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Freight damage and loss can significantly impact your bottom line, and many shippers leave money on the table by not filing claims correctly or recovering all eligible expenses. Understanding how to properly file and maximize your transportation management claims is critical to protecting your revenue.
Before we have discussed the basics of freight claims, the different types of coverage and types of claims that can be filed. Once you know exactly what type of damage or loss you have, it's time to file your claim. When doing so, it is important to know all the expenses your company should be filing for.
In this blog post, we will discuss the fundamentals of filing a freight claim and how to ensure you are getting the full amount that you are entitled to.
How to File a Freight Claim
When filing a freight claim you have to remember that a claim against a carrier is a legal demand for payment, therefore there is a specific process that has to be followed. You can find specific claims rules in the carrier's tariff or on the bill of lading.
There are four elements that are vital when filing a freight claim:
- The freight shipment must be identified (Pro number, shipper's number, vehicle number, origin date, delivery date, and commodity description) so that the carrier can conduct an investigation
- Record the type of loss or freight damage
- Record the amount of the freight claim, or estimate
- A demand for payment must be made
These elements must be completed within the specific time frame stated within the contract or tariff, which is usually within 9 months of the delivery. The carrier must receive your claim within this time frame for it to be valid, so filing through a means where you receive a confirmation of receipt is best.
When filing a claim, you must also provide these supporting documents:
- Original Bill of Lading
- Paid Freight Bill
- Proof of the value of the commodities lost or damaged
- Inspection Reports
How to Get Your Full Claim Amount
Now that we know the basics of filing a freight claim, let's talk money. Carriers are always going to look out for themselves, but you are also legally required to take reasonable measures to lessen the losses. With that in mind, though, you need to ensure that you get paid for the expenses required to lessen those losses.
Labor Costs
Usually, you can only claim the damaged portion of the shipment. So, depending on the commodity — and especially with concealed damage — someone may need to sort through the shipment for individual products that are undamaged. Again, depending on the product, you may also need to test the products to see if they are still in a usable condition. This takes time, and time is money. If you are spending a significant amount of time sorting or testing the damaged shipment, then it is rational to claim your labor costs when filing a claim.
All Repair Costs
Oftentimes carriers will expect you to repair the damaged product, rather than replacing it entirely. In this situation, they would reimburse you for repair costs to these items. Make sure to keep track of all the expense that go into these repairs such as, parts, labor, and shipping costs for replacement parts.
Salvage
When it comes to salvaging, there are two main things to consider when filing your claim.
With certain types of freight, while some of the shipment looks to be salvageable, the entire shipment needs to be written off entirely. This comes into play when dealing with temperature controlled freight such as food, drugs, or other products intended for human consumption. This is covered under the Federal Food, Drug and Cosmetic Act -21, Section 342(a)(4), essentially this states that a product is deemed "adulterated" if it is damaged and may have been contaminated.
The second exception to salvage is when it isn't reasonable to salvage the shipment. Let's say that you work for Coca-Cola and are selling bulk bottled soft drinks to Costco, but a shipment is damaged on its way. Coca-Cola could claim the value of the entire pallet, even though some individual bottles were undamaged. This could fall under the previous statement of the Food, Drug, and Cosmetic Act, but also can be ruled as unreasonable to salvage. This is because these bottles were intended to be sold to Costco in bulk units. So, while some bottles are unharmed, the bulk units are not, making it unfit for sale and making it worthless to Costco.
Final Thoughts
When it comes to freight claims there are a lot of aspects to consider and paperwork to file. Depending on your commodity and the frequency of damaged freight, this can become very time consuming and a major headache for the shipper. If you're spending too much time on freight claims, or not getting the amount back you are entitled to, it might be time to consider working with a third-party logistics company. With Redwood's Modern 4PL approach, you gain access to a simple and easy-to-use Freight Claims Portal, in addition to a full personalized customer service team. Contact us today to learn more about how we can save you time and money!
FAQs
What do you need to include when filing a freight claim?
A freight claim should include four core elements: identification of the shipment, the type of loss or freight damage, the amount of the claim or an estimate, and a clear demand for payment. Shipment identification should include details such as the PRO number, shipper's number, vehicle number, origin date, delivery date, and commodity description so the carrier can investigate the loss.
How long do you have to file a freight claim?
In most cases, a freight claim must be received by the carrier within the time frame stated in the contract or tariff, which is usually within 9 months of delivery. The claim is only valid if the carrier receives it on time, so it is best to submit it in a way that provides confirmation of receipt.
What documents are required for a freight claim?
A freight claim typically requires the original bill of lading, the paid freight bill, proof of the value of the damaged or lost commodity, and inspection reports. These documents help establish what was shipped, what was paid, what was lost, and how the damage was verified.
Can you claim labor costs on a freight claim?
Yes, labor costs can be claimed when time is spent sorting, testing, or handling damaged freight to reduce losses. If employees must inspect individual items, separate usable product, or test product condition, those costs may be part of the freight claim because they are tied to mitigating the damage.
Can you recover repair costs in a freight claim?
Yes, repair costs are often recoverable when the carrier expects the damaged product to be repaired instead of replaced. Those costs can include parts, labor, and shipping for replacement parts. Keeping detailed records of every repair-related expense helps support the full claim amount.
When can an entire shipment be written off instead of salvaged?
An entire shipment can be written off when salvage is not reasonable or when the product may be contaminated, especially in temperature-controlled freight such as food, drugs, or other products for human consumption. In those cases, the shipment may be considered adulterated under the Federal Food, Drug, and Cosmetic Act if it is damaged and may have been contaminated.
Why do shippers lose money on freight claims?
Shippers often lose money on freight claims because they miss filing deadlines, leave out required documentation, or fail to include all eligible recovery costs. In many cases, they also overlook labor, repair, or salvage-related expenses, which can reduce the amount recovered even when the claim itself is valid.
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