Short shipment

A short shipment is when cargo is listed on a shipping list but not included in a shipment, or not received by the recipient. Notably, when the quantity received is less than the quantity listed. Conversely, an overshipment is when the quantity received is more than the quantity listed. These can occur for a number of causes, and the term can refer both to actually shipping incorrectly, or to what the recipient reports on receipt, which may be for another cause.

Causes

Overshipment and short shipment can both be caused by an error at the source, where the incorrect quantity is shipped or the incorrect quantity is listed. As the terms indicate, these can fundamentally be caused by errors in the source of the shipment. Short shipment can be reported by the recipient if some of the goods disappear in transit, such as by theft or loss. Overshipment is unlikely to occur due to changes in transit, unless spurious items somehow enter the cargo or the shipping list is damaged or altered in transit.

Problems

Short shipments and overshipments can cause accounting problems due to paperwork not matching up with the actual delivery, and need to be manually corrected.[1]

Falsely reporting a short shipment can be used to perpetuate a fraud, by stealing the items actually received but reported not to have been. To prevent detection, this generally requires keeping two sets of books or filing two disagreeing sets of paperwork.[2]

Solutions

When a short shipment or overshipment is noticed – most often by recipient, but potentially by sender if an error is noticed post-shipment – the other party should be informed promptly, so corrective action can be taken. These include supplemental shipments for short shipments, returning merchandise for overshipments, issuing corrected invoices if actual quantity is acceptable, etc. These can also include investigations into causes, to ensure that fraud or theft are not occurring, or to verify that a mistaken shipment actually occurred (and a short/over-shipment is not being incorrectly reported).

References
  1. Overshipments and Short Shipments
  2. Corporate Fraud Handbook: Prevention and Detection, by Joseph T. Wells, p. 278


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