Everything in the supply chain world has been kicked up a notch over the past few years, with the pandemic having a significant effect. But there have been other key factors in shifting the shipping axis. This year, two new pieces of legislation have also affected the transportation world. The Ocean Shipping Reform Act addresses late fees charged by ocean carriers and terminals, which are passed on to the consumer, adding to inflation. Meanwhile, the Inflation Reduction Act aims to incentivize sustainable transportation use. Also forcing adjustments in the supply chain is the frenzied proliferation of fast-paced technology innovations. Technology has put its stamp on the industry, from cloud-based transportation management systems to sustainable solutions to digital freight-matching and more.
These innovations underscore the fact that the world moves at the speed of technology. Experts predict that by 2027, the global logistics market will reach $6.55 trillion. But a fast-changing industry is bound to see some growing pains. As innovation fuels growth, logistics professionals throughout the supply chain see reduced workforces contend with increasing volumes. As a result, they turn to freight claims to recoup their losses. Freight claims are a way for a shipper or consignor to get back money lost when shipments arrive damaged or are lost.
Let’s delve into three must-know facts about freight claims to help shippers steer through the complex rules and regulations of freight claims.
Fact One: In a Labor Shortage, Freight Claims are Inevitable
While just about every part of the supply chain world has increased in number, there is one area where figures are heading the other way: labor. Companies at all levels of the supply chain are facing a “labor mismatch,” a lack of workers given a greater number of total jobs currently available. Despite wage increases, logistics operators still have difficulty hiring and retaining workers. They have also seen increased absenteeism, causing knock-on effects across the supply chain. It is a problem exacerbated by the pandemic, but it appears that underlying effects are keeping the problem from subsiding, and some believe it is a problem that is not going away soon.
Not having enough workers to fill all positions creates a second problem: An industry that is growing in volume and costs is staffed by increasingly overburdened workers. In an environment where employees are overwhelmed with tasks, accidents are inevitable. Shipments can be forgotten about or left behind in bustling warehouses. Delivery people, hurrying to make deadlines, can accidentally damage goods. Oversight by busy managers and logistics professionals can also hinder the labor shortage. All of these examples can and usually do result in the need for shippers to submit freight claims to recoup losses.
Fact Two: Freight Claims Have Changed Since the Pandemic
For many years, shippers often overlooked freight claims. They didn’t want to take the time to track down a claim, or they lacked specific legal knowledge to wrestle with the carriers. There was also a common misbelief that cargo insurance could protect from losses. Most of those freight claims involved cargo loss or damage. Cargo loss is when a product loaded at one point of origin doesn’t arrive at its destination. This is usually an easy claim to prove if accurate records are kept and the documentation is up to speed. Damage claims occur after a package is received with visible damage that wasn’t there at its point of origin. With proper documentation, shippers prove these claims quickly.
In the past couple of years, spurred by the pandemic and all of the uncertainty that came with it, bankruptcies began to rise, and companies started showing more concern over their financial situations. Figuring out ways to save money became paramount, and one of those places to focus on is freight claims. Logistics professionals have seen more shortage claims involving abandoned cargo, repair and maintenance, and unexpected fees such as demurrage and detention. Unlike the relatively straightforward procedures surrounding cargo loss or damage claims, these more complex claims require detailed accounting on the part of logistics professionals. A concealed shortage is probably the most difficult claim to prove when goods are missing from a shipment, but that shortage is not outwardly evident at final delivery due to packaging or other reasons. So having as much documentation as possible and making sure it is available and easily shared can be especially crucial.
Fact Three: Logistics Professionals need to Overhaul Outdated Freight Claims Management Strategies
With these types of claims needing to be more clear-cut, a lot more is demanded of the logistics staff of a shipper. If the critical documents are not easy to access, a shipper can be on the hook for the claims while struggling to understand the detailed intricacies of freight claims management. This can be next to impossible for smaller shippers without on-staff freight claims management specialists. Oversight can be a significant problem for shippers still using manual technologies, such as phone calls, emails, and spreadsheets. The failed claims lead to a loss of the value of the goods and possibly lead to high prices for customers.
But with new freight claims management solutions, shippers can break free of those manual technologies and work with easily integrated systems that provide:
- Cloud-based claims documentation – With all your documents on cloud-based software, the pertinent information can be found in one place and shared almost instantly anywhere.
- Carrier correspondence – Be able to document and organize all correspondence along with all the claim documentation.
- Analytics and reporting – Quickly make informed decisions with readily available analytics and reports that make it easy to comprehend.
- Claim deadlines – The ability to set up deadlines for each stage of the claim and having alerts to keep you from missing them are musts. With them, you can stay on top of the deadlines that are part of the Carmack Amendment, which limits the liabilities of carriers to loss or damage of the property itself. The amendment states the minimum time a carrier must allow for filing a claim (less than 9 months) and initiating a legal action in court (less than 2 years).
FreightClaims.com Can Help Your Claims Go Smoother
Along with many other aspects of the supply chain, freight claims have changed. With the financial fluctuations of many companies in the last two years, winning those claims has certainly become more important to shippers. Now, more than ever, shippers can use some help understanding freight claims and executing what is needed to make the decisions go their way. FreightClaims.com has everything you need in freight claims management software to achieve a successful result. From submitting a new claim to adding documents to tracking all the information to communicating all the details, FreightClaims.com can be there every step of the way. Visit our website and request a demo.
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