A freight claim is a legal claim that gets sent from a shipper or consignee to a carrier after an issue with an order shipment. The purpose of freight or logistics claims is to bring about an in-depth analysis of the issue and to seek financial reimbursement for the loss or damage that has been sustained to all or part of a shipment.
According to Logistics Management, the ultimate goal of these claims is for the carrier to rectify the situation caused by poor delivery service. Customers want to end up in the same position they would have if the delivery had gone according to plan.
For example, an order worth $1,000 was damaged to the point that the load is only worth $900 to the consignee. They would file a claim for $100 for that order to get restitution for the damaged goods and lost profits it caused. That is the basis of freight claims and logistics claims.
Meanwhile, the rate of freight and logistics claims is only growing in tandem with e-commerce. In 2019, MercuryMyEZClaim found 70% of claims filed were due to damaged freight, but regardless, the overarching rate for e-commerce claims is well above 30%, including those where customers simply return a purchase due to a delay or buyer’s remorse.
Even if the package arrived on time, it’s imperative to have proof. And the faster that companies can process those claims, the better for all involved. That’s why freight claims automation is now table stakes in the freight tech stack, and it’s critical to understand a few other factors in this area.
Failure to Modernize Responses to Freight and Logistics Claims Will Ultimately Cause Stagnation and Decline
- It slows down productivity and makes even the simplest of tasks much more involved and time-consuming.
- It causes more delays due to poor scheduling, management, and communications inside and outside the network.
- It frequently causes errors and mistakes due to rushed planning and poor decision-making caused by a lack of data.
- It makes directors and managers rely too heavily on human effort for mundane tasks and repetitive tasks.
Freight and logistics claims responses can easily be streamlined and automated to improve overall performance and reduce their impact on freight management services.
The Push Toward Advanced Claims Automation Is Due to Customer Expectations and E-Commerce Growth
Inadequate responses to freight and logistics claims can lead to a decline in customer satisfaction, leading to reduced future demands. Ultimately, this leads to stagnation and the decline of the business.
Claims cannot be completely eliminated, but automated processes and a robust tech stack can help reduce their occurrence and severity. Shifting consumer needs are at the heart of the need for supply chain automation. Consumers have changed the way they shop and how they now expect shipping options and services to respond.
Successful transportation service providers are adapting and evolving to meet the changing demands of e-commerce and current market trends. Claims threaten to undo all the hard work of carriers and logistics managers and cannot remain an afterthought.
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Ways to Embrace Claims Automaton and Build a Strong Tech Stack for the Modern-Day Supply Chain
Four primary types of claims make up the bulk of what is seen by transportation service providers today. Each claim type has a viable response and solution that is made possible with automation and technological advances. Here is how a strong tech stack provides shippers with a competitive advantage by focusing on claim response and mitigation:
- Shippers can offset the impact of damage by implementing real-time delivery status updates for customers and holding carriers accountable for such damage.
- Freight management parties can address loss with accessible dashboards and tacking services that offer remote access.
- Enterprises can leverage intelligent invoices and tracking through real-time paperless services to reduce shortage claims, ensuring the order arrives on time and in full.
- Concealed Claims Companies can resolve concealed damage claims by using automated customer service apps and innovative solutions to avoid risks and improve service levels in shipping.
Take Steps to Embrace Automated Freight Claims Processing
A freight claim can have a tremendous impact on the profits of transportation service providers throughout the shipping industry.
Managing claims and responding to them effectively and professionally is key to reducing their impact on the network. Our beginner’s guide to managing freight claims can help.
By embracing technology and implementing a modern automated tech stack setup, shippers can protect their profits and reputation when freight claims and logistics claims occur. It is all about overcoming the transportation management challenges facing the industry today.
