In recent years, the transportation and supply chain industry has adapted to fulfill increased demand worldwide. The rapid pace of these changes caused many challenges. These difficulties included a lack of capacity in equipment, warehousing talent, and a driver’s shortage across the country. The strain on the industry also created an extraordinary number of claims for late deliveries, missed pickups, shipments delivered to the wrong locations, crates broken or destroyed, incorrect packaging, and unexpected transit times.
Right now, two of the most common claims shippers are dealing with are lost shipments and misplaced cargo. In this blog, we will share some valuable information to help you manage these difficult situations.
If you want to learn more, check out our blog: 8 Tips You Should Know About Shipping Claims.
1. What are the main challenges experienced when you file a claim?
There are several aspects to be considered when filing a claim. To begin with, you need to know what kind of commodity you’re handling, and where the responsibility of the claim lies.
Let’s break down the key points to understanding the claims process and how to get the best results.
First, it’s important to understand the laws that rule the claims process. In this case, that means you need to be familiar with the Carmack Amendment. If you don’t know what it is, here’s a quick explanation of it.
2. What is the Carmack Amendment?
The Carmack Amendment is a federal law applied to interstate motor carriers as a uniform system of liability. This statute provides certainty to both carrier and shipper.
3. So, who’s liable?
Carriers are responsible for damage and losses incurred during the shipment of goods and for handling the liability of claims and reimbursement of money. Also, pay special attention to the type of commodity you are handling in case you are dealing with a sensitive one, in that case, we recommend you buy additional insurance.
When you’re working with an LTL service provider, It’s important to check the liability ratio because it varies from carrier to carrier. They do not always pay 100% of the freight value, it depends on the rules they have set up, make sure to double-check before choosing a carrier. Among the features you need to verify, you need to know the compensation you’re going to receive in case of damage or losses.
4. Are there any exceptions addressed in the Carmack Amendment where the carrier wouldn’t be liable?
There are five exceptions outlined in the Carmack Amendment where a motor carrier can deny liability for cargo damage. They are:
1. An act of God.
2. A public enemy of the U.S government or act of war.
3. If shippers did something that could result in damage.
4. Government actions.
5. Inherent vice of goods.
5. Are there time limitations to filing a claim notice?
Yes, and it’s important to keep them in mind when establishing your claims process timeframe. In the Federal Regulations 49 CFR Part 370, the minimum filing requirement is 120 days (about 4 months) to provide a pay, deny, or compromise answer. And 30 days (about 4 and a half weeks) to acknowledge receipt of a claim.
6. What do I need to file a claim?
According to federal regulations, a claim for the loss or damage, injury, or delay of cargo shall not be voluntarily paid by a carrier unless the claim is properly filed within the applicable time limits. You must also make sure to verify the terms of the bill of lading.
Here’s the Documentation you Need to File a Claim:
- Written communication such as the POD with the novelties (damages, losses) within the time limits specified.
- Documentation that contains sufficient facts to identify the shipment such as the packing list. Include information such as serial numbers, size, color, quantity, and brand name.
- Commercial Invoice.
- The asserts liability document for alleged loss, damage, injury, or delay.
- Claim document for the payment of a specified or determinable amount of money.
- Pictures of the damaged cargo.
What Documents are not Useful when Filing a Claims?
- Bad order reports.
- Appraisal reports of damage.
- Notations of shortage caused by damage.
- Freight bills.
- Delivery receipts.
- Other documents or inspection reports issued by carriers or their inspection agencies.
These documents alone are not considered by carriers as sufficient to comply with the minimum claim filing requirements.
7. Ok, but what if the consignee didn’t notice the damage when the shipment was delivered?
When the damage is not easily visible and the consignee only notices it after the driver has gone, this is called Concealed Damage. These kinds of situations are difficult to claim because it’s not easy to prove the damage was done while under the carrier’s responsibility. It’s vital to know that in these cases, you only have five business days after delivery to report the damage.
– Tips to get through the claims process as smoothly as possible –
- Write down shortages, damages, or anything else that you find incorrect with your freight on your proof of delivery or delivery receipt.
- Ask for your exception number so you can file the claim.
- Take pictures and/or record a video depicting the poor condition of the shipment.
Another Pro Tip: You should also buy additional insurance to avoid losing all your money, and remember, you have two years and one day to appeal against a decision you receive from a carrier.
Don’t forget you can also rely on a partner to handle this kind of situations, it can help you have better control, get a timely resolution, solve any bump along the way and they can be on top of every detail while you focus your time on growing your business. If you want to know more about “Tips to Mitigate Risks in Case of Claims and Damages,” click here