Freight damage will occur. Even with the best-laid plans, cargo damage mitigation strategies, and careful handling, products may still arrive damaged. Unfortunately, freight claims management remains an area of logistics subject to wide interpretation and variance. In other words, each carrier may have dozens, if not hundreds, of rules regarding the filing of freight claims. And, while international standards exist for the filing of claims for ocean, air, and over the road transport, carriers have the liberty to extend these timelines. Instead of trying to hope for the best, shippers need to know the misconceptions surrounding claims management, how to mitigate risks, proactively manage claims, and achieve a timely resolution with a TMS and connected systems.
Misconceptions Surrounding Freight Claims Management
The biggest misconceptions surrounding freight claims management are simple. While cargo is in the possession of carriers, it’s the carrier’s responsibility to prevent damage and loss to the shipment. While this model worked great for centuries, it does not work as effectively in global transport, and the added complexities that go hand-in-hand with globalization. Depending on possession of the bill of lading and liability for cargo, shippers, freight forwarders, and even third-party logistics providers may be responsible for damages, not just the carrier. The misconception that carriers always bear the responsibility is rampant in the industry.
Furthermore, freight claims management is not as simple as proving damage. Carriers will want to know who caused the damage, when was the damage found, if photos of the damage are available to support claims, and much more. Claims management requires attention to detail and an exhaustive process to ensure reimbursement and resolution on claims.
Mitigating Risks Remain Crucial To Effective Claims Management
It’s inevitable: things will go wrong. The only solution for shippers and logistics service providers is to actively work to reduce the incidence of damage or cargo loss. This includes tracking shipments for delivery, collecting proof of delivery, ensuring the proper handling of shipments, working with customers and business-to-business partners to deliver freight on time, and understanding events that supersede claims’ insurance. The Carmack Amendment also comes into play. The Carmack Amendment is a law applied to motor carriers by Congress in 1935 which was adopted to achieve uniformity in rules governing interstate shipment. The Carmack Amendment spells out rights, duties and liabilities of shippers and carriers when it comes to cargo loss. In short, everyone must do their part to reduce the risk of damage.
How To Proactively Manage Risk, File Claims, And Resolve Issues
There are several tips for better freight claims management that shippers and logistics service providers have followed and have stood the test of time. When it comes to effective freight claims, the fundamentals are paramount in proactive management to lower freight damage risk, such as:
- Improved, damage-resistant packaging.
- Checking labels for accuracy.
- Working with carriers to avoid the “rush” during pickup and drop-off.
- Properly completing documentation.
The distinction between these fundamentals and the tips to succeed as we move into the new decade focuses on the degree to which technology enhances the process. For example, these steps can help mitigate, file, and resolve freight claims:
- Use software-as-a-service systems, including a TMS, to connect your whole supply chain and capture the necessary data around each freight shipment. This makes it much easier to process the freight claim if necessary.
- Leverage automated alerts and exception algorithms to address any deficiencies or delays, preventing a premature claim.
- Take advantage of predictive analytics to recognize when things may go wrong.
- Collect all necessary documentation, including photos of the damage, original invoices, estimates for repairs (if applicable), and proof of delivery.
- File the claim using the carriers’ or service providers’ online claims’ portals.
- If possible, file claims within your integrated carrier-connected TMS.
- Consider outsourcing the freight claims management side of logistics.
- Track the time. Chris Cotter, via Inbound Logistics provides these guidelines for submitting a claim:
“For ocean shipments, the timeline to file a claim is only three days from delivery, and the deadline to file suit is one year from the date of delivery.
For air carriage, different rules apply depending on whether the shipment is domestic or international. For domestic shipments, the air carrier’s tariff sets the time limits and limits of liability. These limits can be short—seven days or fewer. The limit of liability can also be low—50 cents per pound.
For international shipments, the Montreal Convention of 1999, an international treaty, sets the time limits and limits of liability. A claim must be filed within 14 days of delivery for damage and 21 days for the delay.”
Boost Your Freight Claims Management Processes With The Right Partner
Proactive freight claims management will reduce the impact of damage and losses to your supply chain. Attention to detail and following the tips listed above will help shippers and carriers work together to reduce preventable issues. Meanwhile, a standardized, digital process for managing freight claims will eliminate the hassle and burden of manual management and streamline the process. At the same time, automated systems could process claims and complete reimbursements, further reducing the impact of such claims. Depending on the size of your organization, developing such systems might be out of the equation. Fortunately, you don’t have to rely only on your internal resources. By partnering with MercuryGate you are able to take advantage of the resources and experience necessary to help mitigate, process, and resolve freight claims. And, with MercuryMyEZClaim, you have the added experience of the world’s first freight claim management software.
This article was originally published on Mercury Gate.