It’s been an industry standard for some time now for FedEx and UPS to put language in some of their contracts waiving their clients rights to Guaranteed Service Refunds (GSR) and Money Back Guarantees (MBG). With around $2 Billion in unclaimed refunds every year, it’s no surprise the carriers want to limit themselves to this liability as best they can. However, in the past these waivers were typically only seen in extremely high volume shippers contracts.
As of late, smaller and smaller shippers have been seeing this language included in their contracts during negotiations. This is likely in large part due to the wide availability of 3rd party auditing firms making it much easier for smaller shippers to identify and refund late or missed deliveries.
What Shippers Should Do?:
What shippers need to know is that this language, like virtually everything else in your parcel contract, is negotiable. There are very few cases where GSR or MBG waivers are actually justifiable. And despite what carrier reps might say initially, they can be removed without sacrificing any additional discounts. Shipper’s should look out for this language in their current contracts, and any time they are renegotiating their carrier contracts, to make sure these waivers don’t sneak their way in.
Between FedEx and UPS there are currently dozens of surcharges and accessorials that can potentially be attached to the cost of each shipment, with more additional charges being rolled out every year. Furthermore, how, and to what, these surcharges and fees are applied to is constantly changing as well. Making it more difficult than ever to ensure complete billing accuracy.
These complicated and ever changing surcharge structures can leave even the most experienced logistics professionals scratching their head when looking over an invoice. Making it nearly impossible to manually verify every single shipment charge, even if you had the time to do so.
What Shippers Should Do?:
As surcharge structures continue to become more complicated, the time investment of manual invoice auditing will increase and the realized recovery will decrease. This will make it more important to employ a comprehensive audit software to automate this process and ensure complete billing accuracy. Doing so will not only save time and money, but also give shippers a more accurate picture of how surcharge changes will affect them and their company.
Consumer expectations for faster delivery are leaving carriers with higher pressure to make time definite deliveries. While the carriers have done a great job adapting and expanding their networks to make on time deliveries, they’re still not perfect. Late deliveries are bound to happen, exposing the carriers to a high potential late delivery refund liability.
As a result, carriers are taking a much stronger stance defending themselves from late delivery refunds. Whether it’s due to traffic, weather, or other circumstances, carriers will deny just about any initial refund request they can find an excuse for. And while an initial denial isn’t a death sentence for a refund request, it does require you call the carrier to appeal it, which they know most shippers won’t do.
What Should Shippers Do?:
As carriers are denying refund requests more often, it’s more important that shippers be prepared to take their audit process a step further than filling out an initial request. Some refund requests may be denied for valid reasons, but up to 50% of refund denials can be successfully appealed if you call the carrier for review. Whether you are working with a 3rd party audit company, or doing the process manually, it’s crucial to ensure that denied refunds are being reviewed and appealed if necessary. Adding this important second step can nearly double the amount of refunds you receive from your carrier.
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