the Walnut comments on the Hidden Costs of Shipping (part 1)
In an article titled “The Hidden Costs Of Shipping” published in Manufacturing.Net on January 15, 2010, John Haber explained in depth where costs hide shipping.
“When it comes to shipping agreements, companies may not always understand the language used in their contracts, which may set them up for double-digit fee increases over the term of the contract or other unfair penalties and costs,” said John Haber, Partner, NPI.
Haber identifies three categories to focus on: annual rate increase, unjust contract terms, and assessorial fees.
Annual Rate Increases
“There is currently a lack of competition in the shipping industry, so big name companies feel they can justify 5 to 7 percent increases per year of a contract,” he said. “That’s a huge increase when prices aren’t rising and a company has a 3-year contract.”
Haber advises companies to request new pricing information if they are under contract, or they should consider opening up to bids if they aren’t.
“Rate increases may differ from carrier to carrier, and location to location,” he added. “Companies should think about updating their decision matrix that they use to determine shipping options and thoroughly analyze their shipping characteristics.”
In the end, if a company can gain a better understanding of what they are paying for and what costs they can cut back on, it will not only help their shipping bills, but their overall bottom line as well.
