Based upon the sheer volume of items being shipped these days and the innumerable amount of destinations those items are headed to, freight losses are inevitable for shippers. To put it in monetary terms, the global financial impact of freight loss exceeds an estimated $50 billion annually. With that much loss involved, it’s smart to expect that somewhere along the way every shipper is going to feel the pinch from freight damaged in transit and need to be prepared for the worst-case scenario. According to one study, 21% of U.S. adults who have bought a large item in the last year had it arrive damaged. That means a lot of unhappy customers and distressed shippers.To help relieve some of those headaches, shippers depend on freight claims. With software from Freightclaims.com, that claims process can be simpler and more effective.
What Are Freight Claims?
According to FreightWaves, “freight claims are filed by a shipper or consignee if goods are damaged in transport, contaminated, lost, or delayed.” Those claims help shippers get reimbursements from carriers for lost or damaged freight. To understand how significant those claims can be, let’s look at the journey of one particular ship. In late 2020, ONE Apus lost over 1,800 containers in the Pacific Ocean. At an average of $50,000 per container, the ship lost an estimated $90 million in freight. While this container loss was the highest in recent history, it’s not the only incident. More recently, 109 freight containers went overboard when a ship off the British Columbia, Canada, coast was hit by high seas in October of last year. Freight claims are there to protect shippers against what can sometimes become extremely costly liabilities.
The ABCs of Freight Claim Terms
The world of freight claims can appear formidable and complicated. The best way to enter the claims process with confidence is to be up on all the terminology. So here’s a glossary to help get you off to a good start:
Bill of Lading (BOL)
A bill of lading is a receipt of freight services between a shipper and a carrier with details such as type, quantity, and destination. It must be included with the shipment. With freight claims software, like the platform offered by Freightclaims.com, shippers can more effectively organize and then easily access each bill of lading.
Concealed Loss/Damage
Concealed loss or damage is when freight has been damaged during transportation of the shipment but isn’t visible when the shipment is delivered and the damage was not notated on the invoice or proof of delivery report (POD).
Damages
Damages are the financial demands of shippers from carriers in the event of loss or damaged freight, whether it be partial or complete damage. The state of the product when it arrived, the monetary value of the damage and other pertinent details need to be documented. Without that proof, shippers are left on the hook for what could be devastating costs. The best way to stay on top of that documentation is with easy-to-use organizing methods in cloud-based freight claims software.
Deadlines
When filing freight claims, time is usually of the essence. Being aware of deadlines is as important as having sufficient documentation. While some claims — such as ones for concealed damages — can be filed after the fact, most claims need to be filed right away. Having a software that can alert shippers to those deadlines is a must in order to see eventual reimbursement.
Inspection
Inspection occurs when the consignee has to verify the status of the merchandise, the damages or losses suffered. It protects the parties involved in case any issues occur during the shipping process.
Insurer
Freight claims can often involve quite a bit of money. To offset some of that financial burden if a lost or damaged shipment is particularly expensive, shippers and carriers often turn to insurance providers to cover the colossal cost. Considering the long and arduous process that often comes with insurance litigation, new cloud-based solutions can help speed up the sharing of information among all parties and thereby make communication easier and prompt a much-swifter resolution.
Liability
Liability, which is typically included on the bill of lading, is the extent to which a carrier is responsible for loss or damage of goods in transit. It is established in the initial stages of a logistics relationship and coverage can run from minimal to full value. Without easy, cloud-based access to these documents, it can be difficult to establish liability.
Loss
Loss is when the shipment does not arrive, quite often because it has been separated from its paperwork. It can be the entire thing or separate parts of the shipment. For a disorganized shipper, this can result in significant losses, and is another reason to prioritize on-demand access to documents and shipping analytics.
Mitigation
Mitigation is the process used when one party wants to recover any cost associated with damage or loss. Both parties must work together to satisfy the concern.
Proof of Delivery (POD)
Proof of delivery is a post-delivery receipt with information supplied by the carrier containing the name of the person who signed for the shipment, the time and date of delivery, and other shipment delivery related information. The consignee must not only confirm that the freight is present and accounted for, but also that it arrived without visible damage.
Responsibility
Responsibility starts out in the fine print of the shipping documents when a logistics contract is being worked up. It pertains to the individual obligations held by each party. When loss or damage happens, responsibility is often the deciding factor in where the claim payoffs are distributed. This makes it strikingly important to have a software platform that provides easy access to all documents throughout the lifetime of the contract.
Salvage and Disposition of Goods
When goods are damaged, there are two choices: 1) salvaging part of the shipment if there are goods that are still intact or 2) disposing of the goods if there is no way to save any portion of the shipment. It is the duty of the consignee to retain damaged merchandise and shipping containers. You never want to dispose of a damaged product until the carrier either wants to inspect it themselves or salvage it and then pay for the goods back to you.”
Shipper
You’ve probably heard the expression “possession is nine-tenths of the law.” Possession, or perhaps lack of possession, is just as important when it comes to shippers in freight claim cases. The shipper is responsible for demonstrating that the carrier had taken receipt of the shipment before the damage occured. With accurate documentation and analytics that prove the carrier was in possession of the shipment when the damage occurred, shippers are not culpable for damaged goods.
Software
In the past, freight claims often involved drawn-out searches for documents and uncertainty surrounding tasks. Innovative software solutions have changed that environment, letting shippers move beyond older technology and embrace speedier and more efficient ways to track down and communicate vital information.
Visible Loss/Damage
Visible loss or damage is when the receiver can clearly see that the shipment has been damaged or that some of the goods are not with the shipment.
Moving Beyond the Basics
Basic systems, software or otherwise, of the past often let things slip through the cracks when it came to freight claims. With the world of shipping now becoming larger and costlier by the day, those cracks have become massive fissures. To help fill in those gaps, shippers can turn to cloud-based software that not only puts more data at their fingertips but also makes the communicating of that information easier and speeds up the process of solving those claims. To see a demonstration of what new, innovative freight claims software can do for you, contact us at Freightclaims.com.
