Insight: Global Freight Audit & Payment Market Outlook

Rolf Bax

Rolf Bax

November 2, 2018 - 09:10

Insight: Global Freight Audit & Payment Market Outlook

According to Gartner in it's September 2018 report, Market Guide for freight Audit & Payment providers “Improved freight spend visibility and freight audit accuracy are needed to improve transportation performance and lower freight costs in the face of increasing transportation challenges”. In this Blog we will provide our take on their latest research.

Current freight Audit & Payment market
Freight Audit Services that FAPs provide are invoice collection, preaudit, post-audit, payment of transportation bills etc. In the last years extra services have been added to the market like strong analytics and supply chain consulting based on their logistic costs. Due to more transportation market complexity and rising costs, business intelligence from freight data is needed. Some of the current market issues are difficulty in controlling spend and cash-flow due to lack of analytic tools and carrier negotiating and issues in invoicing, payment and  econcilliation due to low levels of automation and lack of freight bill audits. The lack of systems to audit and pay freight bills causes enormous errror rates. 

Identifying the right partner for outsourcing Freight Payment and Audit to a FAP provider that is driven by cost savings as much by value through logistics data helps you getting logistics insight to the next level. Freight Audit platforms allow both carriers and shippers to align data, rates, issues and invoices orchestrated by audit teams. Automation is increasing fast over the last years and different modes and different regions add complexity that lead to more outsourcing. You are able to outsource to FAPs, 3PL providers and business process outsourcing companies. If you need any help choosing your freight provider check out this blog

U.S. Versus Europe Versus Asia
The freight payment industry in the US formed by banks when the transportation marketplace was heavily regulated but in Europe there is no regulation history. In Europe there are also additional complexities due to different rules in different countries and no concistency in the carrier invoices. Also in Asia there is no long history with outsourcing of freight payment. European and US vendors are entering the Asian market as well as European and American vendors entering each others market.

There are a lot of differences especially between Europa and North America. Please see the worldmap and differences between the three continents in global freight audit and payment:

 

Click on the interactive map to active continent comparison details 

In the USA the market is fragmented with a lot of suppliers in comparison to Europe where only a very few providers are dominating the market. In Asia mostly European or US headquartered companies are active.

Comparison between shippers and shippers vs 3PL's
Mostly large shippers are outsourcing freight payment due to freight bill volume and process complexity and different modes and location (legislation). Manual processes continues to decline and shippers use 3pls for payment, freight payment providers, their ERP or TMS to audit and pay freight bills. 3Pls use their TMS or use a freight payment provider that is not a bank. They often use this to their customers as well.

The Freight Audit and Payment process

A good set up of a solid freight audit and invoice audit process looks like this

Freight Payment process


Some remarks:
• A portion of shippers and 3PLs seems concerned over freight payment vendor malfeasance and keep the payment in-house.
• Today's transportation payment companies are offering expertise in all modes
• For many shippers the ideal situation would be to have a single platform to audit and pay freight bills across all modes.
• The leading FAP vendors providing more technology offerings as separate solutions such as TMS, modeling and parcel solutions
• Turning to an outsourced approach(7% inaccurate invoice rates) in stead of doing it manually(23-25%) inaccurate invoice rates is the innaccuracy of invoice rates.
• According to the American Shipper 2017 Transportation Payment Benchmarking study the number of shippers paying manual or spreadsheet-based is 18% (3PLs 21%)


Manual Freight Audits versus outsourcing
The annual American Shipper study found that the cost to manually process a global freight invoice was 53% higher than the cost of using an outsourced partner. On average the price to process and pay a freight invoice cost a company 5$! Besides this, errors are expensive as rate sheets are usually outdated and data can be incorrect so invoices can look right but can be wrong. Some reports show that error rates can be as high as 15-20%. Outsourcing saves personnel costs, delivers efficiency and makes sure freight rates are correct and accessorials under control. Please find four benefits of outsourcing freight audit below. 

3 Freight audit benefits

 
Future of freight audit and payment solutions
in 2016, the global market of freight payment solutions was valued at nearly $ 19 billion and is expected to reach around $29 billion in 2021 (+38 percent). Some important factors that are impacting the FAP market are decrease in manual processes and increase use of automation, increase in outsourcing, increased transportation costs, globalization, changes in trade agreements, analytics, carrier collaboration and visibility. Two smaller factors are Blockchain and Data security.

Choose your Freight Audit provider wisely. Some recommendations:

– Check out all their FAP services and available extra solutions they provide by region and mode.
– Compare the freight audit and payments services among the price of processing and transportation invoice payment. Use their data to provide key insights
– Make your business more lean and use their feight invoice payment services as well.


Summary:
– Due to a rise in rates and freight spend the importance of visibility continues to grow
– Requirements for global FAP drive vendors to expand from their current services and solutions
– The Freight audit companies that are active is segmented, depending on mode and region.
Pricing models can vary

About ControlPay Freight Audit & Payment
For over 16 years, world's leading Freight Audit & Logistics visibility Provider ControlPay, with offices in multiple countries serves large multinationals with complex logistics structures achieving control of freight costs and invoices flow. Our service also include Auto Invoicing, Extra Cost Tool, Business Intelligence, Issue resolution, Bidding Tool, Cost allocation, rate management and freight tendering in partner with tendertool.com. For more information, please don't hesitate to contact us via info@controlpay.com

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