The Hidden Cost in Freight: How Untracked Spend Eats Into Your Bottom Line

Hidden Freight Costs and Margin Leakage

Freight is one of the largest indirect expenses for most manufacturers and shippers; but it rarely gets the same level of financial scrutiny as raw materials, labor, or capital expenditures. It’s not because freight isn’t important. It’s because the process behind it has historically been opaque, manual, and difficult to measure.

And that’s exactly where the hidden cost lies.

The Real Cost of Untracked Freight Spend

When freight procurement is managed through scattered email threads, spreadsheets, and phone calls, three major problems arise:

1. No Historical Benchmarking = No Leverage

Ask most finance teams what they paid to ship a certain lane 6 months ago across all vendors, and the answer is usually: “We’d have to dig that up.”Without historical rate data across vendors, there’s no way to spot price creep, leverage past rates in negotiations, or identify patterns. That lack of visibility leads to silent margin erosion over time.

Example: A Midwest manufacturer consistently paid 8–12% above market rates to a preferred carrier on short-haul lanes because those rates were never benchmarked. It wasn’t discovered until a temporary procurement lead ran a manual audit.

2. Unpredictable Freight Budgeting

Freight is one of the most volatile components of the supply chain, yet many companies still budget using last year’s averages or gut estimates. That leaves finance teams vulnerable when rates spike, or worse, when they miss out on savings during soft markets.

Example: One shipper planned for $3.1M in annual freight spend based on prior-year numbers. Market rates dropped mid-year, but because they weren’t analyzing rate trends or win/loss patterns across vendors, they ended the year $280k over budget simply by not adjusting to market conditions.

3. Decision-Making Driven by Relationships, Not Data

In organizations where freight quotes live in inboxes, decisions are often made by who responds the fastest — or who has the strongest relationship. That introduces subjectivity and favoritism, which can override more cost-effective options.

Example: A food manufacturer favored three long-standing carriers for 90% of spot moves. A review later showed they were 14% more expensive than the lowest qualified bidder across hundreds of shipments, not due to performance, just comfort.

What Can Finance Leaders Do?

Modern finance teams are starting to treat freight like every other cost center: with measurable KPIs, historical comparisons, and clear accountability.

That means:

• Centralizing quote data for better visibility

• Tracking vendor win/loss performance over time

• Identifying cost-to-serve by customer, lane, and vendor

• Using analytics to improve forecast accuracy — not just freight averages

This doesn’t require a massive transformation, but it does require a shift in mindset. Finance leaders need to ask tough questions: Do we actually know if we’re overpaying? Can we prove it? And what’s the cost of not knowing?

In today’s margin-conscious environment, untracked freight spend is a silent threat. And like most hidden costs; it only gets more expensive the longer it’s ignored.

If your freight costs aren’t backed by data, you're budgeting in the dark. Start by asking: Where are we losing visibility and what is it costing us?