Freight claims-whitepaper
- 1. KNOWLEDGE IS POWER: EVERYTHING YOU NEED TO KNOW ABOUT FREIGHT CLAIMS 9/15/2014 Knowledge is Power: Everything you Need to Know about Freight Claims WHO IS CERASIS? C IN THIS WHITEPAPER Cerasis is a non-asset based third party logistics service provider who specializes in freight technology solutions and integrated freight management services. Cerasis is headquartered in Eagan, MN, with sales and marketing in Dallas, Carrier Relations in Houston, Technology in Tulsa, and offices throughout the United States. What Cerasis Does Cerasis has 3 Full Time Freight Claims Managers who have all passed the Institute of Logistical Management’s Extensive Freight Claims Management Course The Cerasis Freight Claims team handles all freight claims from beginning to payment by carrier on behalf of our shippers. Working as a liaison on behalf of our customer, working with our carrier partners and providing transparent communication throughout the entire freight claims process. We’ve handled all of our shippers’ freight claims since 1998. In 2013 Cerasis processed more than 650 freight claims on behalf of our clients Cerasis provides proactive education to shippers, consignees, and carriers to decrease future freight claims by empowering all parties with the knowledge they need. What is a Freight Claim? Page 2 Four Tips to Get Your Claim Amount Page 3 Four Types of Freight Claims Page 4 Freight Liability and Insurance Page 5 6 Steps to Filing a Freight Claim Page 7 Avoid these Freight Claim Time Wasters Page 9 Freight Claims and You
- 2. KNOWLEDGE IS POWER: EVERYTHING YOU NEED TO KNOW ABOUT FREIGHT CLAIMS 2 A Freight claim is a legal demand by a shipper or consignee to a carrier for financial reimbursement for a loss or damage of a shipment. Freight claims are also known as shipping claims, cargo claims, transportation claims, or loss and damage claims. The intention of a freight claim is for the carrier to make the shipper or consignee “whole” – that is to say, their position is as good as it would have been if the carrier had carried out their tasks according to the Bill of Lading. For this reason, claimants are generally expected to file a claim to recover their costs, not including profits, although in some rare cases claiming profits may be considered acceptable. A regulated motor carrier operating in interstate commerce is liable for freight loss, damage and delay pursuant to the Carmack Amendment, Title 49 US Code 14706. The Carmack Amendment was adopted in order to establish a uniform nationwide standard of liability for freight loss and Damage, originally for rail and water carriers in 1906 and subsequently for motor carriers in 1935. To establish a prima facie case, a shipper need only show the following three elements: Three Elements: Prima Facie Delivery of the shipment to the carrier in good condition; Delivery of the shipment to the consignee short, in damaged condition, or unreasonably late; and The amount of damages incurred. The Carmack Amendment is the statutory enactment of the common law, which is the law that developed from the judgments and decrees of the courts recognizing, affirming and enforcing the usages and customs of society over the years, particularly the unwritten law of England. As a result, the common law standard for a carrier’s liability for freight loss and damage generally is the same for exempt motor carriers and the carriage of exempt commodities. The Carmack Amendment and the common law both impose a high standard of liability on a motor carrier. Indeed, although it is incorrect, it is often stated that a motor carrier is an insurer of the goods. Many lawyers, especially in port cities, specialize in interpretations of relevant shipping/freight law. What is a Freight Claim? The Carmack Amendment If a carrier fails to meet its burden, the shipper is entitled to “actual loss or injury” due to the errors in the shipment. This is normally interpreted to mean the value of the cargo that was being shipped, but not necessarily loss in business stemming from the error.
