"When will it end?" Many shipping companies ask this question to lament the current containerized logistics situation. On March 14, 2022, McKinsey and Company proposed four future recovery scenarios, summarizing that, "Container freight rates will remain elevated throughout most of 2022 while the containerized logistics disruption persists." While one can only guess which of the four scenarios will be most accurate, shippers need to use the elevated rates as fuel to learn what freight costs are in accounting.
Freight costs are the overall expenses accumulated while transporting an amount of material from one location to another. While all businesses that require the transportation of goods engage in freight accounting, the counting of freight costs is especially important to those whose complete job is to ship the material. Freight costs might include fuel, carrier employee salary, warehousing costs, and expedited upcharges. Accounting software for transport companies can help to navigate these charges with fine-tuned functional features such as GL coding support.
Although there have been many advances in supply chain tech, shippers must stay strategic to overcome common freight accounting challenges. Some of those challenges include:
These operational costs are vital to the successful transfer of goods in the hands of a shipping company. So how can freight accounting help overcome them?
Most challenges in life are best dealt with proactively instead of reactively, and freight accounting is no different. Virtual finance and accounting tools are more readily available today than ever before, but where does one start? To properly budget baseline operational costs, shippers must find and resolve any inaccuracies of core functionality. Integrating all lines of payment and business processes into a single source of truth prevents inaccuracies from falling by the wayside. A freight auditing service can be that source of truth to singlehandedly analyze freight costs and provide the next cost-saving step.
Freight network optimization is a second vital component of proactive freight accounting. Freight network optimization happens when shippers analyze service levels and customer satisfaction, even after delivery. This analysis can provide blanket data on which carriers are underperforming or are consistently hitting the mark to make a successful transport. In addition, it can give a breakdown of patterns of avoidable costs such as accessorial charges or layover fees.
When common or uncommon freight accounting challenges arise, shipping companies must have the tools to address and resolve those said challenges. An international freight audit software can provide a proper grasp of what freight costs are in accounting to uncover cost reduction and workflow improvement opportunities. Intelligent Audit has spent over twenty years providing shippers with the tools they need to work smarter, not harder, and overcome inefficiencies. To start a conversation with the #1 global logistics and freight audit company, start a conversation with Intelligent Audit today.
Set up a call with one of our experts to discuss how Intelligent Audit can help your business uncover opportunities for cost reduction and supply chain improvements through automated freight audit and recovery, business intelligence and analytics, contract optimization, and more.
Supply chain visibility gives shippers a way to respond to rising interest rates. Learn more about the impact of rates on transportation.