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Many shippers are noticing a frustrating trend in their logistics operations. Damages and freight claims are climbing. This is due to a shift in how companies are moving their products. With steady increases to truckload shipping costs, shippers are pushing their “gray area” freight to LTL networks. While this strategy seems like the most cost-effective route, it opens opportunities for damages, liability issues, and as a result, a chance to spend even more than expected.
What is a freight claim?
A freight claim occurs when a product is damaged in transit and the receiver files a formal request against the carrier to recoup the lost value. This typically results in some back and forth between the carrier and the receiver showing photographs of the damage, and then coming to some agreement or settlement with the carrier in a definite time period. (Federal Regulations require the carrier to acknowledge the filing of your claim within 30 days, and the carrier must pay, decline, or settle your claim within 120 days typically). However, waiting for the carrier to pay out can be a long and complicated process.
The Packaging Dilemma
Shippers often see packaging as a cost they want to minimize, while still providing the necessary function of protecting their freight. But when freight gets damaged, carriers can deny claims by arguing that the shipment wasn’t packaged properly for standard LTL handling.
That’s why proper packaging is important for protecting both your freight and your financial loss. The National Motor Freight Traffic Association (NMFTA) has specific packaging guidelines for different freight classes, and if your shipment doesn’t meet those standards, a carrier may have grounds to deny a claim.
If you’re dealing with frequent claim denials, consider getting your packaging certified through the NMFTA. You can submit your packaging specifications for approval and receive certification that your shipments meet the required standards. If a carrier challenges a future claim based on packaging, you’ll have documentation to support your case.
Understanding Liability and Timelines
When it comes to freight claims, both shippers and carriers have to follow the rules outlined in the Carmack Amendment, which sets specific requirements and timelines for filing and processing claims. While shippers understandably want claims resolved quickly, carriers have legally allowed time to investigate and respond.
It’s also important to understand how much a carrier is actually liable for if your freight is damaged or lost. Standard LTL liability may be limited to as little as $5 per pound per package, the common liability cap for mid-range new goods, which can leave you with a much smaller payout than expected if you’re shipping high-value goods.
For more valuable shipments, consider declaring excess valuation or purchasing additional insurance. FreightWise makes it easy to add supplemental coverage so you can better protect your most valuable freight.
The Signature Epidemic
One of the biggest issues in LTL shipping right now happens on the receiving dock. Consignees are signing the delivery receipt before inspecting the freight. Once a receiver signs off that the freight was delivered in good condition, you lose the ability to file a claim.
Shippers must actively train their consignees and receiving teams. Make it a strict policy that no one signs for a delivery without first thoroughly inspecting the freight for visible damage or shortages.
FreightWise can help with our mobile app that allows you to upload photos of your freight before. This helps the receiver also have a reference point of how the freight looked before the carrier took possession and compare if there is damage.
Protecting Your Freight and Your Budget
Managing freight claims requires a proactive approach to packaging, liability management, and receiving protocols. By understanding the rules of LTL shipping and training your team to spot issues early, you can minimize damages and ensure you get paid when accidents happen.
If you need help reducing your claims ratio, optimizing your packaging strategy, or adding third-party insurance to your high-value shipments, reach out to your account manager at FreightWise. We are here to help you make smarter shipping decisions.