Everything You Need To Know About Freight Claims

everything you need to knowabout freight claims

everything you need to knowabout freight claimsTo most shippers, “claim” is a dirty word. Also knownas cargo claims, shipping claims, or transportationclaims, a freight claim is a legal demand by a shipper,consignee, or product owner to a carrier for financialreimbursement for a loss or damage to a shipment.No one wants to deal with a freight claim but sometimesship happens. By arming yourself with knowledge ofthe filing process, liability, and best practices, you cansave yourself from wasting time and money. This guidecontains everything you need to know about claims.2

everything you need to knowabout freight claimstypes of freight claimsStarting with the basics, there are four main typesof freight claims you are likely to encounter: DamageThis is one of the more common forms offreight claims. This is when you receive freightwith damage that is visible upon delivery. LossA loss freight claim occurs when freight is lostin the void — picked up but never delivered. ShortageA shortage occurs when you only receive partof the freight you were expecting. Product couldhave fallen out or pieces have gone missing. ConcealedWhen loss or damage is discovered afterdelivery and reported after the driverleaves, it is considered concealed.3

everything you need to knowabout freight claimsdealing with concealed damagesIf you discover damages to your freight after theTo get ahead of the curve on concealed damages,driver has left and you’ve signed the deliverynote on the delivery receipt that something mayreceipt, you’re not completely out of luck — butbe damaged if there is any question. Documentyou need to act fast. You only have 5 days to fileas much as possible and notate on the Proofa concealed damage claim. Prior to April 18, 2015,of Delivery anything that looks awry with theyou had 15 days. Since people can communicatepackaging, pallet, or shrink-wrap. Unfortunately,via email rather than snail mail these days, awriting “subject to inspection” will not help you inlonger timeframe isn’t as necessary as it used tocase you need to file a claim. Also make sure tobe. Now after 5 days, if you try to file a concealedinspect your freight and break the shipment downdamage claim, you will have to prove that theright away. Getting a resolution for concealeddamage did not occur after delivery or at thedamage/loss claims may be more challenging,destination. Within the 5 day window, you only havebut it’s not impossible if you take the right steps.to prove that it didn’t happen at the destination.4

everything you need to knowabout freight claimsthe carmack amendmentAnother fundamental piece of understandingfreight claims is the Carmack Amendment. This lawaddresses the issue of liability between shippersand carriers. Under the Carmack Amendment,the carrier has strict liability for cargo damage.However, the claimant needs to establish three basicelements in order to meet their burden of proof.The claimant must establish that the goods were: Picked up in good condition Delivered in damaged condition Resulted in a specific amount of damage5

everything you need to knowabout freight claimsOnce the claimant is able to prove that theserequirements were met, the carrier is held liableunless it proves that it was not negligent and thatone of five exceptions was the cause of the damage:1. Acts of God: This is an occurrence thathappens without the intervention of man. Thisincludes natural disasters and unpredictableevents like if the driver experiences a medicalemergency or if a flood prevents the truck fromreaching its destination. It’s important to notethat if the carrier could’ve taken reasonableprotective action against one of these eventsand didn’t, they may still be found liable.2. Public Enemy: If damage is caused by enemymilitary forces, the carrier can’t be held liable.This includes acts during wartime. It doesnot include hijackers, criminals, or rioters.3. Act or Default of Shipper: As a shipper, this isan important exception to note. If the carriercan prove that the damage was causedby the shipper, including poor packaging orimproper loading, the exception is met.6

everything you need to knowabout freight claims4. Public Authority: This refers to the intervention ofa lawful authority. If the government is responsiblefor the freight damage, the carrier can’t be heldliable. This includes government actions such astrade embargoes, recalls, quarantines, etc.5. The Inherent Vice or Nature of the Goods: Forgoods that are naturally subject to defects,diseases, or decay, the carrier can deny liabilityas long as they prove the deterioration wasn’tcaused by its negligence. The natural shrinkageor deterioration of a product is something thata carrier cannot control. However, if the carrier’sown negligence leads to speeding up thatnatural process, the carrier will be held liable.Even if these exceptions aren’t met and the carrier isn’table to prove it wasn’t negligent, there are still a fewroadblocks to look out for. The Carmack Amendmentonly requires up to 500 in a claim payout, so if yourfreight has a higher value, you could still be out a lotof money. Also, if you don’t file your claim promptly,you run a higher risk of your claim being denied.7