- 3. KNOWLEDGE IS POWER: EVERYTHING YOU NEED TO KNOW ABOUT FREIGHT CLAIMS 3 Now, let’s talk about money, now that we know how to avoid time wasted on freight claims. When you file a freight damages claim, you are legally required to take reasonable measures to mitigate the losses and most carriers are quick to remind you of that. But, make sure that your reasonable measures are just that – reasonable. And while you’re at it, make sure that you get paid for the expenses that you incur to mitigate these losses. This freight damages claim is costing you money – so while you’re mitigating the freight claim damages to the carrier, make sure you get reimbursed for expenses incurred while doing so. Let’s go over some quick tips to increase your chances you get paid the full freight claim amount: Claim Only the Damaged Portion of the Freight Damages in Shipment Add to Freight Damages Claim: Labor Costs Depending on the product, you may need to sort through the freight damages for individual products that are undamaged. You may also need to test the products to see if they are still in usable condition. Did you spend a considerable amount of time sorting or testing the damaged products? If so, it is reasonable to claim your labor costs when filing your freight damages claim. Repair, Rather than Replace Add to Freight Damages Claim: All Repair Costs Involved Carriers typically expect you to repair a product rather than making a full replacement. In this case, they would reimburse you for your repair costs. Keep track of all of the costs associated with the repair. Parts, labor, and shipping costs for parts ordered in are all fair game. Salvage When Possible Add to Freight Damages Claim: Full Value of Shipments That Cannot be Salvaged Some types of products when freight damages occur should be written off entirely, even though some of the product appears to be salvageable. Food, drugs, or other products for human consumption are treated differently under the law than other product damages. For example, Section 342(a)(4) of the Federal Food, Drug and Cosmetic Act – 21 USC states that “A food shall be deemed to be adulterated … if it has been prepared, packed, or held in insanitary conditions whereby it may become contaminated with filth, or whereby it may have been rendered injurious to health.” To provide a practical example, in Atlantic Mut. Ins. Co. v. CSX Lines, L.L.C., 432 F.3d 428 (2nd Cir. 2005), a container of concentrate that would be used to make Pepsi spent part of its trip submerged in seawater. Despite tests showing that seawater had probably not penetrated the container, the quality manager could not be sure that the container had not been contaminated. Due to this and other evidence that showed a chance of contamination, the court deemed that Pepsi could not use the product without fear of contamination. The definition of “insanitary conditions” can cover a wide variety of instances to which your product may have been subjected. If product seals have been broken, if it has been subjected to insanity conditions, or if it was in any situation where it could have been contaminated (whether or not the product actually was), then you should destroy the shipment and claim the full value of the goods. Salvage When Reasonable Add to Freight Claim: The Full Value of Shipments that Aren’t Reasonable to Salvage! Remember, you are expected to mitigate the losses when reasonable. For example, in their March 2012 digest, Transportation & Logistics Council Inc. advised one shipper to claim the value of an entire palette of bottled beverages, although some individual bottles were undamaged. In addition to the contamination risks discussed above, it would have been unreasonable to salvage the product. This is because the bottles were to be sold to a retailer in bulk units; while some individual bottles were intact, the bulk packages were not, and would therefore be unfit for sale. If your product is now worthless to any potential buyers, your freight damages claim should reflect that. NOTE: The courts have ruled that the carrier cannot claim the salvaged shipment or a salvage allowance if the claimant finds that no salvage value exists. Therefore, if your shipment has not retained any salvage value, you should be able to claim the full value of the shipment. Four Tips to ensure you Get Your Claim Amount What to do when you receive damaged freight? Sign the delivery receipt as damaged… I repeat, SIGN THE DELIVERY RECEIPT AS DAMAGED! Once there is a clear delivery receipt involved, it is almost guaranteed that your freight claim amount will be reduced to a settlement, or worse, denied altogether. “Subject to Inspection” is NOT a valid notation – This notation is not enough to hold the carrier liable. When in doubt, notate “Damaged.” If you must, refuse the freight – In cases where the driver will not let you sign or check for damages, refuse the freight.
