Archive for Prevent Freight Claims
Freight claim management is all about attention to nitty-gritty details. However, in this post, we’re going to step back and take a look at the big picture procedures that will take your recoveries to the next level.
1. Give Instructions to Each Department
It’s a common misconception – the idea that freight claim management is confined to the claims department. In reality, departments ranging from receiving to purchasing play an important role in ensuring that freight claims are paid and properly processed. For example, if the receiving department handles the paperwork or incoming shipment incorrectly, the claims department will be unable to collect reimbursement for the damaged shipment.
Therefore, it’s essential that you communicate each departments’ responsibilities toward freight claim management.
2. Streamline Claim Management with Pre-Written Forms
Although every claim is unique, the same set of steps will be repeated across claims, such as submitting the claim form, a request for inspection, or a follow-up if the carrier doesn’t respond to your claim.
Ensure that your claims staff aren’t wasting time by writing these requests from scratch each time. Be sure to provide your claims staff with stock letters, templates, and emails that they can use for each claim.
3. Create a Carrier Master Agreement
Unfortunately, most claims fail before they are even filed. Why? Because the carrier has written liability limitations right into their tariffs, and most shippers fail to negotiate better terms for themselves. This is why successfully negotiating an agreement that works in your favor will make it possible to recoup far more losses than if you’re shipping under the terms set out by the carrier.
4. Argue Declined Claims with Legal Evidence
Most claim clerks lack the training needed to argue against a carrier who declines their claim. This can result in the loss of thousands of dollars that could have been recovered with the proper legal argument. However, it doesn’t take a degree in transportation law to be able to effectively argue these claims. Usually it’s a simple matter of a few hours of training and some templates for arguing against the most common types of declinations.
5. Give Claims Staff Ongoing Training
Most businesses have a bias regarding which departments are eligible for training. Sales teams are sent to training workshops, and the manufacturing floor manager is encouraged to upgrade his Six Sigma certification. However, claims clerks are rarely given additional training, and as a result shippers miss out on tens or hundreds of thousands of dollars in recoveries. A monthly coaching program is an affordable way for staff to get advice on difficult claims while receiving training at the same time.
Want more information on how to implement these programs? Download our Freight Claim Assistance Program Brochure.
One of the easiest things you can do to improve freight claim recovery is to take a couple minutes to ensure that the bill of lading is accurate.
After loading, when the driver hands you the bill of lading to sign, check for a note that says “Shipper’s Load and Count”, “SL&C” or “SLAC”. This note means that the shipper counted the packages and loaded the shipment, and the carrier was not present during loading to verify the count and condition of the shipment. This notation protects the carrier from liability for shortages or damages when they were not able to check the initial condition or amount of cargo.
However, if your driver was present during loading, make sure that he doesn’t sign the bill of lading with any of these notations. This will release the carrier from any liability for shortages or damages by stating that the driver wasn’t present (even if he was).
More importantly, if the driver adds anything to the freight bill that isn’t true or you don’t agree with, don’t sign it. It could save you a lot of trouble later.
Concealed damage may be the most difficult type of freight claim to deal with. And in the event that your carrier pays your concealed damage claim at all, they will likely only pay a fraction of the usual claim value. Since concealed damage makes it difficult to prove if the damage was the fault of the shipper, carrier, or consignee, many carriers will only pay for one third of the value of the claim.
Of course, the simplest method for avoiding concealed damage is to inspect the shipment before signing the delivery receipt. However, unloading, unpacking, and inspecting every box of a shipment before letting the driver leave is not usually practical. It becomes even more difficult when the content is sensitive electronic equipment that may not show damage until it is tested.
Another method for reducing the risk of concealed damage claims is to use shipping & handling monitors to alert you of potential damage. Here are some of the benefits of using these monitors:
Reduce Inspection Time
Rather than inspecting the contents of each package before signing off on the shipment, shipping & handling monitors allow you to simply check the status of the monitors. You can then sign the delivery receipt and unload your shipment with peace of mind knowing that your shipment has arrived undamaged.
Shipping & handling monitors typically include some type of warning sticker or label to indicate to the carrier that you are monitoring the handling of your freight. This ensures better treatment and more careful handling by carriers, reducing the risk of damage.
In the event that there is damage, shipping & handling monitors provide clear evidence to help back up your claim. The monitors will be highly useful if you need to take your claim to court. However, when carriers see that you have a good case, they will generally pay your claim without the need for lawsuit.
Identify Responsible Parties
Many shipping & handling monitors even add time stamps to the traumatic events they are tracking, such as tilt or impact. This allows you to tie the damage to the correct party in the supply chain. No more reason for the carrier, shipper, and consignee to each be responsible for one third of the claim – now the responsible party can pay the entire claim.
Disadvantages of Shipping & Handling Monitors
While shipping & handling monitors will indicate potential damage, they cannot warn you if your shipment is short, so you will still need to count your pallets and packages. And of course, before using monitors, you need to consider the cost. Prices will range depending on the sophistication of the device. You will also want to consider if you should purchase a single use or re-useable monitor. When deciding if monitors are worth the cost, consider your freight damage rate, cost of replacement, and cost of the device. This will allow you to determine whether shipping & handling monitors will save or cost you money in the long run.
With profit margins shrinking and clients becoming more and more price conscious, it’s natural to try to reduce costs wherever you can. Packaging is as good a place to cut costs as any. However, a reduction in the amount or quality of packaging may result in increased freight damages. Is reducing packaging costs counterproductive? Not necessarily. Here are a few tips for reducing your packaging costs while keeping damages to a minimum.
Think Inside The Box
Is the product’s box the right size for the product, or is it a couple sizes too big? Boxes must provide ample space to fit the product and any padding that’s necessary to protect it, but after a certain point, a bigger box only adds extra expense. Note that an oversized box may add expense in three ways:
1. The higher cost of the box itself
2. The cost for added packaging materials to fill the empty space in the box
3. An increased cost to ship the box.
In fact, reducing package size has become even more important with FedEx and UPS now implementing dimensional weighing. This dramatically raises the shipping price for large volume, low weight packages. Some have estimated that shipping costs for these packages may increase as much as 60%. For these reasons, it is a good idea to review the size of the boxes that you are using in comparison to the size of the products that you ship.
Choosing low quality packaging in order to save packaging costs isn’t always a wise decision. However, keep in mind that the prices of your high quality packaging materials are likely to fluctuate. Keep an eye on prices and make a point to stock up when prices are low. If it has been a while since you’ve compared pricing between suppliers, look around – you might be able to find the same quality materials at a lower cost.
Does the End Justify the Means?
Think about the value of your product. How much are you willing to spend to protect it? Would a 50% decrease in packaging cost justify a 5% increase in product damage? Maybe, maybe not. The next time you buy light bulbs, look at the packaging. The cheap incandescent bulbs are typically shipped in flimsy cardboard, while the more expensive fluorescent bulbs are encased in durable form-fitting plastic. In this case, the packaging is designed to match the cost of replacement, rather than the delicacy of the product.
Test, Test, Test
No matter how you change your packaging, make sure you test the results. Monitor the damage rate of the product closely. Is there increased damage? If so, follow the steps above to determine if the reduced packaging cost is worth the increased claim cost. (Don’t forget to include the administrative cost of claims in your consideration). Also monitor other changes; is there an increase in loss claims? This could indicate a problem with labeling. Have sales changed? This could indicate a positive or negative reaction to your packaging by your distributer or end consumer. With a little luck and lots of testing, you’ll find the most cost-effective packaging.