How Can Freight Forwarders Eliminate Costly Documentation Errors?

Freight, supply chain and logistics are among the most data-intensive sectors in the global economy. Each day, freight forwarders and brokers need to generate and process a sea of data across the supply chain to keep shipments flowing from point A to B.

Unfortunately, most of these documents are still processed by hand or manual, static systems. And even if you're meticulous about it, statistically, it's only a matter of time before human error pops into your Request for Quotations (RFQs), sales contracts, shipping documentation, or customs paperwork, impacting your operations and margins.

It happens daily when busy shippers email RFQs with errors nobody picks up on, which are then forwarded as inaccurate price requests from time-strapped freight forwarders to unsuspecting carriers. Or when an incorrect buy price is transformed into an overpriced shipping proposal, leading to disputes and lost opportunities. Mistakes can pop up everywhere in the supply chain, and the fallout puts the bottom lines of freight forwarders at risk.

The good news? All of these errors are 100% avoidable. But before we jump to the solution, let's uncover the most frequent documentation errors and, more importantly, their root cause.

What are the most common freight documentation errors to watch out for?

There is still no end to global disruptions in the short term. Meanwhile, the demand for faster shipping times is growing. For freight forwarders to succeed in 2024 (and avoid unnecessary delays, penalties and legal complications), they need to minimize the risk of data errors, discrepancies and omissions impacting their operations.

But why are these mistakes happening? Who's making them? And in which documents are they happening most?

1. Documentation mistakes from shippers: Request for Quotations

Request for Quotations (RFQs) is a mainstay of freight forwarding and the gateway to new partnerships. But when details such as the origin, destination, transport mode, weight, volume, or value of goods are omitted or incorrectly entered by the shipping company, it becomes impossible for the freight forwarder to calculate rates and fees accurately, leading to guesswork and inaccurate pricing for RFQs.

Inversely, an error in an RFQ can quickly snowball when a freight forwarder mistakenly records or transcribes a shipper's price request, causing delays and disputes with the carrier (and wrecking future partnership opportunities when mistakes persist).

2. Documentation mistakes from carriers: Buy Prices

"Buy Prices" refers to the procurement prices at which a freight forwarder or broker agrees to purchase freight services from carriers. Errors enter this process through miscommunications in the agreed rates, currency conversion mistakes, or incorrectly applying surcharges or additional fees.

The consequences of getting the Buy Price wrong are potentially disastrous and include:

• Impacted cash flow and profitability of the shipping company by overpaying the carrier or reduced profit margins of the carrier by undercharging the shipper.
• Possible fines, sanctions, or legal actions, should the mistake contravene any laws or regulations of the origin or destination countries.
• Damage to customer satisfaction and bottom line due to reputation and credibility erosion.
• Operational delays caused by persistent errors demanding negotiations and adjustments to rectify.

3. Documentation mistakes from carriers and shippers: Bill of Lading

The Bill of Lading (BOL) sits at the heart of every shipment. Whether it's an Air Waybill, Ocean Bill of Lading, Multimodal Bill of Lading, Express Bill of Lading or Master Bill of Lading, when people are relied on to generate it, inevitable errors trigger a cascade of consequences for freight forwarders.

• Misidentified consignee information can send a shipment off course, incurring substantial delays and additional costs.
• Mistaken categorization can expose valuable goods to unsuitable storage conditions, leading to damage or spoilage.
• Inaccurate invoices arising from BOL errors can ignite disputes and delay payment processing.

4. Documentation mistakes from customs brokers: HS codes and commercial invoices

Custom brokers depend on receiving the correct Harmonized System (HS) code from an importer or exporters to complete customs clearance documents correctly. Getting them wrong can lead to improper duty assessments, customs delays and the over or underpayment of customs duties.

Additionally, incomplete or inaccurate commercial invoices can cause clearance delays or penalties, especially if they contain misstated values or descriptions. Invoicing mistakes can lead to a loss of productivity, trade privileges, and fines imposed by customs authorities.

Over the long term, consistent mistakes can lead to poor recordkeeping and discrepancies in import or export dealings resulting in audits by customs authorities. But regardless of the document or nature of the mistake, the root cause is the same - manual data management.

What's the real cause of documentation errors?

MIstakes are inevitable in any repetitive process where people must enter, organize, and maintain data without using automated software. This study reveals that human error can range anywhere from 18% to 40% when manually inputting data into basic spreadsheets and documents. Within the freight industry, it's estimated that manual data processing and management can cost supply chain organizations up to 20% of their annual revenue.

Stardox: freight documentation made simple with 100% accuracy.

Stargo's StarDox solves the root cause of freight documentation errors. By eliminating manual data processing and automating freight documentation management. StarDox, powered by Generative AI, extracts, structures, cleanses, enriches, and corrects data from unstructured sources, including shipper price requests, RFQs, buy prices, and commercial invoices.

For instance, Stargo automatically generates 500 lane RFQs in 40 seconds (instead of 60 hours) with 100% data accuracy.

Schedule a demo now to see how Stargo can automate your freight forwarding documentation -- and eliminate manual data errors once and for all.