How the market works
Nearly every organization ships something, whether finished goods to customers, parts between sites, returns, documents or equipment. Freight spend is split across modes that behave very differently.
Small parcel is priced from published rate tables with negotiated discounts, dimensional weight rules and a long list of surcharges and accessorials for residential delivery, additional handling, oversized packages, address corrections and peak periods. Less-than-truckload (LTL) is typically priced from a carrier base rate with a discount, freight class, minimum charges and accessorials such as liftgate, inside delivery and appointment fees. Full truckload is priced per lane, per mile or per load, with contract rates set through periodic tenders and spot rates used when contracted carriers decline.
Fuel surcharges apply across most modes and are calculated from surcharge tables tied to a published fuel index. The table itself is negotiable, and small differences in its structure can move total cost meaningfully over time.
Freight can be moved by asset-based carriers, which own equipment, or brokers, which arrange capacity from many carriers. Third-party logistics providers (3PLs) may manage transportation, warehousing, fulfillment or all three. Warehousing pricing combines storage, handling, value-added services and management fees, each with its own unit of measure.
Where cost and value leak
Surcharges and accessorials outpace discounts. Base rates are negotiated hard while surcharges, accessorials and dimensional rules erode the savings.
Invoices aren’t audited. Duplicate bills, incorrect rates, misclassified freight and unauthorized accessorials are paid without challenge.
Tenders go stale. Truckload routing guides aren’t refreshed, so primary carriers reject loads and freight shifts to spot rates.
Freight is split across too many buyers. Sites, business units and suppliers each arrange shipping, fragmenting volume and data.
Packaging drives cost. Dimensional weight charges penalize oversized cartons that no one has redesigned.
3PL terms go unmeasured. Warehousing and fulfillment agreements include service levels and pricing that are rarely reconciled against activity.
Illustration: a hypothetical consumer products company ships parcel from two distribution centers and LTL and truckload freight from several plants. Its parcel discount was renegotiated recently, but a review of invoices shows that residential, additional-handling and dimensional weight charges now make up a growing share of cost, much of it driven by a few oversized carton sizes. On the truckload side, the routing guide hasn’t been refreshed through several market shifts, primary carriers are rejecting a large share of tenders on key lanes, and those loads are moving at spot rates that never appear in the contract.
Negotiation and sourcing levers
- Parcel agreements — negotiate base discounts, minimums, dimensional divisors, accessorials and surcharge caps as one package, not just the headline discount.
- LTL pricing — address base rate tariffs, discounts, freight class or density pricing, minimums and accessorial schedules.
- Truckload tenders and routing guides — bid lanes regularly, set primary and backup carriers and monitor acceptance so freight stays on contract.
- Broker and carrier mix — use asset carriers on dense, consistent lanes and brokers where flexibility and coverage matter more.
- Fuel surcharge tables — negotiate the base price, increments and percentages in the table, not just the index it references.
- 3PL and warehousing terms — define pricing units, service levels, productivity expectations and cost transparency.
- Freight audit and payment — audit invoices before payment, recover errors and code freight cost for analysis.
- Packaging and shipment design — reduce dimensional weight and accessorial exposure through carton sizing and consolidation.
The S2V approach
Potential. We build a shipment-level view of freight cost by mode, lane, carrier, site and customer, separating base rates, fuel and accessorials. The S2V Compass shows where cost has drifted from contract, where volume is fragmented and where invoices don’t match rates.
Priority. We rank opportunities by value, feasibility, service risk and timing. Contract renewals, peak seasons, customer commitments and network changes shape the S2V Blueprint.
Performance. Through the S2V Accelerator, we run parcel, LTL and truckload sourcing, redesign routing guides, negotiate fuel tables and accessorial schedules, source 3PL and warehousing services and put freight audit processes in place with logistics and operations teams.
Value. With S2V Pulse, we track realized results in audited freight invoices, monitor tender acceptance, surcharge trends and service levels, and flag the next set of lanes or agreements to revisit as the market moves.
Data you’ll need
We typically need freight invoices or carrier billing files, shipment data from the transportation management system or shipping software, carrier and 3PL contracts, rate tables and accessorial schedules, fuel surcharge tables, routing guides and tender history, and warehouse activity reports.
The identifiers that break are consistent across companies. Shipment or PRO numbers on invoices don’t match the TMS, origin and destination locations are entered differently, freight is coded to general expense accounts, the same carrier bills under several names and parcel detail sits in carrier portals rather than AP.
Before analysis, we confirm whether invoices and shipments can be joined reliably, typically through shipment and tracking identifiers, a standard location master and a normalized carrier list. If they can’t, we say so and scope the foundation work separately rather than hiding it inside a fixed fee. Once built, shipment-level cost visibility becomes an ongoing capability rather than a one-time exercise.
Outcomes we target
- Lower landed freight cost, verified in invoices — base, fuel and accessorials measured together.
- Audited freight bills — errors caught before payment and recovered when missed.
- Freight on contract — refreshed routing guides with tracked tender acceptance.
- Controlled surcharges — fuel tables and accessorial schedules negotiated and monitored.
- Accountable 3PL partners — pricing and service levels reconciled to actual activity.
- Shipment-level visibility — cost by lane, mode and customer that supports network and pricing decisions.
Every result is tracked to realized value — measured in invoices and operating performance, not negotiated estimates.
Industries where this matters
How we help
- Assess — Assess establishes where your organization stands and where value is trapped.
- Advise — Advise determines where procurement should go and what deserves resources first.
- Execute — Execute turns strategy into implemented results.
- Develop — Develop builds your team's capability so results last after the engagement ends.
- Sustain — Sustain protects and extends value after implementation.
Frequently asked questions
Which freight modes does this category cover?
Small parcel, less-than-truckload, full truckload, intermodal and expedited freight, along with brokers, third-party logistics providers, warehousing and freight audit and payment. International freight forwarding can be included where it is part of the spend.
Why do parcel invoices keep going up even when our rates are negotiated?
Parcel pricing includes base rates, dimensional weight rules, fuel surcharges and a long list of accessorial and surcharge fees that carriers update regularly. Negotiated discounts on base rates can be offset by changes in these other charges, so the full cost structure has to be negotiated and monitored.
Should we use brokers or asset-based carriers?
Each has a role. Asset carriers can offer capacity commitment and consistency on dense lanes, while brokers offer flexibility and coverage on irregular or spot freight. We design a lane-by-lane strategy that uses each where it performs best.
What does freight audit and payment involve?
It is the process of checking every freight invoice against contracted rates, surcharges and shipment data before payment, and coding freight cost correctly. It can be done in-house or through a provider, and it creates the data needed to manage freight over time.
Where does an engagement usually start?
With an S2V Compass assessment of freight invoices, shipment data, carrier contracts and fuel surcharge terms. It produces an opportunity portfolio sequenced around contract renewals, peak seasons and network changes.