduced dimensional weight charges from carriers. Additionally, automating invoice auditing and payment can help catch errors and streamline your administrative overhead.

Only by digging deeply into your data, and the intricacies of your workflows, can you develop a comprehensive plan to make process improvements. Greater logistical efficiency is a good unto itself, but it’s also guaranteed to bring cost savings—and perhaps even greater revenue.

Take action and monitor progress

Once you’ve identified opportunities for improvement, it’s time to take action. Data is a valuable companion, but it’s an even better friend when paired with good communication. With new insights and a fresh vision, you can work with your shipping providers, logistics team, and other stakeholders to implement desired changes.

Note: A freight and parcel audit is not a one-time deal. You’ll want to make this a habit, in order to ensure that process improvements are bringing desired results, and to identify new issues that might bubble up. Continue to monitor your progress, and your freight and parcel management will keep improving.

Conducting a thorough freight and parcel audit can yield significant cost savings and operational improvements for your business. By following the steps above, you can gain visibility into your shipping spend, identify areas for optimization, and implement changes to streamline your logistics.