The sheer volume of the shipping industry means that it is inevitable that freight will be damaged or lost somewhere along the line. One study found that 21% of large packages arrive damaged in the U.S. Fifteen percent of those surveyed said the large item never arrived at all. Freight claims are a way for a shipper or consignor to get back money lost when shipments arrive damaged or are lost. Those claims have become an essential and costly part of the shipping industry. With volumes and prices rising, the thought of losing money on shipments has become an even greater concern. Therefore, shippers must understand the different types of damage to be better prepared for accidents within their logistics process. Let’s take a few moments to delve into the four types of freight claims.
4 Types of Damage and Loss Claims
There are four common types of freight claims, but before we take a closer look at them, it is imperative to discuss the importance of the Carmack Amendment. The amendment, which outlines the shipper’s liability to its customers for items damaged during shipments within the United States, says the shipper is not required to prove negligence, and the liability is limited to property damage only. Also crucial to shippers, the amendment limits the time frame to file claims to nine months from the delivery date.
1. Loss
The most clear-cut of the four claims, a 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 you keep accurate records the documentation is up to speed. The original bill of lading (BOL) will be your greatest asset in loss claims. Similar to a receipt, the BOL is a legal document provided to the shipper by a carrier and lists the pertinent information: the destination and the quantity of the goods shipped. The best way to ensure that BOL documentation is up-to-date, accessible, and easily shared is for shippers to employ a cloud-based documentation handling system.
2. Shortage
A shortage claim occurs if the customer doesn’t receive the full amount of the ordered goods, which is becoming a greater concern because of the increased risk of human error as warehouses struggle to find enough staffing. According to a survey from Instawork, which provides flexible staffing, 75% of light industrial businesses were not fully prepared for 2022, and 60% struggled to keep pace with increased demand last year. The report, the State of Warehouse Labor: Staying Flexible in 2022, found that 58% of businesses saw an increase in fulfillment volume over the past 12 months while another 19% saw the same levels. When warehouses struggle to find workers, that can lead to the current staff being overworked, which in turn can precipitate mistakes while hurrying. Regarding this type of claim, BOL accuracy is essential, as is a reliable way to access those documents on demand.
3. Damage
The most frequent culprit in freight claims, damage claims, occur after a package is received with visible damage that was not evident at the point of origin. As mentioned earlier, one study found 21% of large packages arrive damaged. So this claim clearly doesn’t fall into the “few and far between” category. Damage can often result from improper packaging or mishandling by logistics professionals. But there’s more “damage” that damage can do:
- There are hours lost in productivity while spending time filling out claims.
- Damaged items also must be inspected and stored, taking more time and space. The costs escalate when prorating the total costs of damaged goods storage, including property taxes, utilities, and rent or mortgage.
- The shipper’s reputation can be affected by being associated with providing damaged goods.
4. Concealed Damage or Shortage
A claim that damage or shortage has happened in a concealed part of the packaging is more ambiguous. Shippers must be even more diligent in checking the information on the bill of lading with what is in front of them before signing off on it. Close inspection can be the difference between getting back the entire amount of value from the freight or footing the bill for all or most of the claim. Remember, there is no particular deadline for submitting a concealed damage claim. While some carriers assert that concealed damage claims are only possible if made in the first 5 days following delivery, the only actual deadline for filing the claim is the nine-month limit in the Carmack Amendment mentioned earlier.
Get Freight Claims Management made Easy with FreightClaims.com
This knowledge of the types of freight claims is the start to understanding what is needed and required for shippers to face the intimidating and often time-consuming environment of freight claims. The next step is to find experts who can help make the process easier and faster. That’s where the simple-to-use software system from Freightclaims.com can come into play. To see our cloud-based platform designed by a team of dedicated freight claims experts, request a demo from Freightclaims.com today.