- 4. KNOWLEDGE IS POWER: EVERYTHING YOU NEED TO KNOW ABOUT FREIGHT CLAIMS 4 THE REAL COST OF LOSSES Global Financial Impact If one accounts for all lost and damaged cargo shipments throughout the globe – businesses suffer more than $50 billion in losses each year. Theft Cargo theft is an increasing problem – especially as sea shipment routes come under attack by pirates operating off the coast of South America and Africa FAST FACTS 08%Only about 8% of all global shipments are damaged or lost – and only a small percentage of that is claimed (as most damage is minor) 80%Supply chain interruptions can cause massive business impacts. More than 80% of global companies rely on daily “Just in time” shipments of supplies and materials. Damage A large number of freight claims you will file will be of the type “damaged.” This is fairly self-explanatory, but to actually have this type designation, the freight damage must be visible upon delivery and then notated on the proof of delivery document. Loss The second type of freight claim you will undoubtedly file is the type “loss.” This type is official if you have notated and documented against the original bill of lading that the freight that was picked up but does not make it to its destination. Essentially, this means there is no proof of delivery ever signed, and you must initiate a freight claim. Again, it is vital that you are accurate when filling out the original bill of lading. Shortage In the types of freight claims, shortages can happen if something falls out or if something was written in error of the bill of lading. There may be several other reasons, but simply, you have shortage if only partial freight of what you expected from what was listed on the bill of lading makes it to you. This is why it is vital when you receive the freight shipped to you that you verify pieces received against the drivers delivery receipt provided at the time delivery. Note in detail any discrepancies on the carrier’s delivery receipt. Have the freight driver sign all copies to acknowledge your notation. Concealed Damage or Shortage The final of the types of freight claims is around concealed damage or shortage. This is a tough one to see when you are inspecting the freight to make sure everything is OK and there is no claim. You very well may sign the POD and notate everything is fine, but when you pull back the shrink wrap or open the packaging you find something inside you couldn’t see is damaged or is short. The more you know about how to file and avoid a declination on concealed damage or shortage, the better off you are. If you know what is being shipped to you, and you should if you look at the bill of lading, then you can make sure you check inside the boxes before you sign the POD. This could help you get back the entire amount of the value of the freight if you catch the concealed damage or loss. If not, you may only be able to get 1/3rd of the claim amount back. Freight Insurance vs. Freight Liability Just as in any insurance situation, when it comes to freight claims it is very important that you take all of the proper and appropriate steps. The first part in knowing how to better manage freight claims starts before you start shipping: choosing the right amount of freight insurance and freight liability. But, do you know the difference? In the unfortunate situation that your shipment is lost or damaged, it’s important to know what is covered by liability and what is covered by freight insurance and what the difference between the two is. It therefore is extremely important that all motor carriers, shippers, brokers, consignees and others that have an interest in a shipment be aware of the extent of the motor carrier’s liability for freight loss under the applicable law and the extent that the motor carrier’s freight insurance provides protection for that liability. Unless the motor carrier is fairly large and financially strong, an uninsured judgment against it may be worthless. Probability of Loss Since the early 1980s, the United States postal services has measured the probability that any given shipment would be damaged or lost. Using modern technology, this rate has dropped from 4.2% to 2.3% - although many other shipping carriers have much lower damage rates. The Four Types of Freight Claims The more you know BEFORE you file a freight claim, the more likely you are to get the claim handled and paid for, and the less time you will spend processing them. Make sure all your paperwork is in order prior to processing each claim.
- 5. KNOWLEDGE IS POWER: EVERYTHING YOU NEED TO KNOW ABOUT FREIGHT CLAIMS 5 Freight Liability A common carrier is liable for all shipment loss, damage, and delay with the exception of that caused by act of God, act of a public enemy, act of a public authority, act of the shipper, and the goods' inherent nature, according to the Carmack Amendment. Each shipment you make for freight with a carrier will have freight, or carrier, liability. Each carrier provides a limit of liability, which is information provided to you before you place a freight shipment with the carrier. Freight Insurance Freight insurance does not provide coverage coextensive with Carmack Amendment and common law liability. Motor carriers and other claimants frequently tender claims to the carrier’s freight insurance company only to be told that their policy does not provide coverage for the loss. Indeed, a broker was recently quoted as saying that at least 30% of the claims it submits to freight insurance companies are rejected because the policy does not provide coverage for some reason. It is worth noting that prior to March 21, 2011 the FMCSA required motor carriers to maintain and file proof of freight insurance that