Shipping Cost Analysis

Companies must pay freight or shipping costs when purchasing materials or sending products to business locations. A shipping cost analysis helps a company determine if the payment for the service is reasonable or if an alternative exists to reduce the business operating cost.

Process

Shipping analysis involves several steps, such as gathering and analyzing data, finding cost-cutting opportunities, submitting proposals and negotiating with suppliers. A review of carrier cost trends can also help owners and managers.

Facts

Different fees and charges typically exist in freight and shipping. For example, carriers may have fuel surcharges, penalties for incorrect shipping addresses, rental fees for onsite equipment or additional cost for upgrading shipping methods. Each of these areas should be considered in a shipping cost review.

Considerations

Companies should consider whether to complete the shipping cost analysis internally or seek outside help. Shipping companies often have sales representatives who can provide valuable insight during a shipping cost analysis. Although these individuals work for the shipping company, contacting representatives from various companies can mitigate your external analysis concerns.

References

• F Curtis Barry & Company: Freight Auditing & Cost Reduction Analysis