When it comes to accounting for shipping, there are different freight and logistics costs throughout every single step of the supply chain. In fact, a cause of high cost numbers can be the lack of a holistic view when it comes to freight costs

Hidden Freight Costs

As an example, one business manager may state that his freight costs were buried into the price of his goods. He also had an arrangement with an Asian supplier that put all his costs into the bottom-line price he was being charged. He essentially had no visibility as to what his freight costs really were.

However, he was happy with the arrangement he had. For him, he just paid one simple price which means he didn’t have to negotiate with carriers and manage any of the shipping processes. It is also interesting to note that he was responsible for the probability of the product line.

This then begs the question, why was he so unconcerned about improving his profitability? A big factor was that he didn’t have the background or knowledge in freight and logistics. There was no support which meant he was oblivious to hidden costs and fees. While the supplier was great, when he agreed to have the supplier manage the cost, he had unknowingly given away a huge amount of control and margin.

When invoices come in, a lot of the time, you cannot actually figure out where the price comes from with many hidden charges in there. This means that the total freight bill was massive. In fact, it can be one the top business expenses when unmanaged.

Luckily, there are now ways to offset these costs with contract optimization and freight auditing.

When it comes to the hidden costs and fees of moving goods via freight, the reality of it is that there should be no hidden freight costs. In every part of your supply chain, there will be some freight costs. Whether it is only inbound shipping, outbound shipping, or even internal processing.

While you may think that it is much easier to give the supplier control of your logistics, giving them ungoverned control gives you a lot of problems. This should be a conscious decision that you make to offset your hidden fees and costs to drive a more sustainable business.

To get started on the first step to finding and managing hidden costs with shipping, contact our team at Navigo today.


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