Packaging damage in the supply chain is a serious issue — between 2% and 11% of unit loads arrive at distribution centers with damage. Although the numbers seem small, these damages affect business and can lead to freight claims.
Freight claims are legal demands that shippers or consignees can file against carriers to compensate for lost or damaged shipments. Understanding and effectively handling freight claims is crucial for businesses because profits are at stake. Let’s dive in.
What Are the Types of Freight Claims?
According to the U.S. General Services Administration (GSA), there are different types of freight claims:
- Visible damage: Deliverables arrive at the destination with apparent defects.
- Concealed damage: Recipients discover damages after opening a package.
- Loss: Freight left its origin but never made it to its final destination.
- Shortage: Deliverables only partially arrive at the destination.
What Is the Freight Claim Process?
Here are the usual steps involved in the freight claim filing process:
- Get a purchase invoice for what made you want to file a freight claim.
- Document all damage with photos or videos. Capture what the package looks like before unpacking and take photos of the damaged items.
- Write a detailed description of the damages.
- Estimate the value of your claim.
- Prepare the required documents to support your claim, particularly the original BOL, original invoice, copy of the paid freight bill, copy of the delivery receipt, and copy of the inspection report or waiver (if applicable).
Finally, be sure to keep open communication with the carrier and insurance company.
What Is the Legal Framework of Freight Claims?
Legal regulations and provisions govern freight claims. Common examples include:
- Carmack Amendment: This framework covers U.S. domestic shipments. It allows carriers to require shippers to file freight claims within nine months of the date of loss.
- Hague-Visby Rules: This framework for freight claims covers international conventions by sea, defining rights and immunities in favor of carriers.
How To Prevent Freight Claims
Minimize the occurrence of freight claims with these tips:
- Package all freight properly
- Label freight appropriately
- Secure cargo
When selecting carriers to handle your shipments, understand their liability limits and insurance coverage before dealing with them. Ensure their operations align with yours.
How To Resolve Freight Claims
You may encounter several settlement options during resolution, including:
- Payment from the carrier: Carriers could accept liability and offer compensation to cover all or part of the damages that led to the claim.
- Arbitration: A third-party mediator may help both parties agree and determine compensation.
- Litigation: If all other efforts fail, legal action may be necessary. Freight claims can be complex and expensive to pursue.
Maintaining good relationships with carriers during the freight claim resolution process can be tricky. Consider the following advice to protect your interests while keeping the peace:
- Pursue resolution promptly
- Request reasonable compensation
- Respect the carrier’s policies and procedures
What Tools and Resources Can You Use for Freight Claim Management?
Freight claims LSPs and software for carriers are popular management solutions. They record incidents with all relevant claims data. For more information about tech developments, browse our blog. At The Logbook from Jansson, an independent agent of Landstar, we keep up with industry news to help you maintain successful warehouse management operations.
Navigating freight claims processes can be tricky. However, the right resources can help set you up for success. In this post, we described how you can resolve the different kinds of freight claims you could encounter. Equip yourself with the necessary strategies to effectively manage freight claims.