did in fact provide freight insurance that was coextensive with Carmack Amendment liability. Although the required coverage was only $5000 per vehicle, $10,000 aggregate, the BMC-32 endorsement made void any policy exclusions or limitations. This is as it should be, but the FMCSA eliminated the requirement regardless. This makes understanding the coverage afforded by a freight insurance policy all the more important. There are different types of freight insurance policies, some going by names such as “all risks,” “broad form,” “legal liability,” and “motor truck freight.” Regardless what the name might imply, none of these policies provides complete protection against Carmack Amendment and common law liability. Policies exclude coverage in many different ways, for example, certain types of freight are excluded, only specific equipment and terminals are covered, losses caused by certain events are not covered, coverage applies only if service is performed in a certain way, etc. We recently have been involved in freight loss cases where coverage was denied or challenged for the following reasons: failure of the insured to report the loss to the insurance company in a timely manner; the carrier’s “drop yard” was not listed as a terminal in the policy; the theft of a trailer was not covered because it was being pulled by a “non-scheduled” tractor; the theft of a trailer was not covered because it was left unattended; Perishable commodity spoilage claims were denied because the carrier in one instance did not perform the required reefer maintenance and in another performed the maintenance but did not provide the records; and the carrier was acting as a broker even though it had a subcontractor with which it had a written contract to transport the shipment. The only way to actually know what is covered by a freight insurance policy is to actually look at and read the policy. A motor carrier needs to work with an experienced insurance agent who knows trucking, and the motor carrier must take care to fully describe its operations and make sure its application is complete and correct. Shippers and brokers need to do the same. Freight Insurance vs. Freight Liability: Which to Get? Every booked freight shipment comes with limited liability coverage. The amount of coverage is determined by the carrier and based upon the commodity type. It covers a certain dollar amount per pound of freight. In some situations, the included liability coverage may be less than the value of the shipped goods. To make a liability claim, the carrier must be at fault for the damaged or lost freight. However, if the damage is from inadequate packaging, loading errors or weather-related causes, the carrier is not at fault. Additionally, if the damage is not noted on the delivery receipt, many carriers will deny any liability. In some cases, your freight shipment might have a higher value than what is covered under the included liability. If so, this is where additional freight insurance may be purchased to fill the gap. This extra freight insurance covers the shipped items and the cost of freight shipping. It is redeemable under all types of loss with no proof of fault required. Unlike the limited liability coverage, with added insurance, there are no exclusions for packaging errors or severe weather. Difference in the Claims Process If your shipment is only covered by liability: Your claim must be filed within 9 months of delivery, or within a reasonable time frame if lost If the deliver receipt is not noted as damaged some carriers require immediate notification You must provide proof of value and proof of loss The carrier has 30 days to acknowledge a claim and must respond within 120 days You must prove carrier negligence This means the freight was picked up in good order, packaged properly but delivered in a damaged condition If your shipment is covered by additional insurance: You will be required to provide proof of value and proof of loss Claims are typically paid within 30 days You are not required to prove carrier negligence Freight Liability and Freight Insurance
- 6. KNOWLEDGE IS POWER: EVERYTHING YOU NEED TO KNOW ABOUT FREIGHT CLAIMS 6 5 Tips to Mitigate Freight Damage and Claims Use Freight Data: If you use a Transportation Management System, it should include freight data about all the freight shipments and activity you have conducted over time. When pulling reports from the system, you will see which carriers you chose for each freight shipment. Drill down further and see which carriers have a low percentage of damaging your freight. And because you’ve got facts, you’re no longer working from your gut. You’re not telling carriers that you feel they’re doing a bad job; you’re telling them that you know they’re doing a bad job. Now you can look carriers in the eye and ask, “How will you fix the problem?” Then you hold them accountable for their answers. If using a third party logistics or logistics outsourced service provider, their carrier relationship manager or customer service representative can also work with the carrier on your behalf, so you are not wasting your own time or creating any awkward moments. Track Product Damage by SKU over Time: Use knowledge power on your production line. Working with a company who offers freight claims management, using a freight claims software, or some other internally developed system, track freight claims by SKU, you’ll know if one product gets damaged significantly more than others. From that you can drill down, investigate, and see if it’s the product, the packaging, or something else entirely. For example, let’s say marketing wanted to change the packaging of a new product and you notice all of a sudden this specific product has