Loss and Damage Claims

Holiday season gets a bit crazy on the shipping front. With that seasonal volume bump, there’s also a bump in lost and damaged packages. It’s a pain for the customer, the shipper and, face it, the carrier as well. What to do about it?

Processing loss and damage claims is a hassle. Doing it well can often require more productive time than a lost article may be worth. That’s why many companies skip the entire process and write off the loss.

Direct-Recovery can help systematize that process by identifying loss and damage candidates and working collaboratively with customers to reduce processing time by 80%. We download all claims data directly, streamline the claims filing process, and you reap rewards of refund checks and increased productivity.

If you’re an existing customer, ask your rep to run a loss and damage claims review to see what you might be missing. If you’re a new or potential customer, once you’ve implemented our parcel audit, we’ll run a full evaluation to determine how best to help reduce your shipping spend.

As always, we work on a gain-share, basis, making the decision to implement a bit of a no-brainer.

And what about those porch pirates — an alliterative euphemism for common day thieves, thugs, robbers. Call it what you will, they steal a package from a customer’s porch after it’s already delivered. That’s a subject for another blog.

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What is Carrier Contract Optimization?

Whatever your particular forte, if it’s not transportation spend management, you’ll want to bring in the pros when negotiating your next carrier contract. FedEx and UPS contracts can be rather onerous to interpret. The language is mostly straight-forward, but the impact on your unique business is elusive. What they don’t show you is what you most need to see.

The Direct-Recovery rate optimization service assures that you get the most for your transport buck. With former FedEx and UPS executives on staff, and decades of data to reference, we understand the nuances of negotiation and concessions. We know what’s possible and we’ll help you get there.

We start with your current contract, informed by a thorough analysis of your shipping history. We find opportunities to nip or tuck in ways that won’t be rejected  by the carrier contract algorithm, we encourage some healthy competition as we walk you through negotiations, and we typically cement a net rate reduction well into the double digits.

If you’re satisfied with your current contract with FedEx, UPS, DHL, allow us to run a complementary analysis. We’ll verify you have the best contract you’re apt to see, or we’ll show you exactly what you’re missing, the potential impact on your business, and how to get there from here.

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UPS Sued over Declared Value Charge

UPS again plays the role of Defendant this New Year in a class action lawsuit filed in the State of Michigan. One Steven Sitak of Michigan, and International Samaritan, a charitable organization serving the poor in Latin America, have filed a class action lawsuit against UPS with the help of the Complex Litigation Group LLC. The matter is fairly simple, and one that has perplexed auditors for years.

UPS offers a minimum declared value of $100 for every package shipped to cover loss or damage claims. Beyond $100, shippers pay $0.85/$100 in value. As stated in the UPS Tariff:

“– UPS’s liability for loss or damage to a shipment is limited to $100.00 without a declaration of value.– The maximum declared value is $50,000.00 per package. UPS’s liability for loss or damage can be increased up to $50,000.00 (subject to terms and conditions) by making a declaration of value for an additional charge.

– $0.00-$100.00         $0.00

– $100.01-$50,000.00       for each $100.00 (or portion of $100.00) of the total value declared $0.85– Minimum $2.55″

Though the tariff states that the first $100 is free, once a shipper pays for a declared value beyond $300 (the minimum DV charge is $2.55), UPS includes a $0.85 charge for the first $100 in its declared value calculation.
The complaint states the problem succinctly:

“However, despite the explicit representation and contractual promise that the first $100 of liability coverage is provided at zero cost to the shipper, on information and belief when a shipper purchases additional coverage for a declared value in excess of $300.00, UPS charges the shipper $0.85 for the first $100 in coverage and an additional $0.85 for each additional $100 in coverage or portion thereof.

For example, on information and belief, where a customer declares a value of $350.00, instead of charging $2.55 (the “minimum,” which is also 3 X $0.85 for each $100 or portion thereof in excess of $100), UPS charges $3.40. As a further example, on information and belief, for a declared value between $400 and $500, UPS charges $4.25, and so on”

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On Sandy, Mugabe, and hyperinflation

Today is the 8th work anniversary of one of the most valuable, but least celebrated agents of Direct-Recovery. For many customers, she’s the eloquent voice of Direct-Recovery. Indeed, she speaks the Queen’s English, not that bastardized version to which most of us Americans have sunk over the past few hundred years. Not Sandy. Every consonant is enunciated, unless it’s silent. Every punctuation is present. Every word is spelled – no lol, gtg, l8r or any of the sort. If her correspondence is added to a time capsule discovered 500 years hence as evidence of our language practice, we’d be proudly, but falsely, represented.

Here’s a little secret – Sandy manages our service center in Cape Town, South Africa.
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Business Intelligence for Parcel Shippers

The story from Business Week, March 2009 was “Business Intelligence Software’s Time is Now“.  The writer tells of companies growing more creative in their use of data-mining tools to extract cost-cutting and revenue-enhancing operational solutions in the wake of recessionary economics. Interesting. But, from our perspective at least, not news.

