Many shippers depend on professional third-party logistics providers (3PL’s) to help them streamline many aspects of their supply chain operations. One important task is freight auditing, where the 3PL will review several aspects of a specific shipment method to determine the legitimacy, and ensure their customers are being charged correctly. While the freight audit process is completed on both LTL and parcel shipments, there are a few unique steps completed in each – that help to save shippers money and improve the efficiency of their logistics network.
Noted below we’ll outline some of the differences between parcel and LTL freight shipping, along with comparing the unique areas of freight auditing completed by a professional 3PL.
Whether you’re mailing a letter via USPS or shipping several boxes via Fed Ex Express for overnight delivery, the parcel shipping segment is quite diverse. A parcel shipment is typically categorized as any movement of a package weighing less than 150 pounds or that can be moved without special assistance from a machine. Essentially, if it can be carried by a human courier and delivered without using a pallet jack, it’s considered parcel. A parcel shipment can be completed via ground or air and is typically delivered to the end user directly by the courier service.
Some of the most common carriers that supply parcel shipping include:
• United States Postal Service
• Fed Ex
There are several advantages of shipping via parcel – mainly is convenience. If the product is small enough, directly shipping to the end user not only is good customer service, but it can be much cheaper to accomplish it. Also, modern day carriers have amazing tracking software, that permits the parcel shipment receiver and sender to review the status of the delivery, including any delays and expected arrival time.
For those packages that are larger than 150 lbs. or require special handling (such as loaded on a pallet), LTL or less than truckload is the preferred method. An LTL is for bulky or unique-shaped products – and often are delivered to an end consumer. These shipments are typically palletized and can be distributed to an end recipient via a similar hub-based shipping process as parcel. Since the commodity is larger, the LTL tends to be more expensive to transport.
While they are both intended to move freight from point A to point B, there are some differences.
• Risk of Damage: The risk of having a package lost or damaged during transit is usually higher with parcel shipments than LTL.
• Tracking options: If tracking shipments are important to you – the parcel shipment typically is more robust and instant.
• Cost: Both LTL and parcel have unique cost advantages. Typically, carriers will offer volume shipping discounts for both.
What’s the Difference with Freight Auditing?
Now comes the big question – how is freight auditing different with parcel than LTL shipments? Generally speaking, a freight audit will examine several individual items on both including:
• Verifying the shipping rates
• Verifying shipment details, including weights, dimensions, the rate per mile or total charges
• Reviewing any surcharges or penalty charges (fuel surcharge, missed delivery, etc.)
With a parcel shipment, the focus is typically on checking for hidden charges, such as missed deliveries, or other areas of inefficiency that the customer has to pay. A good 3PL will review all parcel shipments and determine if the charges are justified, or if their client is being taken advantage of by the carrier. An example of this would be address corrections, charges for weekend delivery, or different rates to a commercial vs. residential address. With LTL freight auditing, clerical mistakes are typically the leading culprit. Mileage, weights, and dimensions can also be entered incorrectly – which eventually increases the rates paid by the customer.
Having a strong and experienced 3PL in your corner can significantly reduce hidden costs or over-billed invoices. Plus, they can review your logistics networks and find better ways of moving freight – for improved customer service, cost savings, and reduced potential for mistakes or damage.