an increase in freight claims. If you can catch this early enough you can nip the issue in the bud by returning to the old packaging and save your customer service department hundreds of calls, decrease damage and claims, and your marketing department from embarrassment. This will allow you to: Leverage your systems to track claims and understand which products get damaged more often than others You can track this back to better packaging to avoid future damage You can also let the carrier know and work together to handle those types of products more carefully Document and communicate to all in the DC or warehouse Distribution Center Knowledge. If your manufacturing facility does business with multiple distribution centers, you want to know what’s going on at each location as intimately as you know what’s going on with your freight carriers. Because you can see what’s happening at every location generating a claim, you’ll spot damage trends before they spin out of control. Again, if this data isn’t tracked currently with your own system, put one in place and your logistics provider should offer this as one of their services if they are going to give you any value beyond negotiating freight rates. It is also possible concealed damage claims are increasing wildly when the shipment originates from a particular DC. For example, alert the operations and management folks at the frequent offending DCs to look closely at the packaging and shipping process. You may discover something like the quality control manager has been promoted out of the department and the new manager’s standards leave a lot to be desired. Creating a lot of money left on the table and a lot of customer and carrier angst. Customer Knowledge. One business manager says, “The customer is always right,” then wisely adds, “and I have the right to choose my customer.” Unfortunately, problem customers can be the root cause of damage claims. With the right information gathering and reporting system though, it will be as easy to root these customers out as it is to identify problem carriers and DCs. If you leverage your freight claims department’s systems, which is chock full of historical data, you’ll have an easier time convincing your sales team (who don’t feel your pain) that there’s trouble in paradise. Again, because you know what’s going on all the way to the end of the supply chain, you’ll be in the driver’s seat when it comes to managing this class of freight damage, or possibly theft. Take the data to the account manager of the account, and walk them through the details of historical freight damage. Then teach the account manager how they may explain needed changes or things to look out for with the leadership of the company. Often times, the leadership may not know that an employee of the customer is in fact the one creating the damage which leads to frustrating filings of freight claims. After giving the quality control manager at the customers warehouse a day or two of training, your concealed damage problem disappears. Use a System: The root word of knowledge is “know”. How will you ever really know what is causing your freight damage claims, and the best way to mitigate those claims, if you don’t have a way to collect, catalog, and analyze your data? The answer is you won’t truly know, you’ll just guess. That guess can mean you may favor a mediocre carrier over an A-rated one, or alienate your best carrier when it is actually your company that has a problem at a DC or with packaging. A guess can mean that instead of damage claims going down, they go up. The obvious solution, and the opportunity you have, is to reap the power of an actionable database that contains all your freight-related knowledge. Your IT team can either build it themselves, you can use a very inefficient tool such as Microsoft Excel, or you can easily implement a transportation management system with integrated freight claims management from a freight logistics service provider. “Unrecovered freight claims (often stymied by coordinators or entire companies simply not knowing how to file a freight claim in the first place) have a direct impact upon the bottom line of a company; and the tougher the economic times and thinner the margins the greater the impact. If your company operates at a 5 percent profit margin, to recoup the net revenues that would be lost by failing to recover a $1,000 freight claim, it would have to generate $20,000 in sales!”
- 7. KNOWLEDGE IS POWER: EVERYTHING YOU NEED TO KNOW ABOUT FREIGHT CLAIMS 7 Knowledge of freight claims and how to file a freight claim, is vital for shippers because they’re often on their own (unless they have a provider who can handle freight claims on behalf of the shipper) when it comes to claims. For carriers, whose core business is transportation, the processing of freight claims is an integral part of their business, and all but the smallest of carriers are quite knowledgeable and very competent when it comes to defending against claims vs. those shippers who still don’t know the first step in how to file a freight claim. For most retailers, manufacturers, and distributors, the transportation function is an unwanted headache….and freight claims represent a migraine. Remember: It’s a Legal Process The first point to know in how to file a freight claim is that a claim against a carrier is a legal demand for the payment of money arising from the breach of the contract of carriage (usually the bill of lading). Therefore, the rules governing the filing of claims are founded in law and must be followed strictly. Freight claims are also governed by government regulations, whether intrastate or interstate commerce is involved. If an international movement is involved, the