VOLUME 8, ISSUE 14 APRIL 9, 2007 WWW.JOC.COM $5.00

The weekly newsmagazine of international trade and logistics, founded in 1827

Canadian carrierscontest US fees

Special Reports: West Coast Ports;Transportation Intermediaries

Open-skies dealno boon for cargo

IntermodalIntermodaloverhauloverhaul

IntermodalIntermodaloverhauloverhaul

Coalition forgesPNW security network

Maersk changes the wayit moves containersin North America

Maersk changes the wayit moves containersin North America

CONTAINER SHIPPING

W ith big-box retailerspaying ocean freightbills that add up tomillions of dollars a

year, they often find it hard to trackwhether their carriers have fulfilledthe contracted freight rate for everycontainer they deliver. Their carriersmay not have recorded the pickup ordelivery of a box on the correct date,or may have billed the shipper at thewrong rate. The billing errors canresult from fluctuating freight rates,changes in surcharges or mistakes ininputting on both the carrier andshipper sides.

errors in their own accounting sys-tems that may save them additionalmoney on future shipments.

“Sometimes a carrier contracthas been signed and the cargo hasbeen received on such and such adate, but it doesn’t get through allthe systems, so you might getcharged $75 more or $75 less,” saidRay Burdgett, director of interna-tional transportation at Pier 1Imports in Fort Worth. “The biggestthing we found is in mistakes in tim-

A dollar here,

a dollar there

Costs from erroneous billing can add up quickly for shippers.

Here’s a way they can fix it.

BY PETER T. LEACH

The money involved in erroneousbilling for any one shipment may notbe much, but multiply an incorrectbilling by the thousands of contain-ers that may have been billed wrongand that can add up to real money.That’s why a number of retailers areturning to a company called OceanFreight Refunds Inc., which per-forms post-shipment audits forimporters before their three-yearstatute of limitations on contractclaims runs out. They are gettingsignificant amounts of money backfrom their carriers, and they areusing the audits to find and fix

ing and rate changes that weren’treflected in the system or billedproperly.”

Pier 1 contracted with OceanFreight Refunds to audit its oceanshipments for 2003, 2004 and 2005.“We did get back a substantialamount of money,” Burdgett said.“The biggest thing we found is inmistakes in timing and rate changesthat weren’t reflected on the systemor billed properly.”

Burdgett said the audit alsoshowed Pier 1’s carriers where theyhad made mistakes. “It was also dif-ficult on our steamship partnersbecause they don’t like to givemoney back,” he said. “They didn’tknow either. It’s not like they werehiding something from us. Unlesssomebody finds those mistakes,they’ll go forever and no one willever find them.”

He said that although Pier 1’ssystem for tracking ocean shipmentsand bills was “doing a pretty goodjob, the audit pointed out the areaswe have problems with that we wereable to go in and fix.” Now that Pier 1 has fixed its own auditing sys-tem, it does not plan to use OceanFreight Refunds’ audit system again.

“That’s one of the benefits I givethe clients,” said Steve Ferreira,founder and owner of OceanFreight Refunds. “I tell them thatthey can take all the reports I gener-ate for them, and they can either useme going forward every six or 12months, or they can use the reportsto fix their own system.”

Ferreira offers customers twopricing models. Under the one hehas been using for the past threeyears, clients pay a contingency feeof 50 percent of the amount of therefunds the audit helps them recov-er from their carriers. Under thenew pricing model he introducedrecently, his customers pay a fixedfee upfront for a guaranteedamount of refunds. If the refundsgained through the company’saudit don’t add up to theamount guaranteed, then the

Land Service Inc., has started toaudit ocean freight shipments. Hesold the first one, Tradechek, to anaccounting firm in 1997. He startedOcean Freight Refunds in 2004,after his non-compete period ended.The new company has already land-ed contracts for audit services with15 of the top 100 U.S. importersranked by PIERS Global Intel-ligence Solutions, a sister companyof The Journal of Commerce. Inaddition to Pier 1 Imports, some ofthe company’s customers includeHasbro, Big Lots, J.C. Penney andTJX, the parent of TJ Maxx. ◆

Peter Leach can be contacted atpleach@joc.com.

Readers of the digital edition of The Journal ofCommerce who want more information can click on: www.oceanfreightrefunds.comTo receive the JoC digital edition, call (888) 215-6084.

fixed fee is refunded in full,Ferreira said.

He said one of the five biggestU.S. retailers has just signed a con-tract under the new pricing struc-ture. Ferreira prefers the secondpricing model for his businessbecause he would rather collect thefixed fee upfront than wait the three or four months to collect halfof the amount carriers refund to his customers.

Ocean Freight Refunds uses proprietary software to match itscustomers’ shipment records andcontract rates against the invoicessubmitted by the carriers to spotany anomalies in the pricing anddelivery dates.

“We code their historic invoices,which gives us an idea of what therates should have been at any pointin time,” Ferreira said. The softwarecatches about 80 percent of theanomalies and errors, and humanscrutiny catches the rest. Becauseevery company uses different sys-tems, the audit must be customizedfor every client. “It’s a very simpleprocess, but it has to be cus-tomized for every client,Ferreira said. “J.C. Penneyand TJX have very differ-ent processes.”

Ocean FreightRefunds is the sec-ond company thatFerreira, 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

Published with copyright permission from The Journal of Commerce. http://www.joc.com/copyrights – 4//07