Your Shipping Invoice Explained

Shipping invoices are great tools for tracking how and where you spend your money. Even better, you can use the information to improve your profit margin — if only you knew what it all meant. You've been meaning to better understand your invoices, but when they come at the same time your inventory arrives or when orders need filling, it's often faster to pay the invoice now and learn later.

To help you make sense of your parcel and freight invoices, we've answered frequently asked questions from small businesses. You can use these explanations to gain insight into the effectiveness of your shipping strategy.

Basic details for understanding your shipping invoice

A standard freight invoice acts as a legal record, including names of consignor and consignee, date of LTL or FTL shipment, origin and destination points, number of packages, and a description of the freight. It will also provide details about the goods being shipped, including their common name and what it's made of, their weight and dimensions.

The description section of your invoice can include other pertinent information, such as specialty features required for the shipment and any assessed fees or surcharges.

A standard parcel invoice includes the names of shipper and receiver, date of shipment, service level and zones.

Additionally, the invoice identifies the goods being shipped, the materials it's made of, and the shipment's weight and dimensions. Other information found in this type of parcel document includes specialty shipping services, handling fees and other surcharges.

Delivering your parcel and freight shipments

The service level is the type of shipping service selected by a shipper based on features such as speed, destination, specialty services and so on.

In small package shipping, zones are the geographical areas a shipment travels through to reach its destination. Each carrier assigns its own zones based on distance between ZIP codes and uses those zones as one element when calculating rates: the lower the zone, the shorter the distance and the lower the rate. A shipment with a closer destination (Zone 1 to Zone 2) will have a lower rate than a shipment traveling farther (Zone 1 to Zone 5). To avoid the higher shipping rates of the more distant zones, some businesses establish multiple fulfillment centers that are strategically located in or near their most common destinations.

Parcel and freight fuel surcharges are fees carriers add to the basic parcel and freight shipping rates to cover fluctuating changes in fuel prices. The fees are determined by the weekly National U.S. Average on Highway Diesel Fuel Price report.

Carriers' goals are to fill their trucks in the most efficient ways possible. While valuable to filling cargo capacity, pickups that contain only one pallet or handling unit are more expensive to handle — in effect, adding an additional stop increases the truck's overall cost for usage. For these smaller shipments, carriers often add a single-shipment fee to account for the extra effort (including time and fuel) required to complete the delivery.

A multi-lot shipment is one that contains multiple boxes bound for the same address. A business can save on parcel shipping costs by consolidating individual packages headed to the same location.

A delivery area surcharge is assessed for the cost of providing service for shipments delivered to remote areas and locations that are less accessible.

Parcel and freight shipments delivered to or picked up from residential addresses or home-based businesses in residential areas are assessed a surcharge. By marking the address as such when the shipment is originally processed, you'll avoid the surprise of this fee being added when you receive your invoice.

Why accurate shipment weight and dimensions matter

Special handling fees are assessed for packages exceeding 48 inches on its longest side or 30 inches on its second-longest side, and for packages weighing more than 50 lbs. To avoid a shipping charge correction, you must indicate "Additional Handling" when you schedule a pickup. By entering accurate information, you'll be assessed a handling fee for the shipment but not a correction.

A carrier may audit a package to validate a parcel shipment's weight and dimensions. If the original information is incorrect, you'll be charged a different rate for the shipment, as well as a reweigh charge. You can avoid this extra charge by providing an accurate weight on your shipping label.

An inspection charge is assessed when a carrier audits a freight shipment to verify its actual weight, measurement, and/or class in comparison to what is disclosed on the bill of lading.

Less-than-truckload (LTL) freight rates are determined by several factors, one of which is its classification code (see National Motor Freight Classification). Every LTL freight shipment has a classification code based on its weight, dimensions, ease of handling and stowability. If as shipment's classification is incorrect (e.g., the freight weighs more than reported), then the shipment will have to be reclassified. You'll be charged both for the reclassification process and for the higher shipping rate. To avoid these extra costs, make sure to accurately weigh and measure your LTL freight shipment and report the correct information on your bill of lading.

Invoices Help Protect the value of your freight and parcel shipments

A high cost surcharge is a fee charged for freight shipments in some densely populated areas — generally in large cities that are more difficult for the carrier to navigate. The surcharge is driven by ZIP code and varies by carrier.

For small package shipments, the declared value of a shipment is the monetary portion the carrier is liable for in case of its loss, delay or damage. It is not equal to the full retail value of the goods being shipped. If the goods are valued at more than $100, you can increase the declared value of your shipment by indicating a higher amount in the shipping document and paying an additional charge or consider adding shipping insurance.

Get your shipping invoices in one place

Now that you have a better understanding of how to read your invoice, use what you've learned to build a better shipping strategy. But that can be easier said than done — especially when you're working with several carriers and multiple parcel and freight documents. Each carrier's invoice comes on different dates with different billing cycles and different formats. Making comparisons between shipping documents can be like trying to complete a jigsaw puzzle with missing pieces.

When you work with a third-party logistics (3PL) company, the puzzle is already put together. You get one consolidated invoice of all your carriers, making for easy comparisons.

At Worldwide Express, we take it even further. Your shipping expert will show you how to leverage the information in your invoice, perhaps by conducting a freight audit, to your advantage and help you create a shipping strategy that's more effective for your bottom line.

See how we can help