Damaged freight?
Here’s what to do.
At some point, freight gets lost or damaged. It doesn’t happen often, but it’s something we have to live with as part of frequent shipping.
When it does occur, we know how stressful and confusing it could be. That’s why we’ve put together a reference guide so you know what to do in scenarios like this.
What Is a Cargo Claim?
A cargo claim is a demand for compensation or reimbursement for a shipment that has been lost or damaged while in transit. Perhaps you’re wondering what factors lead to cargo damage. It can be caused by many reasons like improper packaging or the use of inappropriate containers, overheating, uneven loading, improper distribution of weight, or mislabeling. And the cargo claim isn’t based on the carrier’s negligence but on a breach of contract law. The contract between the claimant and transporter is that the transporter will deliver goods from Point A to Point B in the same condition as when they were put in the transporter’s care. If loss or damage occurs, it breaches the foundation of the contract and a claim can be filed.
HOW TO FILE A CLAIM FOR CARGO DAMAGE
Record specific damage and/or loss details on the delivery receipt or bill of lading (BOL).
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Retain the freight at the shipper or consignee location, not the carrier.
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Gather documentation to support your freight claim.
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Pay your freight bill.
WHEN TO FILE A CARGO DAMAGE CLAIM
Once you’ve identified any damage or discrepancies, notify the freight broker/carrier as soon as possible. Note all damages/shortages clearly and specifically on the delivery receipt at the time of delivery.
If you don’t, it will be considered “concealed.” Phrases such as “potential damage,” “subject to count/inspection,” or “subject to review” will not be considered an exception.
Carriers cannot decline claims because of a lack of notations on the delivery receipt. However, if no additional evidence can be provided to prove the carrier caused the damage during transit, carriers can deny the claim.
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What You Can Expect
After submitting a cargo claim, you have to wait for carriers to investigate the claim. They have 30 business days from the date of the claim submission to acknowledge receipt of the claim. After that, they have 120 days to investigate. The clock is paused, however, when the carrier sends you an inquiry about the incident.
The NMFTA (National Motor Freight Traffic Association) also gives carriers 60-day blocks of time after the initial 150 days provided they provide written status updates.
It takes approximately 120 business days to resolve a freight claim. Create a calendar reminder every 15 to 20 business days to track the status and age of the claim.
Tips to Streamline the Claims Process
To streamline the claims process, it’s best to complete as much work as you can before submitting your claim.
Anticipating what the carrier may need during the investigation—photos of the damaged cargo, packing list, signed BOL, sales invoice, signed delivery receipt, etc.—should also help the process along.
After carrier inspection, you should also mitigate (salvage, discount, or repair) the cargo before proceeding with the claim. Purchasing shippers’ interest insurance should also help cover your cargo at the invoiced value.
Types of Freight Claims
Don’t depend on the price tag alone when choosing a carrier, or it could result in a lot
of headaches or worse, expensive litigation. But what should you look for beyond costs?
Damage
If there is visible physical damage to your cargo that previously wasn’t there when it was shipped, then it falls under damage claims.
Shortage
A shortage freight claim is when only a portion of the total freight listed on the BOL makes it to you.
Loss
When the cargo was loaded onto the carrier but didn’t make it to the receiver, it’s called a loss claim. If you have the original bill of lading (and other documents of what is shipped in and out of a facility) with no proof of delivery ever signed, a loss claim is an open-and-shut case.
Concealed
A concealed claim is when you found tough-to-see damage or shortage on your cargo only after delivery. This type of cargo claim is hard to prove so you’ll often experience carriers pushing back.
Refused
A refused claim is when the wrong freight gets delivered to you, the cargo is damaged, or late, or you’re unhappy with the state of your cargo.
Claim Denials
Common Reasons Claims Get Denied
- When you have incomplete or inadequate documentation.
- When you didn’t mitigate the costs of your claim to the least amount possible.
- When your freight charges haven’t been paid.
- When you listed the number of pallets but didn’t list a piece count.
- When there’s a natural disaster such as a hurricane, earthquake, or other acts of God.
- When the driver sustains injury outside his control (e.g. stroke).
- When there’s terrorism or armed robbery.
- When public authority impounded the vehicle.
