What is a transportation audit

A transportation audit is a comprehensive review and analysis of a company's shipping and transportation processes to ensure efficiency, accuracy, and cost-effectiveness. It typically involves examining invoices, shipping routes, carrier contracts, and freight bills to identify errors, overcharges, or inefficiencies. The goal of a transportation audit is to optimize logistics, reduce transportation costs, and ensure compliance with agreements while improving overall supply chain performance.

Benefits of a Transportation Audt

Benefits of a transportation audit include uncovering hidden cost savings by identifying billing errors and overcharges, which helps reduce shipping expenses. It also optimizes logistics by analyzing shipping routes and carrier performance, leading to more efficient transportation operations. A transportation audit ensures compliance with contracts and industry regulations, minimizing risks and avoiding penalties. Additionally, it provides valuable insights into carrier negotiations, helping companies secure better rates and improve supply chain performance, ultimately boosting profitability and operational efficiency.

What is the cost of a transportation audit

The cost of a transportation audit can vary depending on several factors, including the size of the company, the complexity of its logistics operations, the volume of shipments, and the scope of the audit. Some companies may choose to conduct internal audits, which primarily involve labor costs, while others hire external auditing firms that typically charge a percentage of the savings uncovered or a flat fee. In general, the cost of an external audit can range from a few hundred to several thousand dollars, but the potential savings and operational improvements often outweigh the initial investment.

Transportation Audit Checklist

1. Gather Documentation:
   • Collect all shipping invoices and freight bills.
   • Gather contracts with carriers and third-party logistics providers.
   • Obtain shipment records and manifests (including weight, volume, and dimensions).
2. Verify Billing Accuracy:
   • Check for duplicate or overcharged invoices.
   • Ensure billed rates match agreed-upon contract rates.
   • Validate fuel surcharges, accessorial fees, and other add-on charges.
3. Analyze Shipping Volumes and Costs:
   • Compare actual shipping costs with budgeted or expected costs.
   • Calculate shipping costs per unit and identify any anomalies.
   • Look for trends in shipping volume and peak seasons.
4. Examine Carrier Performance:
   • Review on-time delivery rates and delays.
   • Assess overall service quality and incident resolution.
   • Evaluate whether the carrier is meeting agreed-upon performance standards.
5. Review Shipping Routes and Modes:
   • Check for route optimization – are shipments taking the most efficient routes?
   • Evaluate transportation modes (air, ground, rail, etc.) for cost-effectiveness.
   • Identify opportunities for consolidating shipments.
6. Validate Compliance with Contracts:
   • Ensure carriers are adhering to the terms of the contract.
   • Confirm any rebates, discounts, or volume incentives are being applied.
7. Check for Hidden Fees and Surcharges:
   • Analyze fuel surcharges and see if they are aligned with market rates.
   • Look for any unauthorized or unexpected accessorial charges.
8. Evaluate Freight Classification:
   • Verify that freight classification (for LTL shipments) is correct.
   • Ensure items are not being misclassified, leading to higher shipping rates.
9. Assess Claims and Disputes:
   • Review any claims for damages, loss, or delays.
   • Ensure claims are filed and resolved in a timely manner.
   • Analyze patterns in disputes to identify recurring issues.
10. Carrier Negotiation Opportunities:
    • Review existing carrier contracts for potential renegotiation.
    • Identify high-cost areas where a new carrier or service level may be beneficial.
    • Leverage shipping volume to negotiate better rates or services.
11. Review International Shipping Documentation (if applicable):
    • Ensure proper documentation for customs, tariffs, and duties.
    • Confirm compliance with international shipping regulations.
12. Monitor Environmental Impact (optional):
    • Track emissions or fuel consumption for sustainability goals.
    • Look for opportunities to improve eco-friendly practices in transportation.
13. Create a Report of Findings:
    • Summarize key findings and cost-saving opportunities.
    • Present actionable recommendations for improving transportation processes.
14. Implement Continuous Monitoring:
    • Set up systems to track shipments, costs, and performance regularly.
    • Plan for periodic audits to maintain efficiency.