Shipping Audit: I Found $4,200 in Overcharges in One Month
A month-long deep dive into one company's shipping invoices uncovered $4,200 in overcharges. Here's exactly where the money was hiding and how to find yours.
Shipping Audit: I Found $4,200 in Overcharges in One Month
Last October, I met with a direct-to-consumer (DTC) brand owner who ships about 3,000 packages a month using UPS and FedEx. He believed his shipping expenses were reasonable, having negotiated his contracts two years prior. However, he admitted he hadn't scrutinized his invoices closely since then.
Curious, I requested one month's worth of invoices. Three days later, I had detailed spreadsheets covering every charge from September. Going through them meticulously, I found $4,247.83 in overcharges. These weren't just hypothetical savings or optimization suggestions. They were genuine, incorrect charges that warranted refunds.
Here's how the overcharges broke down.
The Anatomy of a Shipping Overcharge
Carrier invoices are complex documents. A single weekly invoice for a mid-sized shipper can easily exceed 50 pages, with each line item containing numerous charge components. Carriers understand that most customers don't audit these invoices, and they profit from this oversight.
Here’s a breakdown of the main types of overcharges I discovered:
Late Delivery Refunds accounted for $1,845. UPS and FedEx both offer service guarantees, meaning if a package arrives late, a full refund is due. However, the catch is you must request it. The carriers are aware of late deliveries through their tracking data, yet they won't issue refunds unless you file a claim within a specified period (15 days for both UPS and FedEx).
Dimensional Weight Errors added up to $892.40. Both carriers use dimensional (DIM) weight pricing, which means they calculate charges based on the package's volumetric weight rather than its actual weight. Errors occur when their automated systems miscalculate dimensions, often rounding up. In this case, 48 packages were billed with incorrect dimensions, leading to overcharges.
Duplicate Charges amounted to $456.12. These occurred when shipments were billed twice, either due to voided shipments that were still charged or billing adjustments that didn't remove the original charge.
Wrong Service Type Billed led to $389.75 in overcharges. Packages shipped via Ground were incorrectly billed at Express rates due to billing system errors or service downgrades during transit.
Incorrect Surcharges totaled $341.20. Carriers frequently apply surcharges incorrectly, whether for residential deliveries mistakenly classified as commercial or additional handling fees for packages within size limits.
Address Correction Errors came to $198.36. Sometimes, carriers "correct" an already accurate address, leading to unnecessary charges.
Category 1: Late Delivery Refunds — $1,845
Late delivery refunds were the largest source of overcharges. Both UPS and FedEx offer service guarantees, but only if you file a claim within a stipulated period. In September, 108 packages were delivered late, and 85 were eligible for refunds totaling $1,845. This money had been left unclaimed simply because no one filed the necessary claims.
How to Claim Late Delivery Refunds
For UPS:
For FedEx:
Using an automated auditing tool can streamline this process, automatically identifying and filing claims.
Category 2: Dimensional Weight Errors — $892.40
Dimensional weight pricing can lead to significant overcharges if not monitored closely. In this case, 48 packages had incorrect DIM weight calculations due to errors in measuring dimensions. The company used standardized box sizes, so any discrepancy between billed and actual dimensions was easily identified.
How to Catch DIM Weight Errors
Maintain thorough records of your box sizes. Create a spreadsheet listing each box's dimensions and corresponding DIM weight. If your invoice shows a DIM weight that doesn’t align with your standard box sizes, dispute it. Document your packaging process with photos if necessary, to provide evidence.
Category 3: Duplicate Charges — $456.12
Duplicate charges often go unnoticed. In this instance, 12 shipments were billed twice for the same service, with one charge sometimes including a surcharge the other didn’t, complicating detection. These errors typically occur when shipments are voided and reprocessed or when billing adjustments are incorrectly applied.
How to Catch Duplicates
Export your invoice data to a spreadsheet. Sort by tracking number and examine any entries that appear more than once. Investigating these duplicate entries can save substantial amounts of money.
Category 4: Wrong Service Type Billed — $389.75
Packages shipped via Ground but billed at Express rates led to significant overcharges. Billing errors occur when labels are generated for one service but the package is downgraded during transit, or due to system errors. By comparing service types on invoices with actual transit times, these discrepancies can be identified and disputed.
Category 5: Incorrect Surcharges — $341.20
Surcharges are frequently applied incorrectly, whether due to misclassification of delivery addresses or errors in assessing additional handling fees. The most common mistake is classifying a commercial address as residential, leading to unnecessary charges.
How to Dispute Surcharges
For residential misclassification, provide evidence that the address is a business. This could include a Google Maps screenshot showing the business, the company’s website listing that address, or the business’s Google Business profile.
Category 6: Address Correction Charges — $198.36
Address correction charges often arise from carriers reformatting an address rather than correcting an actual error. If your original address was deliverable and the package arrived correctly, these charges may not be valid.
How to Set Up Your Own Shipping Audit
Conducting a shipping audit yourself is feasible and can be quite rewarding financially.
Weekly Audit Checklist
Allocate about two hours per week to review various aspects of your shipping invoices:
- Check for late deliveries (30 minutes)
- Verify DIM weights (20 minutes)
- Scan for duplicate charges (15 minutes)
- Review surcharges (20 minutes)
- Check service types (10 minutes)
Automated Audit Services
If manual auditing seems daunting, consider using automated audit services. These services range from percentage-based auditors, who take a cut of the recovered funds, to flat-fee platforms offering software tools for invoice automation. Some shipping platforms even include built-in auditing features.
The Real Numbers: What Overcharges Cost Over a Year
The $4,247.83 in overcharges for September wasn't an anomaly. Historically, this company overlooked similar amounts each month, resulting in over $47,000 in potential savings annually. This money was lost simply because invoices weren't audited.
Start Your Audit Today
Begin with your current invoices. Focus on one category, such as late deliveries, and start reclaiming funds. Even recovering $500 this month is a positive step. As you develop this habit, auditing will take less time each week.
Carriers won't offer these refunds voluntarily. You need to actively pursue them to reclaim money that rightfully belongs to your business.
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