Recently, we have noticed an increasing number of carriers requiring photos of damaged freight in order to file and process a freight claim. This is just one of the most recent trends in an ever-changing process, and while we hope our customers never have to file a claim, it’s still important to understand the ins and outs of the process. Being prepared to file a claim will help you reduce the time, money and resources used when you encounter the inevitable damaged or lost freight.
Whether you ship your own freight or work with a freight forwarder, follow these tips to help you better understand the freight claims process and how to deal with it.
Act quickly and record everything
When it comes to freight claims, time and precision are of the utmost importance. Shippers should work quickly to:
- Thoroughly make note of any damages or shortages on the bill of lading.
- Use VERY specific language. Record which items are damaged/lost, how they are damaged, and the severity.
- Take pictures of the damaged freight.
Shippers must also make every effort to mitigate the damage to freight and salvage what is possible to salvage. All parties, including the shipper, carrier, 3PL, etc., are responsible to act in good faith in this regard. This is outlined in the Carmack Amendment (see below for a more detailed explanation).
Keep the items and pay your freight bill
Two major mistakes shippers make are discarding the damaged freight after the carrier leaves and/or refusing to pay the freight charges when the shipment is delivered with damages or shortages. Some shippers will refuse to pay the freight bill on principal, but all freight claims must be accompanied by a paid freight bill. Not paying your bill will impede your ability to resolve your claim quickly.
Discarding damaged items also hurts your chances of successfully resolving a claim. Carriers have the right to inspect freight when damage claims are made, and they also can take possession of the freight and salvage it if the claim awards full value for the freight.
Make sure to keep the damaged product and its associated packaging material and handle it as little as possible. This gives the carrier the opportunity to inspect the damaged freight. If this is not possible, you should carefully record and take digital images of the damaged units as well as write-up a short explanation as to why the damaged freight needed to be inspected before the carrier had a chance to do likewise.
Know the four types of freight claims
When filing a claim, know how to describe it. There are four types of freight claims that can be made:
- Damages: cargo that falls under this category must have visible damages upon receiving. These damages should be noted in the proof of delivery document.
- All Short: this is when the entire shipment does not (for whatever reason) make it to the consignee/destination.
- Shortage: shortages are different than “All Short” shipments in that they are usually the result of an incorrectly filled out bill of lading. Rather than the shipment being “All Short,” you are instead delivered fewer numbers of an item than recorded on the Bill of Lading.
- Concealed damage or shortage: if damage or shortages are discovered after freight is inspected and the proof of delivery is signed, the claim is considered to be “concealed.” It is more difficult to receive reimbursement in this case but you should document these claims anyway (Note: stamping or writing on the POD such statements as “Subject to Concealed Damage Inspection” does NOT cover the consignee in claims such as this. This is a common misperception.).
Understand the Carmack Amendment
Adopted in 1935, the Carmack Amendment is a piece of legislation that details the liability of carriers under receipts and bills of lading (you can read the full text here). The Carmack Amendment protects carriers against unreasonable freight claims and limits their liability to the actual loss or injury to the property being shipped. It also sets the timeframe that shippers have to file claims to no less than nine months from the date of delivery. The timeframe for filing lawsuits is no less than two years from the date in which the claim is denied.
Under the amendment, carriers may deny liability for cargo damage for five reasons:
- Acts of god: a physical phenomenon or natural disaster that the carrier cannot control. In terms of weather, it has to be severe and unexpected (e.g. a tornado).
- The public enemy: hostile acts committed by military forces that are enemies of the government (understandably, this is exceptionally rare in the U.S.).
- Act or default of a shipper: the carrier can prove that damage or loss was the result of negligence of the shipper (e.g. improperly packed or loaded cargo).
- Public authority: damage or loss caused by the government (e.g. quarantines, embargos, etc.).
- Inherent vice or nature of the goods transported: damage caused by natural traits of the products shipped (e.g. the natural decay of perishable goods).
What to include with a freight claim
The more information you include in a freight claim, the better. The documents that will help you receive a successful claim include copies of the:
- Original invoice (Purchase Orders are not considered valid substitutes for this document)
- Proof of delivery
- Bill of lading
- Freight bill
- Photographs of damages
- Written descriptions of damages/losses
If you have items repaired, you should also include the invoice that details the repairs completed and their cost. Basically, if you have documentation you think will help your claim, it’s best to include it.
Avoiding making freight claims
What’s the best way to avoid damaged and lost freight? Work with a 3PL that leverages a network of reliable carriers. At King Solutions, we are proud of our 0.0009% claims ratio that we have maintained for years. Get in touch with one of our logistics experts to learn how we can help protect your freight.