Freight or shipping claims are essentially a breach of contract claim filed by a shipper against the transporter or carrier who handled their shipping load. These claims get filed against damages, losses, or shortages that occur with a load or order. The legal concept behind freight claims is to help the shipper compensate for any problems with the order and to get the shipment to its destination as if there had been no losses or damages. Freight claims are a common event, and any respectable carrier will strive to keep claim numbers and frequency as low as possible. Managing claims with the right freight technology and policy procedures can help reduce their occurrence and impact on the modern-day supply chain. And it’s important to know how this translates into managing claims at scale.
Why Managers Need to Avoid Freight Shipping Claims
A freight claim is a serious legal matter that should not be overlooked or undervalued. Too many transport claims, especially for cold-chain shipments, or claims levied on larger orders and significant customers can harm overall profit margins. They can also be referred to as shipping claims, cargo claims, transportation claims, or loss and damage claims. Managers can help reduce expenses and boost profits by doing everything possible to keep shipping claims and disputes to a minimum. Losing even a low percentage of profits off several massive orders due to claims can affect bottom-line revenues. Having a reputation as a carrier with freight claim issues can also significantly damage a company’s reputation within the supply chain network.
Understanding the Freight Shipping Claim Types
Shipping claims will always occur. There are any number of issues that can and do go wrong during transportation. And according to Supply Chain 24/7, it is crucial to understand why management needs to do everything possible to keep freight claims from happening. Several types of freight claims can be seen in the supply chain regularly, especially during peak seasons when carriers are stretched and pushed to their limits, including:
- Damage Claim — Part or all of a load has been damaged to the extent that its value is affected.
- Concealed Damage Claim — The damage was not apparent until final unboxing and inspection.
- Shortage Claim — Multiple pieces were missing from an order, thus creating a shortage.
- Concealed Shortage Claim — Miscounts that could not be detected until unboxing took place.
- Refused Claim — Claims occurred when the recipient denies acceptance of an entire order.
- Loss Claim — This occurs when an entire order has been lost and is not delivered as intended.
These common claim types can have a considerable impact on the growth and success of carriers and transportation managers, big and small. Once their effect is understood, it becomes critical that they are addressed when they occur. In other words, shippers must maintain clear, concise processes for addressing all freight claims.
Tips for Managing Shipping Claims and Reducing Their Impact
- Choose quality over price when it comes to selecting a freight carrier.
- Package shipments properly to make it as easy as possible to avoid damages in handling.
- Label shipments clearly and ensure special delivery instructions are clearly noted.
- Record specific details and notes about known issues on delivery receipts and paper trails.
- Ask the carrier to inspect freight at the time of delivery and sign off on deliveries.
- Implement a transportation management system (TMS) that utilizes modern tools and technologies to track all transport stages and manage claims in one resource.