Growing Volume. No Margin by Lane.
A freight consolidator was growing volume with no view of lane-level margin. How lane costing and accessorial capture surfaced $321,800 in annualized value.
Logistics — Freight Consolidation and Regional Distribution
Growing Volume. No Margin by Lane.
A freight consolidation and regional distribution business was growing volume steadily. What it could not produce was margin by lane, by customer, or by load. A Financial Discovery Assessment identified $321,800 in annualized value, most of it in revenue the business was earning and not billing.
In freight, volume growth and margin growth are not the same thing and can move in opposite directions.
Logistics businesses live on thin, high-turnover margin. A few points of cost drift on a lane that runs every week compounds into real money by year end, and it does so invisibly if nobody is costing the lane.
This business consolidated freight and ran regional distribution for a mix of contracted and spot customers. Volume had grown consistently and the operational side ran well. Loads moved, customers stayed, and the equipment was utilized.
The financial picture was assembled at the company level. Revenue, fuel, wages, maintenance, and insurance were all tracked accurately in total, and none of it was allocated to the lanes and customers that generated it. Leadership could tell you the company's margin. Which customers earned it and which consumed it was a different question.
The most immediate issue was billing rather than costing. The business regularly incurred detention, layover, and other accessorial charges that its own contracts entitled it to recover. Capturing them depended on a driver noting the time and someone downstream turning that note into an invoice line. Most of the time neither happened, so work performed under contract was simply given away.
Owner-operator settlements were reconciled by hand each cycle, which absorbed a substantial share of the back office and introduced errors that had to be corrected in later periods. That's when they called us.
The Assessment
What we found when we costed the business one lane at a time.
The largest number here was not a saving. It was revenue the business had already earned under contract and never invoiced.
No lane-level or customer-level margin, only a company total
Costs were captured accurately in aggregate and never allocated to the lanes, customers, or loads that generated them. Pricing decisions and renewal negotiations were therefore made without knowing whether the account in question contributed or consumed margin. Building a lane costing model that carried fuel, driver wages, equipment, and empty miles down to the load identified $139,000 in annualized margin recovery through repricing and selective exit.
Projected Annualized Margin Recovery: $139,000
Accessorial charges earned under contract and never billed
Detention, layover, and related charges the business was contractually entitled to recover were captured only when a driver recorded the time and someone downstream converted it to an invoice line. Neither step was systematic. Implementing structured capture at the point of delivery, with automatic flow through to invoicing, identified $67,500 in annualized value consisting almost entirely of revenue already earned.
Projected Annualized Value: $67,500
Owner-operator settlements reconciled by hand every cycle
Settlement statements were assembled manually from several sources each pay period, consuming a large share of back office capacity and producing errors that had to be corrected in subsequent cycles. Automating settlement against the dispatch record, with exception reporting rather than line-by-line review, identified $56,000 in annualized value and removed a recurring source of friction with the operators the business depends on.
Projected Annualized Value: $56,000
Maintenance spending expensed without a capitalization policy
Equipment work was expensed as incurred regardless of whether it extended the useful life of the asset, with no written capitalization threshold. The result distorted both period results and the equipment cost the business believed it was carrying per mile. Establishing a capitalization policy and applying it consistently identified $32,500 in annualized value and corrected the cost basis used in lane pricing.
Projected Annualized Value: $32,500
Cargo and liability coverage set for a smaller fleet
Coverage limits and cargo values had been set when the fleet and the freight profile were materially different. Higher-value freight was moving under limits established for earlier work. Rebuilding the program around current fleet composition and commodity mix identified $26,800 in annualized value and closed a gap that would have been discovered only in a claim.
Projected Annualized Value: $26,800
In freight the difference between a good year and a bad one is a few points per lane. A business that cannot cost a lane is negotiating its own rates blind.
Is This Your Business?
If margin is only visible at the company level, the accounts that lose money are invisible.
A Financial Discovery Assessment pushes cost down to the lane and the load, and shows what each account actually returns.
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