Rocky Balboa eloquently said it best: “The world ain’t all sunshine and rainbows.” He could’ve been referring to LTL shipping, because in the freight and logistics world, things inevitably go wrong; shipments get lost, damaged – leaving you with a freight claim to sort it out. Carriers are well suited to dispute and decline your claims, which can result in a significant loss for your business if you’re not prepared. We’re not saying you need to train like Rocky to master freight claims, but a little conditioning never hurt anybody…
What is a Freight Claim?
Lets start with the basics. A freight claim is a legal demand by a shipper to a carrier for financial reimbursement for a loss or damage of a shipment. Remember, transportation agreements are legally contractual: a carrier performs a service (moving goods) in return for compensation, and it is understood that the carrier takes responsibility to ensure that the transported goods arrive in the right condition. When shipments are lost or damaged, shippers may file freight claims against carriers to recover their losses.
Legal Talk: The Carmack Amendment
Liability is everything in a freight claim. The Carmack Amendment, adopted in 1935 for motor carriers, sets a common law standard of liability in the case of freight loss or damage. Under The Carmack Amendment carriers are considered virtual insurers and remain strictly liable for freight claims, unless they negotiate their liability in the contract with the shipper.
The 4 Types of Freight Claims
Damage – In order for your freight to be considered “damaged,” the damage must be visible upon delivery and noted on the proof of delivery document.
Loss – For your freight to be officially considered lost, you must prove through with the Bill of Lading that the freight did not make it to its destination.
Shortage – When only part of your shipment makes it to the destination, you have a shortage. Check the freight against the delivery receipt and note the differences.
Concealed Damage or Shortage – Looks can be deceiving. If you unpack a shipment only to find its damaged or missing you’re freight has concealed damage or shortage. Make an effort to inspect the entire shipment before you deem everything is in order on the Proof of Delivery document, otherwise it will be difficult to receive full reimbursement with a claim.
As mentioned above, the common carrier is liable for freight claims—to an extent. There are exceptions to the Carmack Amendment where carriers are not liable (such as the weather) and each carrier negotiates a limit to their liability, usually as a dollar amount per pound. If a storm destroys your shipment or a carrier damages high-value freight, you may be liable. In this case, you may purchase a shippers’ interest freight insurance policy to cover theses circumstances.
Filing a Claim
Filing a claim for lost or damaged freight is an intricate legal process. In essence, you are notifying the carrier they breached the freight contract, and you are seeking reimbursement for your loss. To file a claim you must identify the freight in question, describe what occurred (loss or damage), estimate the value of your loss and demand payment. Filing a claim is tricky, and if done incorrectly, can hurt your chances for reimbursement. For a more complete guide on filing freight claims, ask our friends at YRC Freight.
You can also find additional details on freight claims here.