Reweighs, Classifications, Inspections - Why are they happening, why does it seem like it's escalating recently, and what can you do about them!
LTL carrier inspections resulting in reweighing shipments, re-classifying shipments, and adding accessorial charges is now epidemic, but before we get into how to avoid them it's necessary to understand a little history and to have an appreciation for the carrier side of things.
LTL carrier profitability has always been under serious pressure due to an abundance of capacity and competition in the marketplace. The recent recession crushed margins for these carriers, but the recovery wasn't as kind to them as other modes. Most are still scrambling for market share and find price increases difficult, but one thing the recession taught us all was to be lean and be smarter. Technology use ramped up in all areas and the carriers have learned how to be more profitable beyond typical price increases.
The carriers now have a much better ability to analyze profitability by customer, by product type, and by lane and are making decisions to improve operating ratios along those lines. In addition to simply dropping unprofitable business, they have also looked at exactly what they are hauling and are now capturing revenue that has been lost in the past and that is thru the far closer inspection of every single shipment that moves across their docks.
These are the Hidden Price Increases that we have written about in the past - new accessorials, new classifications, certified scales everywhere. They are also being aided by a carrier-friendly NMFC which has been re-classifying products to higher classes for years now. What was traditionally a class 55 or class 60 item is now being frequently defined as a class 65 or even class 100 item and these changes continue regularly.
Here's another carrier perspective that you need to consider. Let's say you are selling 1,000 widgets to your customer at $22 per widget. Your customer receives the product and then pays you $20 per widget for the order. Wait you say - the price is $22, you owe me $2,000 more for this order! Customer says sorry, but we show it's $20 so that's what we're paying - good day. I don't think you'd be happy with that would you? Well turn it around. Your system has a product weight of 2,000 lbs for an order and you ship it, but the carrier's certified scales show it's actually 2,200 lbs. They want their missing revenue just like you do, don't they?
These scenarios are occurring much more frequently now because they have momentum. It's now commonplace and the carriers are all jumping on board to capture what they perceive as missing revenue. And in a lot of cases they are right, but there are certainly overzealous people involved who make mistakes. Frequent mistakes.
So what do you do? Honestly - you have to get things right! Period. You have to know what you are shipping, what it's exact weight is, what the exact NMFC description is, how it's packaged and have proof to that effect. I'm sorry, but that is the reality these days and to rely on order management systems that have product weights in them simply isn't proof. Packaging, components, etc can change all the time slightly modifying a per unit weight which has a greater impact on a shipment of multiple units.
We understand that many smaller shippers simply don't have the means, the knowledge, the expertise, the time, etc to do this, but if you can't then you have to bite the bullet and take what the carrier is saying. Not all the time because there are obvious errors that carriers make and Recon knows how to find those, but without proof a carrier does show their certified documents.
The best way to handle this is to get a certified scale and weigh each pallet as it ships out the door. Retain the weight certificate and file it away. If you have proof then the reweighs can be fought. If not then we are all going to be wasting a lot of labor tracking down issues and balance dues which probably will cost more than the effort to certify what you are shipping.
As far as classifications go - this gets more complicated and a strong resource like Recon can help you properly describe your products AND get you the appropriate pricing to protect your.... CLAss. Have to have some humor on a Friday!
These practices are here to stay so you can either argue with it or make the appropriate change to be exact in what you are doing.