Having your freight reclassified is expensive. Introducing a pallet dimensioning system into your facility is a simple way to reduce chargebacks and reclassifications. Based on the simple calculations below, a pallet dimensioner could save you close to a million dollars each year in chargebacks. In this blog we'll break down the costs associated with freight reclassification and chargebacks, and we'll discuss the compounding long-term effects inaccurate measurements can have on your company.
CARRIERS AUDIT YOUR SHIPMENTS
In 2022, the average carrier audits 40% OR MORE of the freight that comes through its doors. For example, if you ship 300 pallets a day, your carrier likely uses a pallet dimensioner to audit the dimensions and weight of 120 of those pallets. That number will continue to climb as carriers aim to increase the percentage of pallets they audit with a goal of around 80%.
On average, 25-30% of the audited freight gets reclassified based on the carriers’ findings. The data from their pallet dimensioners show that your declared measurements and dimensional weight were inaccurate. Of the 300 pallets you shipped, 30 were flagged and were reclassified.
Carrier chargebacks typically range between $50-$250 PER PALLET. In this scenario, we’ll use $125 as the average penalty assessed to a reclassified pallet. 30 reclassified pallets at $125 per pallet equals $3,750 a day in unnecessary chargebacks.
$3,750 a day in chargebacks is a hard pill to swallow, especially when those penalties are avoidable. Add that up over a typical five-day work week and you’re looking at $18,750 PER WEEK IN CARRIER CHARGEBACKS.
Over the course of a year, your manual measurement process could COST YOU CLOSE TO A MILLION DOLLARS! That’s significant capital that could be allocated to other parts of your business.
If the above numbers are a close representation of your shipping volume, you’re looking at an ROI of between two to three weeks on a pallet dimensioning system. If you ship more than that, you’ll realize that ROI even faster.
Introducing pallet dimensioning into your shipping operation is an investment in the health and future of your company. Make that investment today and you’ll start to see immediate returns.