For many years, cargo claims were minor headaches worthy of ignoring. Not so anymore. With the increase in claims and the cost of those claims, disregarding them is no longer an option for cargo claims specialists.
Consider a study of people who bought a large or oversized item online:
- 21% of respondents said the item arrived damaged.
- 15% said the item never arrived at all.
It’s easy to see why shippers must follow through on all cargo claims and resolve them quickly, despite complex regulations and extensive documentation challenges. To help shippers better understand the scope and importance of claims, we’ve dug into five common cargo claims questions.
What are Cargo Claims?
A cargo claim, also known as a freight claim, is a legal demand by a shipper or consignee against a carrier claiming the value of a damaged or lost shipment. Carriers are responsible under the law to cover valid cargo claims.
A critical piece of legislation involving cargo claims is the Carmack Amendment, which limits the liabilities of carriers to loss or damage of the property itself. The Carmack Amendment made it possible to standardize state regulations and halt companies from filing claims seeking more than the value of the goods.
What are the Different Types of Cargo Claims?
There is more to cargo claims than just loss or damage. Let’s take a look at the four types of cargo claims:
- Loss: A loss claim is submitted when a delivery shows as completed, but the shipment never reached its final destination. In other words, there is an original bill of lading, but no official signed proof of delivery.
- Damage: Upon delivery, there is visible damage to the goods or the containers that hold them. A valid damage claim must have the damage noted on the proof of delivery (POD), bill of lading (BOL), or other official documentation. With a damaged shipment, the freight invoice gets paid upfront; reimbursement for the damage is part of the claim settlement.
- Shortage: Shortage occurs when the quantity of product delivered in a shipment does not match the shipping order. In such cases, note the number of products received on the BOL before signing it or the POD.
- Concealed damage or shortage: This type of claim can be trickier to identify and more difficult to prove in a settlement. Concealed damage or shortage is damage to or a missing amount of the goods that is not visible when looking at the shipment when it arrives. There would be no notation on the delivery documents with no visible damage to the container. Only after opening up the packaging, sometimes just after delivery but often much later, is it determined that there is damage or missing items.
The global logistics industry is seeing a surge in claims in addition to those mentioned above:
- Demurrage claims
- Abandoned cargo claims
- Repairs and maintenance claims
- Claims against additional and unexpected fees charged by shipping lines
Even an established logistics professional might need help with these additional claims. That is where guidance from a cargo claims specialist, like FreightClaims.com, can prove to be advantageous.
How Long Do I Have to File a Cargo Claim?
The standard for cargo claims is that the claimant must file within nine months from the date of delivery. For lost shipments, it is nine months from the date the shipment was reasonably expected to arrive. It is important to note that the nine-month limitation stated in the Carmack Amendment is the minimum time a carrier must allow for filing a claim. For concealed damage, a claim must be filed within five days. Shippers often struggle to meet these deadlines because of complicated manual processes, which can easily result in lost paperwork. That’s where a cloud-based document storage platform can come in handy in making sure everything is ready before any deadline approaches.
What Documentation Do I Need to File a Cargo Claim?
Without documentation, there is no way to have a successful cargo claim. Here are five critical documents that are needed to prove your claim:
- Evidence of damage: Photographs provide definitive proof. Shippers or receivers should take photos upon delivery, and it’s important to take both close-up shots and an overview of the entire shipment to show extensive details.
- Verification of value: The commercial invoice or bill of sale will help provide the value of the damaged or lost goods. A screenshot of the internal accounting page will suffice if there is no invoice.
- Statement of claim: This document clearly defines the details of the loss. It should include an itemized list of the commodity damaged, its extent and value, and an explanation of the claim circumstances.
- Delivery documentation: These documents — which include one or more of the following: a signed delivery receipt (POD), a drop trailer receipt, or a receiving sheet — are used to show proof of delivery. The receipt should have the consignee’s signature or stamp verifying they received the goods. The receiver should note any damaged goods on the document. Failing to do so jeopardizes the chances of getting back the amount the carrier is liable to pay.
- Transport documents: Documents containing the details of the cargo’s movement — shipper and carrier information, what is being shipped, the quantity, and shipping terms — are crucial to the case of a claim. This is usually the bill of lading.
Not only should these documents be compiled and organized, but they must be prepared and ready in advance of the deadlines.
What Should I Expect When Filing a Cargo Claim?
The first steps are to document the damage and ensure the carrier is aware of the damages at the time of delivery. Then, it’s time to compile and organize all of the documentation. That is followed by filing the cargo claim and being prepared to answer any questions about the claim as it goes through the processes. It can be a complex, challenging, and drawn-out affair, even for logistics professionals. To help them through, a cargo claims specialist can provide expert advice and handle each step in the process.
Don’t Leave Your Claims to Chance; Partner with the FreightClaims.com Experts
Cargo claims have become a vital factor in a company’s bottom line. With more claims and associated costs, it’s even more crucial that all the documents are ready, organized, and easily accessible before the claim deadlines. This blog’s overview of the types of freight claims and what forms of documentation are needed to prove those claims shows how complex the process can be and how crucial it is to have knowledgeable people to help you through all the ins and outs.
The dedicated experts at FreightClaims.com can be just what you need to see the claims through. FreightClaims.com provides one system to manage and store all cargo claims, documents, and carrier communications. So if you want to streamline your cargo claims process and relieve yourself of the headaches that can come with it, request a demo today at FreightClaims.com.