- When the cargo wasn’t sufficiently packaged according to industry standards.
- When you’ve signed a clear proof of delivery.
When to Fight a Claim Denial
You can fight a claim denial if you believe your claim is legitimate. When your claim has been declined, find out why and do the following:
- Submit additional documentation to prove your claim is legitimate and that you’re prepared to fight the denial.
- Contact your shipper/vendor. They may have additional documents that will help support your claim.
- Engaged the correct regulatory agency to help resolve the issue.
- Go to court. Nobody likes litigation so your carrier might settle out of court.
How to Avoid Freight Claims
Your Carrier’s Responsibilities
- The carrier sees to it that the cargo is received, loaded, handled, stowed, carried, kept, and safely cared for inside the trailer.
- The carrier must also deliver the cargo to its destination within the specified time and in the same condition when the cargo was handed to him by the shipper.
- Avoid hard stopping and starting so as not to damage the cargo.
- When possible, your carrier should check the cargo for possible load shifting throughout transit.
Your Responsibilities
- Package your shipments properly. Use the right packaging materials Never use packaging that is water-damaged or with holes, dents, or tears.
- Choose the correct size to hold your cargo in. It should be big enough to hold the contents. Also, use the correct pallet/crate size.
- Mishaps can happen while your cargo is in transit. For extra security, use additional impact protection such as bubble wrap, paper, and cardboard.
- Use strong tape that’s at least two inches wide to seal your package. It’s best to use water-activated tape that’s made of pressure-sensitive plastic. This should protect your cargo from potential spills.
- Clearly label all your packages. Include the type of content, weight, and address of the final destination on the label. Do this on the side flaps on the top of the package so they’re visible when stacked.
- Load the trailer properly.
- Choose quality over price tag when selecting a carrier.
How to Choose Your Carrier
Don’t depend on the price tag alone when choosing a carrier, or it could result in a lot
of headaches or worse, expensive litigation. But what should you look for beyond costs?
Reliability
Check for the carrier’s level of service rates. Can you depend on them to deliver your goods on time and to various destinations? A reliable carrier should help meet your customer’s expectations through the timely arrival of cargo.
Transparency
A good carrier or logistics partner keeps you in the loop about the status of your shipment. It demonstrates that they are taking accountability for your load.
Capacity
Does your carrier have the capacity to serve your business needs? Find a carrier with a strong network in regions where your freight often travels so you won’t need to work with multiple carriers..
Safety
Is safety a priority for your carrier? Pay attention to their safety rating. A carrier that gives priority to safety will help you build your company’s image/reputation.
FREQUENTLY ASKED QUESTIONS
For all cargo claims, you must file the claim within nine months from the date of delivery. Shortage claims must be filed within nine months of the shipment date. It’s best to file a claim as soon as possible to avoid discrepancies.
Carriers are almost always liable for transit damage or loss. However, the liability is limited either by law or by contract in the bill of lading. They are also not responsible for many causes of loss or damage that commonly occur in transit (e.g. Acts of God).
Also, consignees have a legal responsibility to keep damage costs at a minimum. They are required to accept damaged cargo that can be repaired reasonably.
A carrier claim or a shipping claim is a statement from the consignee or shipper declaring that the carrier breached a contract by delivering damaged cargo, partial cargo, or non-delivery of cargo.
You may refuse to accept a damaged shipment and file a claim for its full value. However, you should make every attempt to inspect the damaged cargo, accept it, and document everything. Otherwise, if you refuse to accept the cargo, the carrier will have to store it while your claim is being processed and you could be charged storage fees or further damage might occur, invalidating your claim.
Salvage freight is cargo that has retained some value after it has been damaged. Claimants are expected to take measures to mitigate the loss by having it repaired.
The carrier would then be required to pay the difference between the damaged value and the original value or file a claim for the cost of repairs. If the carrier pays the claim, they have the right to sell the salvaged freight to recoup the loss they paid to the claimant.
The shipper, consignee, or product owner can file a cargo claim from the carrier.
- Transportation documents (bill of lading, airway bill of lading, etc.)
- Proof of delivery;
- Statement of claim defining the details of the loss;
- Photos of the actual damage;
- Original invoice stating the value of the damaged goods;
- Repair estimate (if applicable)
