In a new study conducted by Logica, a parcel and freight audit company, most US-based organizations overspent by an average of 13% on their annual shipping costs. Researchers at Logica state that the overcharges came from many different categories, but mostly stem from inconsistent discount practices, accessorial charges, and extra fees added on by carriers.
“13% is in line with historical norms,” says Thomas Andersen, Director of Logistics and Supply Chain Services for Logica. “Each year it fluctuates, but last year’s average overspending of 13% doesn’t surprise me. It concerns me that it’s that high in the first place, but that’s a discussion for another day.”
Based on the study, Logica also finds that most companies don’t even know they’re overspending at such a high rate.
“I always get suspicious of numbers that are so high,” said Rob Nelson, President and CEO of Logica. “In this case, however, history seems to bear out. What worries me more is that companies aren’t aware of the problem. Certainly some are, but given the current economy, I’m surprised more companies aren’t aggressively finding ways to keep that money in house.”
The study also shows that shipping carriers continued their annual practice of applying rate increases that have a greater financial impact than published.
“In 2012 so far, we’re running at about the same 13% rate,” says Andersen. “Given that we’re flat this year, I’m curious to see what the future holds. But what I’m nervous about are those organizations that could really use that money. From my experience, more than 90% of shippers could make minor changes that would generate double-digit savings. If they began to analyze the details of their transportation costs, it could make a big difference in their overall shipping spend.”