18 Jun High Freight Rates Amplify Need For Multimodal Freight Audits
Note: This post has been updated with freight-rate data gathered in October, 2021.
For good reason, shippers and supply chain managers are alarmed as they hear that high ocean container-shipping costs and a cacophony of supply chain issues may continue until sometime in 2023. Peak season can be exhausting, especially when it feels like a never-ending drama. 1
Last year, many shippers were concerned about how expensive freight transportation had become – especially ocean carrier shipping. It is fair to say no one was prepared for today’s reality. Asia to Northern Europe rates are up 621% year-over-year. Asia to the US West Coast rates are up 417% and Asia to the US East Coast 393%. Even so, capacity is tight and exporters as well as importers are paying premiums to get their goods moving. 2
Ironically, as ocean cargo rates are climbing, on-time shipping performance is declining, and an abundance of supply chain disruptions are contributing to these delays. Covid outbreaks have impacted a number of vital, high-volume port terminals in Asia. A combination of Covid outbreaks and power shortages are also jolting manufacturing operations in Asia.
Many supply chain and logistics managers have been experiencing a state of constant crisis since the beginning of the pandemic. Demand for a wide range of goods contracted and then soared, causing key ports and terminals that handle containers to become congested, which resulted in significant delays.
There is no reason to suspect that demand for goods from factories in Asia will decline. In fact, according to the World Trade Organization, Asia’s exports of goods will be 18.8% higher by the end of 2022 than two years earlier. Other economists also forecast a rapid growth of exports from Asia. HSBC, a UK bank, expects Vietnam to experience annual average exports growth of 13% between now and 2026. Bangladesh will be a close second at 12.9%. 3
RISING FREIGHT RATES, LONG SHIPPING DELAYS ARE STRESSFUL AND COSTLY
With muddy waters swirling around timely ocean cargo deliveries, many businesses are turning to air freight to bypass congested seaports. However, demand for air cargo is high, capacity is tight and rates are more than double what they were just 2 years ago. 4
In the US, shippers that rely on Truckload and LTL carriers are also feeling the pinch. Increasingly strong demand has continued to push rates higher over the past 12 months – up 42% year-over-year. Elevated demand is expected to continue through the end of the year. 5
Those who rely on parcel shippers to deliver goods to their customers will also be paying more. According to a recent Wall Street Journal article, shipping rates are rising faster now than they have in nearly a decade. FedEx recently announced rates will increase in January by an average of 5.9%. Of note, the 5.9% GRI announced by FedEx is 20% higher than last year. UPS is expected to soon make a similar GRI announcement. Industry analysts say the carriers are bullish and confident they have uncommon leverage to squeeze higher margins out of their customers next year. 6
Frankly, global, multimodal shippers are navigating unchartered waters. Global logistics and supply chain managers are feeling the pinch as every mode of transportation is costly and in a capacity crunch. Global supply chain disruptions continue to proliferate.
In the midst of this expensive, chaotic mess, now is the time for you to realize the many benefits that SSI global, multimodal freight audits provide.
COUNTER HIGH FREIGHT RATES WITH SSI MULTIMODAL FREIGHT AUDITS
Fortunately, there is something supply chain managers and their counterparts in operations, finance, e-commerce, freight and logistics can do to combat the ever-increasing cost of transporting freight. They can count on SSI to audit every freight bill and parcel invoice across their entire supply chain.
Multimodal freight audits from SSI provide valuable savings and are customized to meet the unique needs of each customer’s global supply chain. Interested? Fill out the form at the bottom of this page, request a demo, or read on.
International freight audits are a core competency of SSI. We perform a comprehensive service audit across multiple modes of transportation from global, regional and local carriers. We audit these freight bill line items and much more.
- Freight charges
- Duplicate billings
- Incorrect DIM billing
- Lift gate charges
- Late deliveries
- Residential surcharges
- Other accessorial charges
- Invalid/Fraudulent invoices
- Service failures
- Base rate errors
- Billing discrepancies
- Manifested vs. billed weights
- Erroneous Currency Conversions
- Fuel Surcharges
- Carrier compliance to contractual obligations
- Other billing mistakes
SSI will also review the addendums, small-print references, and custom services negotiated with each carrier.
With SSI freight audit services, one can be confident that all charges are in compliance with the established rules and contractually agreed-to parameters within each customer’s carrier contracts. The process is fully transparent and users can easily drill down to individual invoices via our SSIconnect online portal. Whenever a charge deviates from the established rules, SSI will take exception to those discrepancies and errors.
SSI FREIGHT AUDIT SOLUTIONS PROVIDE VALUABLE SAVINGS
For global shippers, across all modes of transportation, SSI applies a thorough, automated freight audit process. As supply chain leaders and their colleagues focus on what they do best, there are 4 key benefits that SSI multimodal freight audits deliver.
1. Savings – Our time-proven solutions help many SSI clients recover tens-of-thousands of dollars in audited savings every month.
2. Data Insights – Managed analytics resources provide data visualization dashboards to help customers glean actionable data insights for peak operational, supply chain, and financial performance.
3. Customization – Our custom-designed freight audits meet the unique shipping requirements of each of our clients. Further, as they adapt their supplier or transportation network to address supply chain issues, our freight audit solution scales and adjusts to those dynamic business adjustments.
4. Verification – SSI performs a comprehensive audit of all freight charges and contractually guaranteed services for every mode of transportation used in a global supply chain.7 Validating the rate charged is essential and of course, so is verifying whether the charge itself should have been assessed in the first place.
High freight rates can be mitigated by recovering significant savings with SSI freight audit solutions. Please fill out the form on the bottom of this page or contact SSI to learn more.
OTHER SERVICES FROM SSI
SSI is committed to helping our customers save money and improve efficiencies. Ask about these other valuable services available from SSI.
- Global freight payment services
- Freight rate benchmarking services
- Carrier contract negotiations
- Carrier GRI analysis
- LTL cost management
- Transportation management services
- Service level optimization analysis
- Claims Management
1: How supply chain chaos and sky-high costs could last until 2023, October 4, 2021, as published by American Shipper.
2: Shipping & Freight Cost Increases, Freight Capacity, and Shipper Container Shortage , September 25, 2021, as published by Freightos.
3: Global Trade Boom to Continue After Covid-19 Reopening Bounce, October 4, 2021, as published by The Wall Street Journal.
4: Air cargo load factors soar in September as peak season demand steps up a gear, October 6, 2021, as published by AJOT.
5: Rates red-hot in August, shipments high but capacity constrained, September 13, 2021, as published by FreightWaves.
6: Paul Ziobro, “FedEx, UPS Rate Rises Are Making Online Shopping More Expensive”, September 20, 2021, as published by The Wall Street Journal.
7: Note: Excluding carriers that do not allow audits on select services.