Freight claims are an inevitable aspect of shipping cargo. Although they may be unavoidable at times, there are steps shippers can take to minimize their occurrence and mitigate unnecessary loss related to freight claims.
Freight Claims 101
What’s in the article:
What is a freight claim?
How to minimize the amount of freight claims
How to mitigate freight claims when they happen
What is a Freight Claim?
A cargo freight claim is a legal demand by a shipper or consignee to a carrier for financial reimbursement for the loss or damage of a shipment while the carrier was transporting it.
Submitting a freight claim for damaged cargo requires proper documentation of essential shipment details. The creation of these records starts when a shipper is preparing cargo for transit. This information is gathered throughout the shipment and delivery process, making it important to complete all essential forms initially to ensure you are prepared if you do need to file a claim.
The four main documents when submitting a freight claim include:
- The Bill of Lading (BOL) – This form acts as a record of details of the shipment and a contract between the freight carrier and shipper. This document needs to be signed by the carrier when the cargo is picked up.
- The carrier’s proof of delivery (POD) – This form needs to be marked and signed to document the condition of the shipment at delivery as well as confirm the presence of all items in the shipment as stated on the BOL.
- A claim form from the claimant – This form must include specific shipment information such as item descriptions, number of cases, weights, and cost per case.
- A commercial invoice – This proves that the amount being claimed is accurate.
There may be other documents required, but these four are sufficient to start the claim process with a carrier.
How to Prevent Freight Claims
Education is paramount when it comes to freight claims prevention. To minimize damage to shipments as they are transported, shippers need to know and understand essential shipping practices like:
- How to properly package a shipment
- How to prepare the necessary documentation for shipments
- The difference between less than truckload (LTL) and truckload (TL) moves
- The cost of goods being shipped
- When and how much insurance to add to a shipment
- Selecting the correct National Motor Freight Class (NMFC) codes for goods being shipped
- The value of using good quality pallets
- The importance of taking pictures of pallets before they are loaded for transport
- Training warehouse staff on proper receiving processes
Since the transportation world is continually evolving, selecting a knowledgeable logistics partner facilitates keeping up to date as the industry changes.
How to Mitigate Freight Claims
Freight claim mitigation is an essential element in the claims process. Mitigation is legally required on all claims.
A few examples of actions you can take to mitigate claims include:
- Repair the damaged items from the shipment
- Sell the damaged goods at a discount
- Salvage the cargo content
Regardless of what you do, the goal is to reduce the cost of the claim to the carrier if possible.
And if an item cannot be repaired in any way, the claimant needs to provide a detailed explanation as to why it isn’t possible.
Minimize and Mitigate Freight Claims
It’s best to be well-informed on shipping best practices so you can minimize the need to file a claim.
Regardless of how well you prepare, freight claims are bound to happen from time to time.
But, regardless of how well you prepare, freight claims are bound to happen from time to time. When claims are necessary, it’s required by law that you mitigate the claim in any way possible. Partnering with a knowledgeable 3PL can make it easier to navigate shipping, claims, and claims mitigation more efficiently.