Trax Technologies

Learn the Real Cost of Freight Shipping

Updated: 03-05-25

Key Takeaways

  • Freight audits reduce costs and improve efficiency by identifying hidden expenses and optimizing shipping operations.
  • Data-driven analysis uncovers billing errors, unnecessary fees, and inefficiencies like underutilized capacity.
  • Automated audit technology enhances accuracy, improves visibility, updates rates in real time, and streamlines freight cost analysis.
  • Expense auditing centralizes data, reducing delays, strengthening vendor relationships, and improving financial performance.
  • Trax provides freight audit and payment solutions, helping global organizations optimize transportation spend.

 

Freight audits are among the best ways to curb unnecessary freight costs, maximize efficiency, and drive business growth. By analyzing key factors such as freight rates, labor expenses, and the quality of your chosen shipping service, audits provide the insights needed to streamline operations.

In 2023, business logistics and transportation costs surpassed $2.4 trillion. While growth rates dropped 10% from the previous year, freight shipping costs still represent a substantial portion of the U.S. economy. Even incremental improvements can have an enormous impact on leaders in this space, so auditing is a vital business exercise.

Real freight costs are uncovered by freight audits.

How do audits help business leaders understand costs across multiple shipments and multiple carriers all over the world? The answer to this question is simple — data. Growth in today’s supply chain requires rigorous oversight of freight costs. To uncover freight expenses, an ever-growing amount of data must be sifted through either manually or through freight audit and payment technology (FAP).

At Trax, our goal is to help global organizations improve how they manage transportation spend, including freight rates, labor costs, freight costs, and more. We view technology as an essential component that can help simplify the complex challenges that are all too common within supply chain management.

How Audits Uncover Freight Shipping Costs

Audits shed light on broad freight shipping cost patterns and inefficiencies in the logistics process. For instance, they can highlight areas where consolidating shipments, optimizing routes, or addressing unexpected charges for expedited delivery could reduce expenses. Freight audits also bring visibility into trends such as recurring late fees or costs associated with underutilized capacity, enabling companies to address systemic issues that can arise while transporting goods.

With detailed and accurate data, organizations can make informed decisions to improve freight shipping costs and better allocate resources. Ultimately, freight audits are not just about correcting errors—they provide actionable insights that help streamline operations and optimize the financial performance of the supply chain.

What is a Freight Invoice Audit?

A freight invoice audit reviews the invoices multiple carriers issue to shippers for their services. Those invoices are meticulously reviewed to ensure accuracy based on pre-negotiated services and associated freight costs.

Think about how many invoices your organization receives weekly, monthly, or yearly. 

If every freight shipment has an invoice, and your company handles 100,000 shipments a year, that is 100,000 invoices that need to be audited.

The challenge is that auditing freight invoices isn’t always comparing apples to apples. You're dealing with layers of data: freight class, international shipments, seasonal demand, shipping rates, fuel prices, hazardous materials (or other material types), origin and destination, off-peak times, accessorial charges, and regulatory components, to name a few of several factors. The markets you operate in could also add complexity to the process.

Still, organizations undertake freight audits to cut shipping costs and improve their bottom line, even if the process requires an army of auditors and devours resources.

Common Items Found in Freight Audits

Freight audits can reduce costs and maximize profits, benefiting shippers and their customers. Several common errors can quickly be uncovered. These include discrepancies in areas such as fuel prices, which often fluctuate and can lead to incorrect charges, as well as:

  • Incorrect charges
  • Duplicate charges
  • Incorrect weight or dimensions
  • Misclassified goods
  • Late deliveries or pickups
  • Consolidation errors
  • Accessorial charges

With a manual process, it can be difficult to pinpoint all the charges simply because human error is part of the equation. By implementing a freight audit and payment system, technology can quickly and accurately identify errors, making it easier to pinpoint where you are losing money and take corrective action.

Expense Auditing

If invoicing is one side of the coin, the other is expenses. With a manual auditing process, invoices and expenses are traditionally siloed out. Each requires dedicated teams and resources to manage properly and be cost-effective.

While the siloed approach might work, it does not save time. Information gaps and delays in getting the appropriate data impact the decision-making process. Errors that might not be uncovered until months after the invoice has been paid are instantly recognized when the process is centralized – saving your organization time and money.

The auditing process directly supports good carrier and vendor relationships. Improved transparency leads to reliable service, competitive pricing, better communication, and stronger relationships because all parties involved are in the know. Additionally, corrective action can be taken when a carrier consistently invoices incorrectly, or the partnership can be dissolved accordingly.

Intelligent Automation

The need for technology intensifies as the process of getting your products from the manufacturer to the end customer becomes more complex. Shipping goods across multiple modes of transportation means dealing with multiple hand-offs, each with processes and interdependencies that might require special handling.

To manage the auditing process as your business scales, you are ultimately left with two options – increase your labor force or leverage technology. Automated systems free up more resources that can be redirected toward core business activities like comparing pricing with a freight rate calculator to reduce freight costs.

Here are five benefits of leveraging automated freight audit technology over manual audits.

Error Detection

Manual processes are fraught with human error, and even the best-trained auditors aren’t as accurate as AI-based systems. With technology, even the smallest discrepancies are quickly and accurately identified, allowing action to be taken immediately.

Improved Visibility

As we said before, so much of supply chain management is siloed, and technology can consolidate processes. This leads to fewer information gaps, better data management, and improved decision-making.

Rate Change Updates

Rate changes are a constant challenge that shippers are forced to juggle. In recent months, inflation and consumer demands have seen rates fluctuate wildly from one week to the next. With a manual process, organizations are completely reactionary, especially when working across multiple markets or modes of transportation. Technology can automatically update based on real-time rate changes, resulting in more accurate audits.

Freight Shipping Costs Analysis

Knowing where your money is being spent and where you can improve is essential to scaling your business and freight rates. Intelligent automation streamlines benchmarking, allowing you to determine which carriers within your freight shipping network are performing easily and the final cost of shipping within your network.

Instant ROI

Implementing any freight audit system will take time and resources, but it pales compared to the time needed to train new team members and get up to speed as your business grows. Once the system is up and running and data starts pouring in, results are only a few clicks away.

Save Freight Costs With Trax

With technology, you can efficiently take in data, manage rates, contracts, and compliance, improve visibility and shipping costs, and automate the carrier payment process.

The more centralized the process becomes, the easier it is to determine areas of improvement and scale. Through intelligent automation, you can easily shift from reactionary to proactive management of a freight shipping cost audit process, improving your customer service experience and vendor relationships.

Since 1993, Trax has been dedicated to helping global organizations simplify the complex challenges of the supply chain. That dedication has helped our team be recognized as an industry leader in freight audit and payment technologies.

To learn more about our freight audit and payment solutions and other offerings, visit our website or contact our team today.