Ocean Audit's post audit approach identifies 5 years worth of ocean freight overcharges and returns 1%-2% of the total ocean spend.

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

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

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