Formulas and mathematical calculations can provide a “smoke and mirrors” effect that even the savviest customers are often taken in by. What appears on the surface to be a fantastic rate can be more than meets the eye upon further investigation.
One technique that many freight companies use is to charge pallet rates in place of kilo and full truck rates. While pallet rates may sound like a simple and straightforward way to pay for your freight, there are some potential pitfalls. We have seen cases where customers have been charged for pallets at a certain weight, when in fact they were much lighter. This can lead to a much higher per kilo weight than the industry average.
Add to this the fact that many transport companies charge different rates for different numbers of pallets. This might work out reasonably well if you have a small number of pallets, but we have encountered situations where customers were sending full trucks to be shipped and were being charged the same rate as a company sending 8 pallets.
This higher volume should have attracted a much higher discount, and considering the quantity they were shipping, their rates were pushed well above what they should have been.
Pallet rates can be very misleading and they are often favoured by brokers and transport companies as there are plenty of opportunities for them to increase their margins, especially when they are charging for a particular weight of pallet and the reality is that the pallet weight is much lower.
If you are currently paying pallet rates, it may be worth swapping to kilo or truck rates if you are transporting a high volume of pallets.
Transport companies love to hide behind mathematics, and at Freight Cost Solutions™ we love to expose their little tricks and get the best possible rates for our customers.
If you’re concerned that you may be paying too much for your freight, contact us and find out how our auditing service can help you. We have helped customers stop being ripped off by pallet rates and save hundreds of thousands of dollars on their transportation costs.