It is time to face a simple fact in international and domestic shipping. Things go wrong, and damages will occur. According to More Than Shipping, the causes of damage vary, but water is the most common cause of damage. Moreover, international shipments are so complex that the various activities along the numerous touchpoints increase the risk of damage. For example, the supplier and factory handle and load the cargo, the local trucker delivers the cargo, a local company moves cargo from warehouse to terminal. The terminal moves the container to another location. It gets sent across the ocean on a carrier. The entire process continues in reverse upon arrival at the destination. The complexity is never-ending, and the risk of freight damage and loss claims only continues to grow. To mitigate these risks and lower costs, shippers and logistics service providers need to understand a few ways to help protect themselves.
Challenges in Freight Damage and Loss Claims
The biggest challenge in handling freight damage and loss claims lies within the different ways that carriers process and handle claims. At the same time, claims could be processed by the shipper, freight brokers, freight forwarders, third-party logistics providers, and a number of other parties involved in the shipment. Additional challenges also exist, including:
- An inability to track all relevant shipment documentation.
- A lack of physical evidence, such as photographs, to support damage or the loss of a shipment.
- Poor accountability and reporting of such claims to carriers within the appropriate time frame.
- Differences in the payment and resolution processes for claims between carriers and locations.
So, what can shippers and logistics service providers do to lessen the impact?
Why Effective Processes Help Avoid Freight Damage
The answer is simple. Effective processes, proper documentation including photos and standardized freight claims management is essential to lowering the risk of denials. However, shippers must also take an active role in understanding their responsibilities if damage does occur.
As explained by Chris Cotter, lawyer, and partner of Roetzel & Andress in Inbound Logistics:
“In a transportation contract, the carrier agrees to move cargo, and the shipper agrees to pay the carrier. Implicit in this arrangement is that the cargo will arrive undamaged. If the cargo is lost, damaged, or delayed, the basic contract for carriage has been breached.
To prevail on a claim, shippers have the initial burden of proving their claim. Shippers must prove good condition at the origin, damaged condition at the destination, and the number of damages. After establishing these three elements, the burden of defense shifts to the carrier.”
Tips to Improve Freight Claims Management
To further reduce the risk of freight damage and loss claims, cargo owners should also follow these additional tips:
- Properly seal containers, and properly inspect all packages for signs of damage.
- Ensure recipient data is accurate.
- Use automation to share customer data, as well as print labels and route shipments.
- Automate the claims process by letting your TMS or contracted service provider handle it.
- Keep all documentation in a centralized, cloud-based location.
- File claims immediately.
- Follow through on claims.
- Track transportation data regarding carrier claims and payments.
Invest in a World-Class TMS to Improve Freight Claims Management
Investing in a dedicated, world-class TMS, together with a freight claims management solution like MercuryMyEZClaim is the best way to survive the complexities of freight claims management. Unfortunately, it is impossible to avoid all freight damage and loss claims, but when they do happen, it’s best to have an expert on your side—a centralized resource that will amplify your case and lower chances of denial.
