ARG contributes article to Journal of Commerce “Poor invoicing costs cargo airlines cash and customers”

It has been well known that air cargo carriers have struggled with invoice accuracy for years, with legacy systems with limited flexibility and inherent flaws in the booking process are contributing factors.

Only one in four carriers can adjust rates across six or more factors, including market, product, commodity, unit load device (ULD), weight/volume, and market fluctuations, according to an Accenture Air Cargo study. Almost 60 percent believe that rate calculation inconsistencies are the top contributor to invoice errors, a major source of customer dissatisfaction and revenue leakage. In fact, invoice errors reach “high” levels for fully one-third of carriers in the Accenture survey.

Considering that CASS shows that the direct air cargo carrier market topped $26.4 billion in 2016 and that data research company MarketLine shows that the global (direct and indirect) air freight market topped $101.3 billion in 2016, hundreds of millions of dollars are being disputed by customers.

However, invoicing issues are a double-edged sword. The data that we have collected from working with major global carriers over the past 12 years shows that invoicing issues do not discriminate.

Carriers with a high overcharge rate also have a high under-billing rate, while those with lower under-billing rates have fewer overcharges. Analyzing the data further shows that under-billings on average equate to approximately 2.5 percent of overcharges. The under-billing to overcharge range is 1.67 percent to 3.25 percent — this makes overcharges an extremely good indicator of under-billings.

Based on the current over-charge rate, the data shows that there is more than $250 million in revenue leakage that direct and indirect air cargo carriers face. While staggering, this number does not account for turnover relating to customer friction and distrust in the carriers’ billing capabilities. More than ever, there is a need for carriers to focus on protecting and improving the customer experience, while also guarding their revenue.

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