A3 Freight Payment Blog


Shippers are overpaying for fuel

A fundamental part of the freight payment value proposition is detection of overcharges on customers’ freight invoices. Some freight payment companies make this seem like a complex “dark art” of algorithms and analysis. However, sometimes it is the most basic of system features that can mean the difference between detecting an overcharge or not.

A case in point is offered by fuel surcharges. In recent weeks, the most common indices of fuel prices issued by U.S. Energy Information Agency have been falling sharply. The national price of regular gasoline is down over 13% since the end of March. As the index falls, so do fuel surcharges.

The index itself is published on Mondays. The typical carrier contract will call for the index to be applied for all shipments from the Tuesday after the date of publishing through the following Monday. The carrier’s contract will outline how the date of the shipment is determined. For most clients, that will be the date of the bill of lading. In the experience of the A3 Freight Payment team, carriers often fail to comply with that contractual point. Often, they will use alternate dates for determining the applicability of the fuel index. A3 Freight Payment has seen carriers use load tender date, trailer drop date, and invoice date to set the fuel surcharge. In a period of falling fuel prices this can mean hundreds of dollars per week in overpayments by the client.

Savings obtained by the accurate auditing of fuel surcharges contribute to the Return on Investment of a freight payment solution.  But, more importantly, an accurate audit ensures data used for supply chain analysis is as correct as possible.  The A3 Freight Payment solution proactively corrects billing problems such as fuel surcharge issues. This makes processing more efficient and provides clients with reliable data to support supply chain analysis projects.


 

Posted by Ross Harris at 7:53 AM
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