claim may also be governed by international treaties. Claims rules will be found either in carriers’ tariffs or in their bills of lading, or both. Court decisions interpret these regulations, laws and tariffs, and determine the rights and obligations of the parties. If a freight claim shipment was governed by a contract, the terms of that agreement will govern the carrier’s liability. Often contracts will adopt common carrier tariff rules, as described herein. What Constitutes a Freight Claim? No specific claim form is prescribed by law, but four elements are essential in the quest of how to file a freight claim: The freight shipment must be identified to enable the carrier to conduct an investigation; The type of loss or freight damage must be stated and recorded; The amount of the freight claim must be stated or estimated and A demand for payment by the carrier must be made. The shipment identification information must include the carrier’s “Pro number,” shipper’s number, vehicle number, origin date, delivery date, and commodity description. The claimant’s name must be either: 1. The entity having title to the goods in transit; 2. The entity assuming the risk of loss in transit; or 3. An assignee of either 1) or 2). The carrier against whom the claim may be filed is either the originating carrier or the delivering carrier. It is not recommended that claims be filed against intermediate connecting carriers, although it is permissible to do so if it is definitely known which carrier caused the loss or damage. The claim must be delivered to the carrier within the time period specified in the carrier’s contract and/or tariff, or that time prescribed by law, (usually 9 months from delivery). Since the date of receipt by the carrier determines whether or not the freight claim is timely filed, claims should be filed via delivery methods which give some type of confirmation of receipt and guarantee as to length of time for delivery, such as: Facsimile transmission (FAX); Registered or Certified mail, Return Receipt Requested (RRR); Express Mail; Express Courier Services; Electronic Data Interchange (EDI). Freight claims should be addressed to the carrier’s claims manager at the carrier’s home office. WHAT TO DO WITH DAMAGED FREIGHT? Sign as Damaged The consignee can accept the freight and sign the POD as damaged/short and hold the freight until the freight claim is resolved Refuse the Delivery The consignee can refuse the freight and have it shipped back to the shipper (usually Free Astray) where the shipper will hold the freight until the freight claim is resolved Dispose of Damaged Packages In some rare cases, carriers will dispose of the freight themselves if given the okay by the customer due to a complete loss of the product. 6 Steps to Filing a Freight Claim
- 8. KNOWLEDGE IS POWER: EVERYTHING YOU NEED TO KNOW ABOUT FREIGHT CLAIMS 8 Personal delivery to a carrier’s representative may be effective if the freight claim is actually delivered in time, but an acknowledgment should be obtained in writing, and a copy sent to the carrier’s freight claims manager. Receipt by the carrier is deemed to be notice to all connecting carriers as well. The names and addresses of the consignor (shipper) and consignee (receiver) must be stated, including all stop-off locations for completion of loading and/or unloading. Information on who is liable for the freight charges should be included in the freight claim. (Collect, Prepaid, C.O.D., etc.) Information on any liability limitations must be noted on the bill of lading. Details of a Freight Claim A detailed description of the freight loss, damage or delay must be stated, setting forth the specific commodities, number of units of each type, extent of loss suffered, the value of each unit, the amount of salvage realized, the net loss, and a description of the events which caused the loss. Amount of Freight Claim Here is an example of recording the details of the freight claim: 10 cartons clothing water damaged; @ $100 ea. = $1,000 2 cartons shoes short; @ $500 ea. = $1,000 3 cartons china crushed; @ $100 ea. - $ 300; Total Cost of damages and lost: ($1,000 + $1,000 + $300 = $2,300) Less Salvage: -$150 Amount of Freight Claim: $2,150 Note: See exception notation on delivery receipt dated _______. Confirmed by inspection report enclosed, dated __________. The amount of the claimant’s loss should always be stated in the freight claim. When the extent of a loss is not known at the time of filing, it is not good practice to state that “this is a claim for $100 more or less.” When this is done, some carriers have been known to mail a check in the amount of $100 in expectation that the check will be deposited, thus relieving the carrier of further liability. The better practice is to place the carrier on notice as to its maximum exposure to liability by stating the full potential loss. If a lesser amount is finally determined to be owed by the carrier, the claim must be amended to that amount. Supporting Documentation When you are filing a freight claim, you must provide the following supporting documentation if available and applicable: The original bill of lading The paid freight bill Proof of the value of the commodities lost or damaged Inspection reports, if made Copies of request for inspection Notification of loss Waiver of inspection by carrier Special documents when appropriate, such as Photographs Temperature reports Impact records Condemnation certificates Dumping certificates Laboratory analysis Quality control reports Package certifications Loading diagrams Weight certificates Affidavits Carrier’s passing reports Loading and unloading tallies (Facsimile copies are generally acceptable) A “Bond of Indemnity” may be