everything you need to knowabout freight claimsthe difference betweeninsurance and liabilityEvery freight shipment is covered by limited liability,meaning the carrier is responsible for loss and damageunder the Carmack Amendment. The amount ofcoverage is a set dollar amount per pound of freightdetermined by the carrier and based on the commodity.The shipper is responsible for proving that the freightwas delivered to the carrier in good condition andpackaged correctly. It is then the burden of thecarrier to prove it was not negligent and one of theexceptions under the Carmack Amendment applies.Freight insurance provides more protection and theshipper doesn’t have to worry about proof of fault.The liability amount per pound a carrier providesmay be less than the value of the freight. In thatcase, purchasing additional freight insurance canbring added peace of mind. While insurance isredeemable under all types of loss, there are still someexceptions. It’s important to read and understandyour freight insurance policy before you ship.8

everything you need to knowabout freight claimsproperly packagingyour shipmentPreventing loss and damages starts with properpackaging. Shipments must be properly packedto ensure damage-free transportation. Whilethere are many nuances to different itemsthat may be shipped, use common sense whenpacking your specific commodity. You wouldn’tpackage ball-bearings the same as you wouldpackage glassware. Don’t be afraid to spend anextra couple of bucks on packaging to ensureyou’re not spending more after the fact.Be conscious of your chosen container’smaximum weight capacity and choose qualitymaterials. Avoid packaging with dents, holes,tears, or water damage at all costs. Then choosepackaging that is sized right — with just enoughroom for the contents and necessary padding.9

everything you need to knowabout freight claimsImpact protection is also an important part of packagingyour freight, especially for liquids or fragile goods.Materials like Styrofoam, bubble wrap, and paperwill work to defend against damage during transit.If you’re palletizing your shipment, the pallet will givethe shipment a solid base to sit on and make movementon and off the truck easy and safe. When stackingyour pallet, be sure your items sit squarely on the skidwith no overhang. Weight should be evenly distributedwith heavier boxes on the bottom, and packagesstacked as closely together as possible. Box flaps andcorrugations should face up. Make the top surface asflat as possible and secure cartons to the skid withbanding, stretch-wrap, or breakaway adhesive.10

everything you need to knowabout freight claimsYour freight also needs to be labeledappropriately and it should be easy toidentify. Always follow these guidelines: Remove or completely cover old labels Place labels on each box and eachside of the overall shipment Do not place labels over a seam orclosure on top of sealing tape Indicate the content’s ability towithstand added weight Place a duplicate form of address informationinside the container for added protection Include a full return address11

everything you need to knowabout freight claimsbest practices forreceiving freightFor consignees, following the proper procedureswhen receiving freight can make a hugedifference in the resolution of a claim.1. Inspect your freight immediatelyBefore you sign the delivery receipt, you’ll wantto count your boxes and check for any damages.Writing “subject to inspection” doesn’t protect you inthe case of a claim, so don’t skip this important step.Take the time to make sure everything looks okay.2. Document any damages or shortagesIf you do find damages or a shortage in yourshipment, it’s important to document themfor your claim. Take pictures of the damagedproducts and notate any damages or shortageson the delivery receipt. Be as specific as possibleand note each of the identified issues.12

everything you need to knowabout freight claims3. Save your damaged freightEven if you document your damages, aninspector from the carrier may need to come toyour location to inspect the shipment. Be sure tosave your freight in case this situation arises.4. Pay your freight chargesIt may seem unfair, but paying your freightcharges without delay for a damaged shipment isessential. It you refuse to pay the freight charges,it could hold up the resolution of your claim.13

everything you need to knowabout freight claimsfiling a claimFirst rule for filing claims is to file them as soonas possible. You typically have 9 months fromthe delivery date to file a claim. If your deliveryreceipt is not noted as damaged or short, youonly have 5 days to file a concealed claim.Here’s what you’ll need to file the claim: Proof of Delivery (POD) The original Bill of Lading (BOL) Freight bill Merchandise invoice illustrating thevalue of the damaged commodity Replacement invoice or repair bill Pictures of the damaged freight (if you have them)14

everything you need to knowabout freight claimsThe carrier should acknowledge the receipt of theclaim and assign its claim number within 30 daysof receiving it, according to D.O.T. regulations. Everysituation is different and the time required forresolving the claim may vary, but the claim should bepaid, compromised, or disallowed within 120 days.If your claim is denied, you have the right to file alawsuit against the carrier. Should you choose togo this route, you will need to file within 2 yearsand one day from the date the carrier disallowedthe claim. There are some exceptions to look outfor that requires you to file sooner. It’s best tofile as soon as possible to avoid any issues.15