We see this almost every day with a certain segment of our customer base; the LTL shipper that feels they are better off “fudging” details of their shipment in order to try and reduce the freight charge from their carrier or ltl broker.
From what I’ve seen, the short term gains, if any, don’t outweigh the long term costs of this practice. So let’s dive in and a look at the downfalls of using incorrect information when processing an LTL shipment.
Carriers Catch on Quickly
Customer X will fudge a few hundred or even thousand pounds (yes, we’ve seen that) off the weight of their shipment. During the freight quote stage and bill of lading creation process they portray an inaccurate weight or freight class. In reality, not every LTL carrier weighs and inspects each shipment.
Some carriers are much more diligent about this practice than others, and in general most carriers have started inspecting a much higher % of their shipments. However, once a carrier catches a customer listing weights or freight classes that are egregiously off, the customer will most likely be permanently flagged in the carrier’s system.
Guess what? Now every time that shipper pushes freight through that carrier’s system, the weight and inspection department is going to go out of their way to inspect it, because they know there is going to be extra revenue sitting on the table.
Customers Miss Out on Pricing Opportunities
Many customers fail to realize how diverse LTL pricing can be, whether by calling around to carriers directly or within an ltl freight broker’s negotiated rates with their common carriers. What I mean by this, is that pricing can vary greatly with a few hundred pounds of weight difference, or by different freight class ranges so that a carrier that is cheapest for something at Class 92.5, may be the fourth or fifth most expensive carrier at class 150.
When a customer misrepresents what they are shipping, they are setting themselves up for a reweigh or reclass, and the potential for a much higher final accurate charge then had they just been honest up front and had the opportunity to see the actual carrier pricing options for that particular load.
Let me give you an actual example of this from our own TMS. If I run a shipment from Austin, TX to Los Angeles, CA at class 60 and 3000lbs, the cheapest option we have is YRC. However, let’s assume the customer ran this rate knowing their freight was truly class 85, but decided to try and get away with an improper class, but ends up getting caught.
The YRC cost goes up 33% at class 85. However, if the customer had run the rate at class 85 to start with in our system, Saia would have been the cheapest option and only 6% more than the original YRC rate at the class 60 example.
We see this commonly with customers not listing certain accessorials, such as Limited Access Delivery or Residential Delivery, just hoping the carrier won’t catch it. However, in almost all cases it does get caught and many times the customer could have gotten a better rate with a different carrier by just listing the accurate additional services from the beginning.
Whether most carriers or ltl brokers will admit it or not, I certainly know that we don’t enjoy the extra workload that a customer who constantly tries to get away with fooling the carriers puts on our system. At FreightPros, we pride ourselves on the sophistication of our billing auditing systems and catching billing mistakes is a huge selling point with us for our LTL customers.
That being said, LTL auditing is a major undertaking and knowing that we have customers that are trying to beat the system and invariably create extra work for our system on each and every shipment is a drain.
How does this effect the shipper? Well whether from an ltl broker or carrier’s perspective that shipper just became less profitable to them due to all the additional overhead in dealing with shipment audits that were destined to happen from the start.
As a shipper your are in the strongest position of power with a carrier or ltl broker if you are shipping consistent, easy to move freight, that operates well for them.
You weaken your ability to negotiate better pricing by moving freight whose pricing is constantly being adjusted, as the opportunity to move your cargo becomes less desirable the most aggressive pricing is generally phased out.
While a shipper may “get away” with misrepresenting their shipping information in the short term, the long term effects with their carrier and broker probably outweigh these small gains and end up costing them more in the long run.
I’m definitely interested in hearing more on this from the shipper, carrier, or brokers point of view. Feel free to comment below.