filed with the freight claim indemnifying the carrier for any loss it may suffer as a result of improperly paying the claim on the basis of the claimant’s furnishing a copy of the original document. Every claim should be numbered by the claimant and recorded in a claim log or computer system. The carrier should also assign its claim number and acknowledge receipt of the claim within 30 days of receipt, pursuant to D.O.T. regulations. Both claim numbers should be shown on all correspondence and checks. A separate file should be kept on each freight claim. Important deadlines and dates should be recorded in the claim log and systematically reviewed. For instance: If a claim is not acknowledged within 30 days, or If a claim is not paid, compromised or disallowed within 120 days, or If the carrier does not provide status reports every 60 days thereafter, it should be notified of its violations of the government’s regulations. Repeated violations of D.O.T claim regulations should be reported to the Surface Transportation Board, 1201 Constitution Ave. NW, Washington, DC, 20423-0001 or to the D.O.T. Regional Director in the Region in which the carrier’s headquarters is located. Suit Deadlines If a carrier denies liability for a loss for which the claimant has reason to believe the carrier is lawfully liable, the claimant has the right to institute a lawsuit. However, such suits must be instituted within strict time limits. The most commonly applicable suit time limit is two years and one day from the date the carrier disallowed the freight claim. The date of mailing the carrier’s disallowance letter usually governs, not the date of its receipt by the claimant. However, some traffic is not subject to the Carmack Amendment, and therefore, the time limits vary. A system must be implemented to periodically review the status of pending claims to prevent the expiration of the suit-filing deadlines. Only a written statement declining payment of a freight claim in whole or in part starts the running of the time period for filing suits. An offer to settle or compromise a claim is deemed a declination, but it must also state that the remainder of the claim is disallowed. (See 49 U.S.C. § 14706(e)(2)(A)). Don’t wait until the last day to request your attorneys to institute a suit. Set your review schedule to allow at least 30 days’ lead time.
- 9. KNOWLEDGE IS POWER: EVERYTHING YOU NEED TO KNOW ABOUT FREIGHT CLAIMS 9/15/2014 While most people know that freight claim management is time consuming, do you realize how much time you or your staff are really spending managing freight claims? Here are the top 7 ways that freight claim management eats up your time. At the end, we’ll provide some free tips and resources to help you save time on freight claim management. 1. Filing 2. Data & Document Gathering 3. Filing, Again 4. Carrier Follow-Up 5. Dealing with Damaged Shipments 6. Meetings & Errands 7. Managing Unhappy Clients 8. Use a Third Party Logistics Provider Filing This is the obvious time factor. It typically takes 2 – 3 hours to manually file a freight claim. This includes the time spent entering the data and appending supporting documents, submitting the freight claim form to the carrier, and organizing the data in your own freight claim filing system. You probably also spend time looking for the proper form, since each carrier requires their own specific freight claim form. You can easily avoid this by either using a freight claim software, or outsourcing freight claim management to a service provider. Data and Document Gathering As stated in our 6 easy steps to file a freight claim, you have to document everything and gather data. These time wasters can really pile up and take away time you could focus on your business and better managing your logistics department. You will have to gather documentation and you will spend time on any of the following tasks: Calculating losses Finding repair quotes Looking for supporting documents (such as bill of lading, delivery receipt) Taking photographs of the damages Having a SYTEM to help you track and document is strongly recommended. Use TECHNOLOGY, such as smartphones for pictures, your order system, and knowing BEFORE hand how much something costs to repair Filing, Again Have you ever submitted a freight claim only to have the carrier send it back due to missing information? Since it may have been a month or more since you last looked at the freight claim, you’ll need to spend additional time looking up the information in order to re-file the claim. If you make sure you document everything immediately and fill out the initial freight claim accurately, double checking before you submit it, you can avoid filing again. Don’t let this be you, because like anything that has to be done again, frustration will ensue because something of more importance won’t get the attention it needs due to this time waster. Carrier Follow-up As much as everyone might like to send off their freight claims and have the money magically appear in their bank accounts, it doesn’t always work this way. Unfortunately, it is often necessary to follow up with the carrier to ensure that the freight claims get paid. These are some of the things that could occur that will increase your time spent on these carrier follow-up tasks: Looking up what freight claims have gone unpaid (NOTE: decrease time on this alone by again using software or by having your logistics provider manage on your behalf to look up this info more easily) Writing diplomatic freight claim reminder letters to the carrier Calling and emailing the carrier multiple times before you get a response Now, to circumvent or mitigate this time waster is NOT an easy fix. Really, at the end of the