The Situation
A large chemical distributor relies on a national freight and logistics carrier for warehousing, full-truckload and LTL freight, and hazardous materials transport across the Pacific Northwest. The three-year contract includes several value-protecting clauses negotiated by the distributor’s CFO — a fuel surcharge cap, volume rebate, on-time delivery credits, and early payment discounts. But no one was actively monitoring whether these terms were honored. Invoices were approved and paid based on dollar-amount reasonableness, not clause-level compliance.
Value-Claiming Clauses
Section 3.5
Annual Volume Rebate
5% rebate on all spend exceeding $1,500,000 per contract year. Due within 45 days of year-end.
Section 3.3c
Fuel Surcharge Cap
Fuel surcharge may not exceed 8% of base freight charges on any invoice, regardless of diesel index.
Section 4.2
On-Time Delivery SLA Credits
Tiered credits (5%/10%/15% of monthly freight charges) when OTD falls below 95%.
Section 3.4
Early Payment Discount
2% discount on any invoice paid within 10 days.
What the Analysis Found
Twelve months of invoices — 106 transactions across warehousing, weekly freight, fuel surcharges, and accessorials — were analyzed against the extracted contract terms.
Annual Volume Rebate
Total spend of $2.73M exceeded the $1.5M threshold by $1.23M.
$61,304
OTD SLA Credits
Three months fell below 95% on-time delivery (March, July, November).
$8,200
Fuel Surcharge Cap Overages
Two months billed fuel surcharges above the 8% cap (March 10.4%, September 9.5%).
$4,127
Early Payment Discounts Not Taken
Six invoices paid within 10 days, but the 2% discount was never deducted.
$3,840
Total Uncaptured Value
$77,471