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‘HELP’, was the plea… ‘I have tried to manage my freight myself but to no avail; I got talked into using this freight company, but my freight costs have gone up by 28%, when can you see me’?
This was the cry for help from an old client. In the initial meeting, we were shown their present rates. They had accepted rates that appeared to be cheaper. But unfortunately, they did not realise the impact of cubic conversion on weights and costs.
There was a freight broker who had also been brought in to help them save on freight. The freight broker had advised he could save them a guaranteed 10%.
After attaining some freight invoice data, we completed a benchmark ‘cost analysis’ against industry standards based on their freight volumes. Our assessment identified a 36% savings was attainable.
In the following days the freight brokerage firm increased their guaranteed savings to 15% upon the knowledge that they were competing against us for business.
The freight broker then upped the ante and increased their savings percentage to 20% in a last gasp effort to secure their business.
Integrity then became a valuable part of our discussion. Integrity is a valuable commodity. Freight brokers often use the same tricks as the freight companies to confuse clients. Even after 3 offers were made they were still nowhere near the true savings attainable.
The client credit agreed and re-signed with us for another three years. His company has been able to save each month 33-36% on their previous freight bills with a major freight company.
Further to this, we are monitoring service performance and audit the tendered rates against the invoiced rates (connote by connote) to identify overcharges that may be required to be credited back.
Freight Cost Solutions are always on the side of the customer.
Laminex Australia approached Freight Cost Solutions (FCS) and asked us to complete historical rate audits (going back 2 years) on their primary transport companies.
FCS was provided with invoice data directly from the transport companies as well as the rate-cards for each year. We identified thousands of dollars in overcharges and potential credits from each of the transport companies being reviewed.
Two of the transport companies we reviewed met to discuss and validate our findings and the credits due to Laminex. The credits were worth many thousands of dollars!
However, the largest transport provider had the highest level of overcharges and when queried produced four sets of rate-cards, new zone to postcode files and multiple fuel levies to confuse and eliminate the audit findings.
FCS are used to this. All our Cost Analysts are qualified accountants who pay attention to detail. With their diligence combined with our software capabilities, FCS were able to identify and isolate the specific data to each and every obstacle they put into play.
The outcome of this audit was that FCS identified hundreds of thousands in overcharges which resulted in the involvement of senior management from both companies.
A settlement was reached with a substantial credit being provided to Laminex Australia.
When you want to review your invoices, employ FCS to audit and identify credits and savings.
Spiecapag, a global leader in onshore pipelines, were concerned they were being overcharged and had identified large individual dollar amounts that were all rounded off within their invoices. This raised Senior Management suspicions, however they had minimal knowledge of international sea freight processes, let alone the shipment invoices.
After one of our Customers referred Spiecapag to us, we were requested to provide them with a rate benchmark for their international freight shipments.
After auditing their freight forwarders rates, based upon their freight volumes, we identified what they should be charged based upon the industry market rates applicable for both Full Container Loads (FCL) and Less Than a Container Load (LCL).
The Spiecapag shipments were coming back to Australia from a neighbouring country.
To our surprise, we identified multiple instances of exceedingly high prices being applied.
Spiecapag were being overcharged on their origin pickup, origin port, sea freight, destination port and destination delivery services. Add to this, that the origin charges were in USD rather than the local currency which was much more price competitive.
Furthermore, every container had an AQIS inspection applied with multiple instances of steam cleaning of containers. A per shipment project management fee of several thousands of dollars was also being applied for AQIS management. This fee is normally up to five hundred dollars for each shipment.
FCS completed a Benchmark Report and identified that Spiecapag had been overcharged significantly. This report was later used by Spiecapag in negotiations with the freight forwarder. We identified an overcharge of over $177,000 above and beyond what a freight forwarder would normally charge.
Spiecapag utilised this report to negotiate with the freight forwarder for reduced costs. To the credit of both parties, a settlement was reached suitable to both parties. Spiecapag was reimbursed a large proportion of the overcharged dollar amount.
Zimmer Biomet a medical devices innovator was concerned about being overcharged by an incumbent transporter. They had already identified previous overcharges and had reached a settlement and an agreed credit refund.
In reviewing the transporter’s 2019 financial year invoice data, FCS identified that on top of what Zimmer Biomet had already discovered, they were being charged a 250 cubic conversion factor for air freight. The significance of this is that air freight has historically had an industry standard conversion factor of 167. In cubic weight alone that is a 33% discount.
We then conducted a Rate Benchmark based upon the volume of freight they distributed nationally. The FCS Cost Model identified that Zimmer Biomet was being overcharged millions of dollars.
Zimmer Biomet consequently employed us to undertake a freight tender on their behalf for their metropolitan, intrastate, and interstate freight distribution services.
Within the tender phase, all air freight tenderers excluding the incumbent offered 167 cubic conversion factors. We negotiated with the transporters, rates, surcharges, and service delivery options.
The end result for Zimmer Biomet is a forecasted savings of over $2,000,000 per annum and the implementation of a performance-based service level agreement.
A Nobles and Son are large importers of wire rope, chain, lifting and rigging gear. They service a large portion of the mining industry and have a requirement for freight imports to be delivered into any of their capital city, major port or remote branch location across Australia.
Therefor they needed to attain cost and service efficiencies nation-wide.
The scope of the first tender for Freight Cost Solutions was to minimise the number of freight forwarders from in excess of twelve, down to one or two and negotiate them a better deal.
Freight Cost Solutions was able to consolidate the invoices of all the freight forwarders used by A. Nobles and Son; and ‘benchmark’ the rates against ‘Industry Standard Rates’ based on the volume of freight distributed.
Freight Cost Solutions was able to identify discount savings available to A. Nobles and Son and on behalf of their client completed a tender management process that identified the infrastructure, capabilities, transit times, tender compliance and rate savings offered by the freight forwarders.
At the completion of the tender review, Freight Cost Solutions provided recommendations in a ‘Tender Report’ and provided implementation services.
Following these works, a comprehensive ‘Service Level Agreement’ was negotiated with the freight forwarder and a performance based contract signed for the supply of services for a two year period.
At the conclusion of the 2nd tender phase, and as a consequence of increased distribution volumes, substantial savings were offered by the incumbent who were successful in this instance in maintaining the A. Nobles and Son business.