We assume every company wants to stretch a dollar. It’s not universal, we know, but it’s certainly true for our customer base. Of course, you won’t find the celebrity banking cartel in our customer base either. No coincidence here. But I digress…

A whole lot of companies are spending a whole lot of money on business intelligence tools to mine scads of historical data for “operational optimization jewels” (OOJes). With the exception of some open-source BI resources like Pentaho and Jaspersoft, these tools don’t come cheap. And if they do come cheap, it’s the high implementation costs that offset the less expensive software costs. For the larger enterprise the investment is worth every dime because the returns can be substantial. For the smaller enterprise, good BI may be elusive. Or not?

In the early days of Direct-Recovery we wondered how to best use the gigabytes of shipping data we received each week to best serve our clients. The thought of developing a full Business Intelligence interface to mine for OOJes seemed far-fetched. We focused instead on the task at hand – keeping the customers happy. As customers approached with unique reporting needs, we’d challenge our programmers to bring solutions to satisfy. Once we had sunk the development cost, we took the programming, made it configurable, and added it to our report repository for others to benefit from. We’d tweak things, but the process was largely driven by customer inquiry.

We made the reporting tools available through a central server so our customers could access their full history of shipping. Think of  it as a wiki-intel portal, where customers share logistics focused cost-cutting tools, and we make the best of them available for all our customers.

Today we have over 400+ configurable reports plus an ad hoc writer, graphical dashboard, and tons more posted online for our customers to access, and it’s all thrown in for free. It’s a priceless package – free for customers.

I figure we helped pioneer the Business Intelligence, SaaS, and Free-mium crazes. We just didn’t flaunt it. The one angle we missed was the social network. With LinkedIn hitting $9B in market cap the first day of trading yesterday, and Facebook at $50B, that was a painful miss. We’re now soliciting creative ideas to make parcel auditing the next viral social network craze. Some combo of Lady Gaga meets Facebook, meets Royal Wedding, meets your favorite freight auditor may be in order.

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someTing special…


In 2011 we partnered with a brilliant developer in Palo Alto who conceived of and built an intelligent platform to help companies optimize their cell phone expenses. It reduces cellular spend of our target customers by about 30%. Story and service are described here. Absolutely Brilliant concept.

If the truth be told, however, in a perfect world, or at least one with honest mobile phone billing, this optimization service wouldn’t exist. Continue reading

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Shipping Audit Savings – True Confession

The question is reasonable and inevitable – “How much can I save with your shipping cost recovery services?”

The answer may seem elusive coming from industry professionals, but it’s simply true – “Don’t know”. Yes, we have historical comparisons from ‘similar’ shippers, and estimates by carrier, but until we have the live data in the system, hard estimates are speculative at best. If we overshoot, we pull a bait-and-switch. If we undershoot, we lose the sale.

The simple truth is, we have some customers whose carrier operations and internal logistics are so tight, we scarcely recover anything. For them, and obviously for us, it’s hardly worthwhile. We stay on it because every once in a while something pops. We’ll run dry for 11 months, then recover 20 % of an invoice. Go figure. We’re still in business today because, well, ‘stuff happens’.

Here’s another truth. We ran a 17.6% average gsr recovery rate over 2 years for a good sized client shipping with a regional carrier. True, audited result. But put that on the brag-board and we become snake-oil salesmen.

We especially like returns from international shipments and regional carriers. That’s why we offer our services globally, regardless of billing domicile, and work with virtually any established carrier that has electronic billing and a service guarantee. Recovery rates are higher and our services are all the more essential. What’s more, the more aggressive we are at enforcing carrier service commitments, the better the carrier performs.

We just lost a sale to what I considered an ideal prospect – parcel spend of $1M going through multiple carriers among their offices in 20 different countries. We offered centralized billing, total transparency, parcel audit, claims processing, the works. We’d save them money and boost efficiency. That’s our claim to fame. We lost the sale, but it wasn’t because they found an alternative to our services. They had none. They were simply overpaying their carriers ( UPS, FedEx, and DHL) and choosing to do so. Later came the cynical realization – they’re a government contractor. Aren’t they compensated on cost-plus? Hmm…  And no, it wasn’t Haliburton.

Back to the question of potential recoveries. Run a 30-day trial and we’ll show you, and us, what our shipping audit can do for you. It’s really the simplest answer.

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Wanted: Cost Control Consultants

Direct-Recovery identifies hard and soft cost transport savings for companies that ship with any major parcel shipper. ‘Hard’ savings are refunds due to late deliveries and billing errors, which are credited to the company’s carrier account. Our primary revenue stream is a split of these savings.

‘Soft cost’ savings are derived from operational changes the customer makes based on the information we provide through our SaaS report interface. We have one of the best sources of logistics intelligence in the industry with 300+ configurable reports developed over the years at the request of customers. When that’s not enough, we have an ad-hoc report writer or custom programming to supplement.

We identify the soft cost savings, but it’s up to the customer to deploy the solution. Sometimes they don’t, and it’s a perennial frustration to see the money wasted. We find that the greatest savings opportunities are often based on operational changes we identify, the implementation of which is simply outside the scope of our involvement. Air to Ground conversions is often a big opportunity – up to 30% savings for one specific company.

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FedEx Claims Roulette

True confession:  There’s an intriguing, speculative side to the world of freight auditing, because we never know what we’ll find. Though admittedly somewhere short of ‘Casino Royale’, it can be intriguing to dig into a client’s history to find they’ve spent too much for too little, and the net result surprises us all. Continue reading

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