You recover less freight than you pay. How much is that?

Open your profit and loss and find two lines: what outbound freight costs you, and what you charge for it. Divide the second by the first.

At most wholesalers we see, the answer lands between 50% and 70%. The rest is margin you gave away, usually years ago and usually by accident.

#The sum

A real example from a Dutch wholesaler with €2.4 million of revenue:

outbound freight cost        €81,800
freight recharged            €45,400
------------------------------------
recovery rate                  55.5%
not recovered                €36,400

€36,400 at a company that made €21,500 of net profit that year. The freight line on its own is larger than the entire year's profit.

#Why it happens so reliably

The cost side moves every year: fuel surcharges, peak surcharges, tolls, indexation. The revenue side does not, because it sits in a webshop setting or a price list and nobody owns it.

That is not negligence, it is a design fault. One line rises automatically and the other has to be adjusted by hand. A pair like that always drifts apart.

#What to do, in order of difficulty

Raise the freight line. Simplest, and immediately visible to the customer. Works when your customers do not compare every order on total price.

Set a free-shipping threshold above your current average order value. The smartest of the three, because the threshold pushes the order value itself up. If your average is €68, put it at €75, not at €50.

Fold freight into the product price and call shipping free. Almost always best if your competitors do it too, and almost always worst if your customers are price comparers.

#Do not go looking for a benchmark

You will find plenty of percentages online for "normal" freight recovery. We do not quote them, because they come from samples that do not match your product mix, and an authoritative-looking number from nowhere is worse than no number.

The only hard limit is one hundred percent. Everything under it is a choice you made, knowingly or not, and you can price that choice yourself with the two lines above.

#The trap on the inbound side

While you are there, look at inbound freight and its recovery too. At the same company the opposite was happening: an over-recovery of €54,641, which means part of what sat in the books as gross margin was not margin at all but a recharge rate that happened to be set too high.

Pleasant while it lasts, and gone the moment anyone notices. Do not put it in next year's budget.