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Routing Guides & Supplier Chargeback

Routing Guides Control what you Pay for! Easier said than done!

It is a fact. The receiver of the goods in any business transaction is responsible for the cost of freight, regardless of the freight terms. For example:

  • Freight Costs built into merchandise cost
  • Freight Costs added to merchandise invoices or invoiced separately from the product cost
  • Freight charges sent on a collect basis

In all three scenarios, you can see that the receiver of the goods is ultimately responsible for the freight costs. However, in the first two scenarios, the shipper has no control, or at the least, very little control on what the total freight expense will actually be.

  • When freight costs are built into the product cost, there is no way for a buyer to discern the actual product cost versus the actual freight costs.
  • In the second scenario, the actual freight costs are known, but may be much higher than they should be as most suppliers add a shipping and handling charge for pre-paying and billing freight charges.
  • In our final scenario, the freight costs are invoiced to the receiver at time of shipment so the costs are clear, concise and the costs are those negotiated by the receiver of the goods.

How is this possible? Simple! The receiver issues routing instructions to its suppliers to route all shipments in the most efficient manner, consistent with the least cost.

At ICC Logistics, our logistics analysts will study our client's supplier flow of raw materials and/or finished goods and will create simplified routing instructions to ensure that each and every inbound shipment is routed by the most economical service… Parcel LTL, Truckload, Ocean, Air, etc. and is also routed by the carrier within each mode that provides the required service level at the least cost possible. By the way, ICC also creates Outbound Shipping and Routing Instructions to ensure that all of our Client's shipping facilities are using the proper mode and carrier for all their outbound shipments.

To enhance this service, ICC provides a variety of reports to our Clients when either Inbound or Outbound Routing Violations occur. Not only do we report on the mode or carrier misused, we also calculate the excessive freight costs our Clients have incurred due to the routing violation. These reports go a long way in pointing out areas for immediate cost improvement.

Want to take this process one step further? ICC can issue internal and external debit memos to Suppliers and Shipping Facilities to report and recover these excessive freight costs. Let our Logistics Analysts prepare Shipping and Routing Instructions for your suppliers and Shipping Facilities to ensure that your transportation costs are under control and stay under control for the long term.