Most shippers know that if they don’t weigh and measure their packages accurately then the estimated shipping cost inside their Transport Management Software (TMS) may vary significantly against the carrier’s invoiced charge. Furthermore, if the shipper uses this shipping cost estimate for the purpose of recovering their freight charge, then if the variance is high the shipper maybe unknowingly short change themselves.
In a new series of posts, we will share various ways in which our TMS: 2Ship can easily improve the cost recovery outcomes for our customers.
Today’s post will describe how 2Ship offers a simple client setting that can easily alert you (before shipping) to a situation where the carrier freight charge is likely to be significantly more than initially estimated.
Companies that wish to charge for the shipping of their orders, should be very accurate in how they estimate the cost of shipping prior to having things “ready to ship”. This means, and is typically true in ecommerce sales, that there is an estimate of the cost to ship an order while the order is still being taken and it’s still inside the customer’s shopping cart. In the case of business to business (B2B) these estimates are given at the time the order is being placed, sometimes online, sometimes via phone or email.
Couple this challenge with the fact that today carriers often charge on the volume of goods being shipped rather than the dead weight of the items. This means shippers should estimate the total weight of the shipment as well as how many packages will be needed to pack those goods and what size packaging will be used as.
It’s no wonder most companies inevitably have shipping costs eat into their sales margins. 2Ship is putting an end to all this nonsense with many features and smarts. Yes, we have algorithms to calculate volume weight. Yes, we can figure out the best way to pack all items in an order and what package sizes to use to minimize volume. Yes, we allow our clients to markup on their freight costs to cover any unforeseen mishaps in practice… but there’s now even more…
In order to reduce the risk of under recovering freight charges, 2Ship has a client setting that is called “Check Deviation at Ship from estimate”. This feature includes the option to set a variance percentage thereby allowing you to control how aggressive you want to be notified about the variance. That value becomes the allowed deviation and should be lower than the % markup applied to one’s shipping charges.
When this setting is active, 2Ship compares the expected freight charges at the shipping of the order with the estimated charges when the order was first generated and yes you guessed it, if it’s off by more than the nominated variance percentage, 2Ship holds the order, alerts those who need to be informed and waits for approval before the order can be labelled and shipped.
At this point there is not much that can be done, unless it’s packed incorrectly or there is a cheaper service alternative, the freight charges are what they are. But those who should know, now know why this happened and what they can look for in the future to reduce the incidence of discrepancies. Maybe the dimensions of a product in the order were stored incorrectly, maybe they forgot to replenish packaging before it ran out and were forced to use a larger box. At least the shipper now has the opportunity to increase the freight recovery amount from receiver and improve their cost recovery outcome.
This setting is just one way in which 2Ship can easily assist shippers to reduce the risk of poor freight recovery – if that is important to them. Stay tuned if you are interested in other smart features that helps shippers capture the true cost of shipping for freight cost recovery. In the meantime, if you would like to know more about this feature or any others then please reach out and let us know.