day, and this will make all things carrier related much easier, you must collaborate with your carriers or ensure there is a carrier relationship management focused department at your logistics provider to build a relationship with carriers. The better your relationship with a carrier, the more likely your claim will get paid attention to by the carrier. Remember, in a world of software and technology, personal relationships go a long way in achieving your goals of efficient freight claim management. Dealing with Damaged Shipments When a freight shipment comes in damaged, you’ll need to deal with it and if you are processing the claim yourself, you MUST spend time on the following in order to file the claim: Sorting damaged freight from the rest of the shipment Testing product to determine if it is damaged or not Repackaging product to be sent back to the shipper Disposing of damaged product As stated in our 5 “Knowledge is Power” Tips to Mitigate Freight Damage and Freight Claims, there are great tips on how to stay ahead of damages, but also get better at processing claims. There is NO SHORTCUTTING this process, but the more you know about your damage history (such as the tip of tracking damaged SKUs with a system), the faster you get at this process. Meetings and Errands Once you file a freight claim, undoubtedly extra actions will occur because of the claim. These can include time spent on: Meeting with the carrier’s inspector Taking damaged product in for repair Having damaged product appraised for salvage value Again, like in #5, the more you know about your freight damage history and keep accurate data, the better prepared you are to deal with the above issues faster. Once again, collaboration and having a good relationships with carriers will help you in this area of freight claims management. Meeting Unhappy Clients The worst thing that can happen from ineffective freight claim management is the Avoid 7 Freight Claim Timewasters
- 10. KNOWLEDGE IS POWER: EVERYTHING YOU NEED TO KNOW ABOUT FREIGHT CLAIMS 10 With a Focus on Managed Freight Solutions that save you time and money during freight claims. Education is Key and Knowledge is POWER when it comes to freight claims! Know the freight claim laws Before you ship, know the differences between insurance and liability, as well as how you can prevent damage and claims Know the importance of freight claims, and how to file one yourself (even if you outsource this to a provider!) Use Technology Consider using expert services to handle your freight claims If you’d like to schedule a consultation with one of our sales reps, please visit our website at http://cerasis.com Cerasis, a top third party logistics company offering a transportation management system and managed transportation services, including freight claims management, have 4 freight claims management specialists who are certified in freight claims management. The 4 staff have completed the Institute of Logistical Managements freight claims course which focused on effective freight claims management. The course was challenging and academic in nature, with all three Cerasis employees completing 9 quizzes, 9 essays, and 1 two-hour final exam. Cerasis has offered turnkey freight claims management and technology solutions, alongside their other managed transportation and freight services, since the company's founding in 1997. The freight claims management team instructs shippers on how to first understand freight claims, damage, and loss and then files the freight claim on the shippers' behalves, following up with both carriers and shippers until the claim is satisfied. The new ILM certification for Cerasis employees shows the commitment of the third party logistics company to offer the best service possible to their more than 3,600 current manufacturers and distributors who ship freight in North America. If you are having issues effectively managing freight claims, make sure you reach out to Cerasis today! Fill out a Contact Request at: http://cerasis.com/contact/ Call Us at 1-800-734-5351 Email us at info@cerasis.com CERASIS: YOUR TRANSPORTATION MANAGEMENT SOLUTIONS PROVIDERS loss of a customer due to poor performance of carriers damaging freight and it not getting to your customer on time or in working order. Keeping customers is paramount to the ultimate success of any business. If you have to spend time working with unhappy customers, you are losing time not only on working on more productive activities, but are only creating more frustration and mental anguish which in turn creates more time wasted. Here, again, more efficient technology and the use of outsourced expertise can keep you from wasting more time on freight claims management than you have to! Reasons for Freight Claim Declinations You get everything together, you file the freight claim. Then, like those nervously awaiting college acceptance letters this time of year, you get a notification letter stating “Freight Claim Denied!” You proceed now to curb frustration and anger as you now have to go back to your boss and let them know…you are not getting all of your freight claim paid. Cue the trumpets playing “Wah wah.” If you work in freight, you’ve lived this reality. It’s not a fun reality to deal with in our industry, but it happens. The key to avoiding it (although it’s not always possible to avoid in all cases) is to know the reasons WHY a freight claim declination can occur. Here are the most common 8 reasons why you may receive that pesky freight claim declination, of which we will go into more detail: 1. Incomplete/Inadequate Documentation 2. Mitigation 3. Clear POD 4. Act or Omission of the Shipper 5. Act of God 6. Freight Bill not Paid 7. Shrink-Wrapped Pallet & Piece Count