Shipping and logistics managers have to deal with many aspects of transportation management. After orders have already shipped and invoices sent, understanding freight claims management can become a critical factor in cost control. Unfortunately, the problems associated with managing freight claims resulting from damages and returns seem to be growing worse. According to Bloomberg, ocean containers are being lost at sea at the highest rate in seven years: “Allianz Global Corporate & Specialty estimates that human error contributes to at least three-quarters of shipping industry accidents and fatalities.”
A freight claim represents a legal document filed to request and gain reimbursement for damaged and lost products. Freight claims can be managed externally by a third-party vendor who provides the service, or internally by employees of the shipping or courier company. Freight claims management is vital to efficient operations within the supply chain, so it remains something worth considering. But first, let’s consider the top types of freight claims.
Common Issues Affecting Efficiency of Cargo Claims Management
- Visible damage remains the most commonly reported cargo claim as it covers packages with noticeable wear. Any damage that can be easily seen upon receipt of the delivery must be noted in great detail and recorded on the delivery receipt. A lack of information and facts to back up a damage claim can result in denial of the shipper’s claim.
- Loss within the cargo delivery supply chain occurs when documentation shows the carrier picked up the order but did not deliver, such as when losing a container at sea. The shipper must note that no final delivery took place, even though documentation of pick-up and loading exists.
- Shortage in the shipment when larger orders have many individual packages and parcels. A common occurrence often entails miscounts and missing parts for more extensive and complicated orders. It’s essential to verify the pieces get accounted for wherever their location and ensure that large orders have all items included. Items can fall off the truck or a pallet or be mistakenly delivered elsewhere, resulting in a shortage.
- Concealed damage since there may also be instances of preliminary inspection misses or fails to call out damage to shipped items. Some damage remains unseen upon receipt of goods, and is only detected once a package arrives and is opened and inspected more fully. Most carriers require notice within 5 days of delivery to allow for inspection, if necessary. Hold onto the damaged freight or get an inspection waiver from the carrier.
- Managing the claim is complicated too. When preparing and sending the freight, the carrier bears the burden of preventing loss and damage while handling the order and managing the shipping process. For the modern supply chain, the shipper primarily holds responsibility for filing paperwork, delivery, handling, and everything else that comes with freight claims management. A legal representative, often used by large companies and corporations, can also file the lost or damaged claim on behalf of the company.
It is easy to see how involved freight claims management can become, but knowing the types of damage to look for and what claims may occur can help enterprise shippers prepare. And according to Supply Chain 24/7, the global freight market in a post-COVID world can still change and fluctuate rapidly. Meanwhile, the trends toward a greater emphasis on faster shipping execution will continue, forcing suppliers, carriers, and managers alike to embrace technology and innovation. The shift to automation and advanced platforms and dashboards will better freight claims management and overall supply chain management in 2021 and beyond.
Enhance Your Freight Claims Management Processes With the Right TMS Today
Of all the processes, systems, reports, and records that managers must track, freight claims management remains an essential part of the modern-day supply chain. Ignoring claims and failing to follow up and address issues will not only end up costing the company money in the long run, but it will also severely damage brand reputation and destroy customer service satisfaction ratings. Help from a dedicated vendor experienced in all things related to freight claims management is the best answer to the freight claim dilemma. A robust TMS platform, embedded with claims processes and innovative methods, can make a huge difference in bottom-line profits. Proper onboarding, training, and implementation can help improve transportation responses across the supply chain, and it all begins with putting the right system to work.