Understand Extra Cost Management (ECM)/Extra Cost Request (ECR) for Freight Audit

The Extra Cost Management (hereinafter referred to as “ECM”) is a user-friendly Freight Rate Exchange Database (hereinafter referred to as “FRED”) tool, which was developed for a quick request and settlement of any unforeseen extra costs and/or spot price agreements by submitting an Extra Cost Request (hereinafter referred to as “ECR”).

ECM purpose is to provide extra cost and/or spot price handling visibility and to speed up the process of charges settlement between a shipper and a carrier.

The ECM tool provides coverage of all costs which are treated as unpredictable and/or out of the rate-book (spot prices, if applicable) with full transparency, accessibility and proper visibility for both shipper and carrier.

There are two alternative, mutually exclusive approaches for ECR resolution:

Workflow

Comments

Single-level workflow

Each ECR is reviewed and resolved by one authorized shipper user only.

Multi-level workflow

Each ECR is reviewed and resolved by two authorized shipper users in order to facilitate delegation of authority and increase transparency. If such workflow is utilized shipper users are divided by approval levels, which may be defined based on ECR total amount (ECR approval limits):

● ECM operator (1st approval level)

● ECM manager (2nd approval level)

There are two types of ECRs available in FRED:

ECR type	Comments
Regular ECR	A regular ECR is an extra cost and spot price (if applicable) request incorporated in the FRED’s ECM tool. A carrier requests an approval of any unforeseen extra costs and/or spot prices related to a particular shipment.
Extended ECR (if applicable)	An extended ECR is an advanced extra cost and/or spot price request, which is usually used when the charges claimed appear after the original invoice has been issued/paid or in case of missing shipment data (the procedure may vary depending on the terms and conditions agreed with the shipper). This type of an ECR may require additional obligatory fields to be filled in (e.g. account number, service type, origin company name, destination company name and cities, etc.). The shipment data provided by carrier in the extended ECR is then used for auditing purposes.

The main difference between regular and extended ECR is that a corresponding extra cost ISDR is automatically generated as soon as an extended ECR obtains Confirmed status.

The following ECR statuses are applicable:

Approval status

Approval status	Comments
Waiting for approval	An ECR was submitted by a carrier and has not been reviewed by an authorized shipper user yet.
Cancelled	An ECR was cancelled by carrier. Cancelled ECRs will not participate in further approval process.
Approved	Shipper user responsible for ECR resolution (or, in case of multi-level workflow, for the 1st level of approval) agrees with all the charges and the shipment data provided in the ECR.
Not approved	An ECR was not accepted by an authorized shipper user. carrier should carefully review the reason for negative response and create a new ECR if necessary. No additional actions from the shipper are required.

Note: Additional status (Waiting for confirmation) was designed in order to facilitate ECR search for shipper users utilizing multi-level workflow. It allows finding the ECRs which are pending action from the second shipper responsible person.

Confirmation status

Confirmation status	Comments
Not confirmed	An ECR has not been reviewed by a shipper user responsible for ECR resolution (or, in case of multi-level workflow, for the 2nd level of approval).
Cancelled	An ECR was cancelled by carrier. Cancelled ECRs will not participate in further approval process.
Confirmed	An ECR has not been reviewed by a shipper user responsible for ECR resolution (or, in case of multi-level workflow, for the 2nd level of approval).
Rejected	An ECR was not accepted by an authorized shipper user. Carrier should carefully review the reason for negative response and create a new ECR if necessary.
Expired	An ECR was accepted by shipper but not mapped to any particular shipment record for a certain period of time agreed with the shipper. An “Expired” ECR can no longer be included in the cost pre-calculation and must be resubmitted by the carrier according to the standard procedure.

Note: In case of a single-level workflow an Approved ECR is assigned Confirmed status automatically and doesn’t require any additional actions from the shipper.

Note: In case shipper user responsible for ECR resolution (or, in case of multi-level workflow, for the 1st level of approval) decides not to accept the ECR (either not approves or rejects it), an ECR will be automatically assigned with Not approved approval status and Rejected confirmation status. While in case second approver in multi-level workflow decides to reject the ECR, it will have Approved approval status and Rejected confirmation status simultaneously. In both cases ECR will not be applied for calculation.

Mapping status

Comments

Not mapped

An ECR is not linked to a particular shipment record (Electronic Transport Order File (hereinafter referred to as “ETOF”)) and not included into the shipment cost calculation. An ECR might be assigned such status in the following cases:

● if there is no ETOF for this particular shipment in FRED;

● the ECR was filled in incorrectly and cannot be linked to a corresponding ETOF in the database because of the shipment data inconsistency;

● late ECR submission

Mapped

An ECR is linked to a corresponding ETOF and included into shipment cost calculation.

Note: An ECR can also be mapped to an Extra cost Invoice Statement Document (hereinafter referred to as “ISD”) instead of ETOF if so agreed with the shipper.

There is instructional video on how to search for an ECR, how to accept/reject an ECR available in the Tutorials menu located in the FRED top menu bar and User Manual located in Documentation section in the FRED top menu bar. Appendix_F._ECM.pdf is available under User guides folder.

This function is available for shippers and carriers.