LTL carriers are under an increasing amount of pressure. Shippers and customers want lower rates. The government is increasing the regulations for truck drivers, and the volatile economy is making it difficult to assess what tomorrow’s rates may be. Unfortunately, shippers who misrepresent freight have taken advantage of 2014’s major capacity crunch and the perception of one on the way to make shippers trust their predetermined information.
In a sense, shippers have plenty of power at the start when placing orders for pick up, but carriers have the final say in what freight shipping costs. However, trying to skim a few thousand pounds by the eyes of carriers has brought the issues of weight and inspection forward, and more carriers are doubling down on the number of weights verified and inspections on freight. So, shippers need to understand what the problem is, how it is handled and what it could mean for future business with carriers.
What’s the Problem When Shippers Misrepresent Freight?
When shippers misrepresent freight, it risks much more than just the cost charged by the company. If the weight is not verified, a trailer or truck could be severely overloaded. The risk for an accident when taking sharp turns increases and overweight trucks damage freeways, roads, and bridges. It may not seem like much of a problem if one person does it. However, one person getting away with it means many others may be as well.
So, what happens if the truck does end up in an accident? Will your damaged freight be covered when the carrier finds out that you failed to disclose the accurate weight of your shipment? What about freight from other shippers? Their freight may have been accurate, and now, you could be on the proverbial hook for the damages to other shippers’ freight.
To prevent these problems from becoming more intrusive and damaging than they already are, more LTL carriers are randomly inspecting and weighing shipments to verify shipper-provided information.
How Do Carriers Respond to Patterns of Incorrect Information From Shippers?
One problem with reporting an incorrect weight may be tolerated, but a shipper may be flagged by a carrier for inspections on all shipments. Repeat offenses could carry the cost of reclassification and reassignment to different modes of transit. Moreover, repeat offenders could actually be barred from using a specific carrier.
Reclassification of freight, regardless of if dimensional pricing models are being used or not, could easily cost more than the original cost that would have been incurred by providing accurate shipping information for an appropriate carrier. In other words, using Carrier A to ship freight that weighs X pounds at an example cost of $100 could be cheaper than the cost of trying to get a cheaper price by incorrectly giving Carrier B the weight and sizes of X pounds that would cost $90. The true cost rises to $110 when Carrier B weighs the product in transit, and at this point, the ability of the shipper to change the details is forfeited. Essentially, the shipper must pay whatever the carrier reclassifies freight at, and it may include additional surcharges for providing incorrect information.
How Does Continual Misrepresentation Impact Other Shippers?
All shippers want to get their freight to customers as soon as possible. Unfortunately, continuing to misrepresent the actual weight and size of freight causes additional problems for shippers that are providing accurate information.
For example, the time required to process other shippers’ freight is increased, leading to longer transit durations and lengthy delivery schedules. Furthermore, shippers who misrepresent freight may be damaging relations with more carriers than what appears obvious. This is especially true as more third-party logistics providers (3PLs) have grown to create a shared network of carriers. Essentially, alienating one carrier could lead to being alienated by all the carriers in your area. As a result, you could be faced with paying extremely high costs to ship with carriers that do not have negotiations in place with 3PLs or other carrier partners.
What Does It Mean for the Shipping Industry?
Misrepresented weight and size is also bad for the whole industry. It builds a sense of distrust between carriers and shippers, promoting a more hostile and unfriendly environment. This could make simple requests for audit paperwork and tracking of data difficult, driving costs up when they do not necessarily need to increase.
With respect to government regulation, shipments could be delayed, if not seized, for failure to disclose all information. This is one of the most important parts of international shipping. So, the only choice for carriers is to increase the number of inspections and weighing stations, which increases the cost of shipping products for all shippers.
Shippers Who Misrepresent Freight Need to be Educated.
Shippers who misrepresent freight need to be educated on how to properly provide information for a shipping quote from carriers. This may include the retraining of how to use a carrier- or 3PL-associated transportation management systems, cost of attending courses or seminars to complete the training or the placement of shipping limitations for each shipper. For all new employees, shippers should work to help new hires understand how to take information for shipments and relay it to carriers. This will eliminate the need for retraining and encourage honesty across the industry.
Aside from the physical and monetary costs of misrepresenting the size and weight of freight, shippers who try to avoid providing accurate information is unethical. The industry tries to play down the severity of these offenses, but engaging in this practice is simply “lying.” Using a carrier is not like cheating in a playground game; it has real consequences. Shippers who misrepresent freight need to understand carriers are not taking any more chances and the time to do the right thing has arrived.
What customers say about a shipper if they knew you he making money by taking it from the carriers who trust him?