9 Common Hidden Costs of LTL Shipping: How to Identify and Avoid Overcharges

Blame Amazon or whoever you want, but customers today are more demanding than ever when it comes to shipments, whether it’s a B2C or B2B delivery. It’s hard enough to meet increasing customer expectations for fast shipping, and even the best carriers can make mistakes. Unfortunately, this often leads to overcharges, misclassifications, and add-on fees.

Here are nine of the most common hidden costs in LTL shipping that lead to inaccurate billing, along with ways to identify and dispute charges effectively.

9 Common Hidden Costs of LTL Shipping

1) Incorrect Discount Rates

You negotiate your discount contract rates or spot quotes with carriers, but what happens when they apply the wrong rates to your invoices? Whether it’s the volume of orders they process, the automation they use, or a human error, carriers often miscalculate discount rates. To avoid losing money due to these common errors, consider developing the following strategies:

• Identification Strategy: Implement an auditing system to compare every invoice against contractual discount rates and flag any discrepancies for review.
• Dispute Strategy: Establish a process for contacting the carrier within 24 hours, indicating contract rates, discrepancies, and a calculation showing the correct rates.

2) Accessorial Charges and Fees

Accessorial charges are often challenging to track manually. Fees should align with contractual agreements, but these costs can vary based on the services provided. We’ve seen bills for accessorial services that were provided, but not part of the original order. Fuel surcharges can also vary greatly depending on current prices. Here is what you can do:

• Identification Strategy: Monitor and compare accessorial charges, especially surcharges, against contract terms.
• Dispute Strategy: Present the carrier with a breakdown of the overcharges, requesting an adjustment to the invoice.

It's important to clearly specify on the BOL what services are and are not required to help prevent unnecessary accessorial charges. For instance, a carrier might assume a lift gate is needed for a residential delivery, but the customer may have a forklift or a team available to assist.

3) Weight Accuracy 

Discrepancies between what’s listed on the BOL and the actual weight can create higher charges. Unless you have a foolproof system to verify weights and measurements as shipments go out, you risk charges that exceed your estimates. Here is how you can help:

• Identification Strategy: Weigh and measure each shipment before sending and compare the data to what’s listed on the BOL. Visual confirmation or dimensioner logs can help.
• Dispute Strategy: Provide the carrier with documented evidence of the correct weight and dimensions and request a revised invoice. Avoid listing weights that have zeros - for example 2500 lbs. is a red flag for a W&I person to make sure that shipment is reweighed.
  

4) Reclassification

Since NMFC (National Motor Freight Classification) freight classification is crucial to shipping costs, misclassification can result in a reclass. This can produce surprise charges. Ways to avoid this include:

• Identification Strategy: Document that shipments are classified correctly according to industry standards before shipping and then compare to invoices.
• Dispute Strategy: Submit proper documentation of the correct freight class to the carrier and request a reclassification or refund of the overcharge.

Listing the full NMFC item number with subcategories on BOLs helps ensure that carriers are not guessing how a commodity should be classed based on their limited knowledge of the item being shipped.

5) Duplicate Invoices

When the same shipment is billed more than once, it’s easy to overlook it and pay twice. This is especially common for high-volume shippers who may run regular shipments of product classes along the same route. Useful ways to catch this are:

• Identification Strategy: Use automated invoice tracking software to detect any duplicate bills.
• Dispute Strategy: Notify your carrier immediately upon detection of duplicates and request cancellation of the duplicate invoice.

6) Rate Variances

You should expect variances in rates, even for similar shipments. Shipment size, method, route changes, and other factors can impact rates and produce disputes. While these charges may be valid, it's important to verify them through:

• Identification Strategy: Track and compare shipment costs to identify unexplained rate differences.
• Dispute Strategy: Request a detailed explanation from the carrier for the rate differences and negotiate consistent rates for similar shipments.

7) Service Failure Refunds

A commonly overlooked billing error is failing to note service delivery violations. Even if there is a guaranteed delivery window, carriers may not indicate they missed it. You might be entitled to a refund, but only if you check delivery times against service agreements. You can ensure this by:

• Identification Strategy: Track delivery performance against service level agreements to identify missed guarantees. Require time-stamped proof of delivery for each invoice.
• Dispute Strategy: File a claim with the carrier for a refund, providing evidence of the service failure.

8) Incorrectly Billed Shipments

Clerical errors, system errors, and even typos can produce incorrect billing. Between 5% and 10% of all shipping invoices are estimated to contain some form of billing error. Part of the issue is there is still a high level of human involvement in billing, which leads to human error. You can isolate errors through:

• Identification Strategy: Review each invoice for accuracy, comparing it to the original shipment details to find discrepancies.
• Dispute Strategy: Outline the errors to the carrier, provide the correct shipment details, and request a corrected invoice.

9) Late Payment Fees

Late fees are added to your invoice when you don’t pay bills on time. The easy way to avoid these fees is to pay before deadlines. If you do see late fees, however, you need to check them carefully. Carrier systems may have a default fee that differs from your contract. We’ve also seen late payment fees added improperly, such as charging for LTL billing that is currently in dispute. Use these strategies to help avoid erroneous late fees:

• Identification Strategy: Track payment deadlines and terms looking for discrepancies between agreed terms and invoiced fees. Keep disputes organized for easy review.
• Dispute Strategy: Provide your carrier with evidence of the disputed invoice and request a late payment fee waiver.

Uncover More Savings with Expert Insights

The hidden costs of LTL shipping can add up quickly, cutting into your bottom line before you even realize it. By understanding these common pitfalls and adopting proactive strategies to identify and dispute inaccuracies, you're already on the path to significant savings. But why stop here?

Download our comprehensive ebook, Optimizing the LTL Billing Disputes Process: What CFOs Need to Know to Streamline Their High-Volume Shipping, and learn how to:

• Implement a bulletproof auditing system
• Effectively manage and reduce billing disputes
• Leverage technology to streamline processes and cut costs

Arm yourself with the knowledge you need to master LTL billing disputes and protect your profits.