How to use Intelligent Document Processing (IDP) to reclaim ocean freight overcharges
According to Gartner, one in ten invoices in the ocean freight industry is incorrect. The high complexity of freight invoices is one reason for this, and manual creation is another. The logical consequence of this is that companies overpay 1-2% of the total ocean freight spend, which quickly amounts to staggering amounts of money.
To be able to identify the discrepancies, extracting the relevant data from ocean freight invoices and freight rates is crucial for accurate data reconciliation. MARTIN & SORBO (M&S) with their extensive industry expertise combined with machine learning-based Intelligent Document Processing (IDP) software from Parashift provide the perfect foundation for thorough audits and for any recoveries of overpaid ocean freight charges.
- A mix of complex ocean freight invoices and manual processes leads to inaccurate invoicing.
- The result is overpaid ocean freight charges.
- MARTIN & SORBO and Parashift help clients reclaim spend with digital ocean freight audits using AI-based document capture. And that up to 3 years back.
Various difficulties in the ocean freight industry
The excessive freight charges result from various problems of the following involved parties:
1. From the perspective of the ocean carrier and freight forwarder: Manual preparation of ocean freight bills, incorrect contract or tariff rates, miscommunication, etc.
2. From the perspective of the freight payer or cargo owner: Lack of knowledge of operations (in accounting), only manual sample checking of invoices, focus of resources on container distribution, etc.
3. General reasons for incorrect invoices: Date overlap in freight, double invoicing due to changes, discrepancies due to multiple currencies or additional charges, quantity of containers invoiced not matching the quantity actually carried, incorrect reading of complex freight contracts, etc.
An effective automation solution for the ocean freight industry
For auditing purposes, ocean freight carriers provide M&S with freight rates (contracts), freight invoices and, if available, credit notes. Parashift’s IDP platform extracts the relevant data from ocean freight invoices. This includes all industry-typical information such as port of loading and discharge, departure date, container size and bunker fees, which are extracted as structured data.
Based on the extracted data, M&S compiles a shipping history of the last up to 3 years. In the next step, M&S then creates a sea freight tariff with the volatility of the contracts, the port of loading, the port of discharge, the equipment and the additional costs.
Detect discrepancies and reclaim the overcharged amounts
Based on this data, the difference between the freight invoice and the rate card is calculated. Finally, the digital freight audit is performed based on the transactions and the rate cards. Each individual invoice is calculated on the basis of the number of containers shipped and the determined transport value, which is then compared with the invoice value.
Thanks to the data extracted by the IDP platform in real time, it becomes immediately apparent whether or not there are any discrepancies in the sea freight rates. If so, M&S contacts the transport company to reclaim the overcharged amount.
With a lot of industry know-how and with state of the art Intelligent Document Processing, M&S and Parashift create an accurate automation solution for clients in the ocean freight industry to claim the overpaid ocean freight expenses.