Understanding Freight Claims–Part One
This week and next week we’re returning to our series about freight management. This week we’ll talk about the different kinds of freight claims and next week will cover the details about what needs to be done to avoid having a claim denied and maximize the amount received from the claim.
The Four Types of Freight Claims
According to Wikipedia “A freight claim is a legal demand by a shipper or consignee to a carrier for financial reimbursement for a loss or damage of a shipment. Freight claims are also known as shipping claims, cargo claims, transportation claims, or loss and damage claims.”
Claims fall into one of four categories:
|Damage. Pretty self-explanatory and the most common type of freight claim, particularly when shipping via LTL and you’re transporting material as large and unwieldy as pallet rack frames and beams. Because the freight company usually moves LTL shipments multiple times, the risk of damage increases dramatically. This category is different from number four below because the damage is visible upon delivery.|
|Loss. Unlike a shortage which is described below, a loss involves freight which was picked up but never made it to the intended destination. While I’ll address what you need for freight claims in detail next week, in the case of a loss your copy of the signed bill of lading is the single most important document to have.|
|Shortage. If you only receive part of a shipment that’s listed on the bill of lading, it’s a shortage. Sometimes this means a mistake was made on the bill of lading, other times part of the shipment fell out of the load or was misplaced at some point.|
|Concealed Damage or Shortage. Sometimes damage to a shipment isn’t obvious upon receiving it. Depending on how the load is shipped it may not be easy to identify something is missing under the shrink wrap or in the boxes. This is the most complicated of the claims and the least likely to succeed in getting fully reimbursed. Again, I’ll go into detail next week, but for right now, be aware that the clock is ticking and you have a maximum of 15 days to find the damage or shortage and file a claim, with one to three days being common. Understanding how your carriers limit the claim time frame is an important part of making sure your claim isn’t denied on a technicality.|
Next Week Sneak Peak
Freight claims are not a “Less is More” situation. Instead, it’s closer to “More is Better”. Paying attention to details and writing those details down is a very important part of the process.
I’ll get into the specifics, the trade-offs and some general advice next week. If you have a specific question you’d like answered, email me at DealerSales@dakequipment.com and let me know.