Apr 22, 2024 1:09:43 PM Ryan Williams 2 min read
The transportation logistics industry is rife with terminology like freight class, accessorial charges, base rates, and GL coding, making it challenging for the uninitiated to grasp the intricacies of pricing structures. Making sense of these complexities is crucial for businesses to effectively manage their transportation invoices and ensure accurate billing.
Here's a quick guide to understanding some of the basic terms and lingo of transportation logistics spending:
What is Freight Spend?
Freight spend refers to the total amount of money a company spends on transportation services to move goods from one location to another. It includes costs such as carrier fees, fuel surcharges, accessorial charges, and any other expenses associated with the transportation of goods.
How is Transportation Pricing Determined?
Transportation pricing can be highly complex, with various factors influencing the cost of shipping goods. These factors include distance, mode of transportation, weight, volume, fuel prices, carrier rates, and accessorial charges. Additionally, pricing structures can vary widely among carriers, making it challenging to compare costs accurately.
What Causes Transportation Billing Discrepancies?
Billing errors can stem from miscommunication between account representatives and billing departments. For example, a simple mistake like selecting the wrong client in a billing system can result in significant discrepancies in pricing. Audited accounts payable services help businesses avoid such errors by ensuring that carriers are billing correctly according to the rates and contracts in place.
What is Freight Class?
Freight class is one of the key factors that determine shipping costs. It categorizes shipments based on their characteristics, such as size, weight, and density.
What are Accessorial Charges?
Accessorial charges are additional services required to deliver freight, such as liftgate services or inside delivery. Base rates and discounts further complicate the pricing structure, as they directly impact the final shipping cost.
What is GL?
General Ledger (GL) coding is essential for allocating costs across different departments or projects within a company.
To optimize your logistics operations, it’s essential to understand freight spend and transportation activity. Auditing services can help businesses navigate the complexities of transportation pricing and ensure accurate billing, ultimately leading to cost savings and improved efficiency. If you're looking to optimize your transportation logistics and reduce freight spend, consider partnering with auditing experts who can help you achieve your goals.
At Williams and Associates, we strive to proactively resolve billing issues and ensure that payments are accurate and timely. By taking a hands-on approach with carriers, we can mitigate potential problems and save businesses time and money.
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Ryan Williams
As the CEO and a third-generation Williams & Associates family leader, Ryan brings extensive experience collaborating with partners in supply chain networks, finance, operations and IT, both internationally and domestically. He’s worked with freight carriers and customers to establish KPIs and develop carrier scorecards, as well as performing time-sensitive analyses to prioritize workload and identify risks to improve performance. Ryan was a sculpture and graphic design fine arts major and enjoys bringing his creative side to the transportation industry.