Article in Journal Of Commerce featuring Ocean Audit Inc.

1. Canadian carriers Open-skies deal Coalition forges Special Reports: West Coast Ports;
contest US fees no boon for cargo PNW security network Transportation Intermediaries
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Intermodal
overhaul
Maersk changes the way
it moves containers
in North America

2. CONTAINER SHIPPING
A dollar
here,
a dollar
BY PETER T. LEACH there
W
ith big-box retailers The money involved in erroneous
paying ocean freight billing for any one shipment may not
bills that add up to be much, but multiply an incorrect
millions of dollars a billing by the thousands of contain- errors in their own accounting sys-
year, they often find it hard to track ers that may have been billed wrong tems that may save them additional
whether their carriers have fulfilled and that can add up to real money. money on future shipments.
the contracted freight rate for every That’s why a number of retailers are “Sometimes a carrier contract
container they deliver. Their carriers turning to a company called Ocean has been signed and the cargo has
may not have recorded the pickup or Freight Refunds Inc., which per- been received on such and such a
delivery of a box on the correct date, forms post-shipment audits for date, but it doesn’t get through all
or may have billed the shipper at the importers before their three-year the systems, so you might get
wrong rate. The billing errors can statute of limitations on contract charged $75 more or $75 less,” said
result from fluctuating freight rates, claims runs out. They are getting Ray Burdgett, director of interna-
changes in surcharges or mistakes in significant amounts of money back tional transportation at Pier 1
inputting on both the carrier and from their carriers, and they are Imports in Fort Worth. “The biggest
shipper sides. using the audits to find and fix thing we found is in mistakes in tim-
Costs from erroneous billing
can add up quickly for shippers.
Here’s a way they can fix it.

3. CONTAINER SHIPPING
ing and rate changes that weren’t fixed fee is refunded in full, Land Service Inc., has started to
reflected in the system or billed Ferreira said. audit ocean freight shipments. He
properly.” He said one of the five biggest sold the first one, Tradechek, to an
Pier 1 contracted with Ocean U.S. retailers has just signed a con- accounting firm in 1997. He started
Freight Refunds to audit its ocean tract under the new pricing struc- Ocean Freight Refunds in 2004,
shipments for 2003, 2004 and 2005. ture. Ferreira prefers the second after his non-compete period ended.
“We did get back a substantial pricing model for his business The new company has already land-
amount of money,” Burdgett said. because he would rather collect the ed contracts for audit services with
“The biggest thing we found is in fixed fee upfront than wait the 15 of the top 100 U.S. importers
mistakes in timing and rate changes three or four months to collect half ranked by PIERS Global Intel-
that weren’t reflected on the system of the amount carriers refund to ligence Solutions, a sister company
or billed properly.” his customers. of The Journal of Commerce. In
Burdgett said the audit also Ocean Freight Refunds uses addition to Pier 1 Imports, some of
showed Pier 1’s carriers where they proprietary software to match its the company’s customers include
had made mistakes. “It was also dif- customers’ shipment records and Hasbro, Big Lots, J.C. Penney and
ficult on our steamship partners contract rates against the invoices TJX, the parent of TJ Maxx. ◆
because they don’t like to give submitted by the carriers to spot
money back,” he said. “They didn’t any anomalies in the pricing and Peter Leach can be contacted at
know either. It’s not like they were delivery dates. pleach@joc.com.
hiding something from us. Unless “We code their historic invoices,
Readers of the digital edition of The Journal of
somebody finds those mistakes, which gives us an idea of what the Commerce who want more information can click on:
they’ll go forever and no one will rates should have been at any point www.oceanfreightrefunds.com
To receive the JoC digital edition,
ever find them.” in time,” Ferreira said. The software call (888) 215-6084.
He said that although Pier 1’s catches about 80 percent of the
system for tracking ocean shipments anomalies and errors, and human
and bills was “doing a pretty good scrutiny catches the rest. Because
job, the audit pointed out the areas every company uses different sys-
we have problems with that we were tems, the audit must be customized
able to go in and fix.” Now that for every client. “It’s a very simple
Pier 1 has fixed its own auditing sys- process, but it has to be cus-
tem, it does not plan to use Ocean tomized for every client,
Freight Refunds’ audit system again. Ferreira said. “J.C. Penney
“That’s one of the benefits I give and TJX have very differ-
the clients,” said Steve Ferreira, ent processes.”
founder and owner of Ocean Ocean Freight
Freight Refunds. “I tell them that Refunds is the sec-
they can take all the reports I gener- ond company that
ate for them, and they can either use Ferreira, an alum-
me going forward every six or 12 nus of Sea-
months, or they can use the reports
to fix their own system.”
Ferreira offers customers two
pricing models. Under the one he
has been using for the past three
years, clients pay a contingency fee
of 50 percent of the amount of the
refunds the audit helps them recov-
er from their carriers. Under the
new pricing model he introduced
recently, his customers pay a fixed
fee upfront for a guaranteed
amount of refunds. If the refunds
gained through the company’s
audit don’t add up to the
amount guaranteed, then the
Reprinted from The Journal of Commerce, April 9, 2007 • www.joc.com
©Copyright 2007 The Journal of Commerce. All rights reserved
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