Damage of Goods: Best Practices for Managing Lost and Damaged Products

Parcel claims management is a marathon, not a sprint. Lately, it seems this endurance test is a constant uphill trek through a labyrinth of data, stringent carrier-specific guidelines, and mountainous volumes of documentation. Try as they might, shippers will never reach the summit because the mountain keeps growing.

According to an article in The New York Post, the number of damaged packages arriving on doorsteps has soared by 30% from 2023 to 2024. This is equal to 85 million damaged parcels in 12 months, which would fill the equivalent of more than 45,000 Olympic swimming pools.  

As e-commerce continues to grab an even larger market share and shippers move inventory closer to customers via micro-fulfillment centers and buy online, pick up in-store (BOPUS) orders, those packages will continue to proliferate—along with the number of claims shippers file for lost or damaged parcels.

When looking at potential loss or damage opportunities, as a general rule, shippers can expect 1% to 1.5% of their annual spend will be lost or damaged. For a shipper moving 50 parcels a month, the arduous, time-consuming, resource-draining task of filing claims might not be worth the trouble. However, for shippers moving 5,000 per week or even 2,000 per month, small parcel claims and recovery offer a rather lucrative revenue stream—provided they have the resources, mechanisms, and technology to manage the process.  

Or the right partner who will run that claims marathon with them.

1. The Real Cost of Damage—and How Proactive Packaging Can Save You

The email subject line makes you sick to your stomach: Shipment XB771 arrived destroyed. In seconds, you’re facing a critical damage-of-goods scenario: mangled electronics, an apoplectic customer, and a calendar suddenly packed with damage control meetings.

And that’s just one hypothetical example. Every shipping disaster sets off an expensive domino effect—not just the obvious costs of replacing damaged goods but the harder conversations, like explaining to your VIP client why that mission-critical shipment looks like it went through a trash compactor.

But here’s the silver lining: You can prevent your shipping operation from becoming a case study in Murphy’s Law and minimize damage-of-goods incidents. The path forward begins by taking a pessimistic approach to packaging—assume the worst in transit, and plan accordingly.

• Package Like It’s Your Biggest Client
  Treat every shipment as if it’s bound for a VIP. Heavy-duty, double-walled boxes and premium cushioning materials might cost a bit more upfront, but they pay for themselves when you avoid the cost and hassle of replacing an entire shipment.  

• Proper Labeling and Training
  “Fragile” and “This Side Up” labels do more than decorate boxes; they set expectations for how each package should be handled. Equally important is ensuring your warehouse staff and carrier partners know exactly how to treat packages marked “Handle With Care.”

• Smart Sensors and Tracking
  Consider installing tracking devices and sensors that detect tilt, shock, or temperature changes. This level of visibility allows you to pinpoint where and when rough handling occurred so you can refine packaging strategies or address carrier performance issues.

By combining realistic packaging strategies with rigorous staff training and next-level tracking solutions, you significantly reduce the chance of facing that dreaded “destroyed” shipment email in the first place. Given that 1% to 1.5% of a shipper’s annual parcel volume could be lost or damaged, these best practices aren’t just risk mitigation; they safeguard your bottom line in an ever-expanding e-commerce marketplace.

2. Streamlined Claims and Return Processes

Even if you’ve done everything right from a packaging standpoint, bad luck can still strike. That’s where a smooth, well-documented claims process becomes the difference between a minor speed bump and a total logistical fiasco.

• Bulletproof Documentation
  Today, your smartphone might be your most valuable tool. Quick photos, clear tracking records, and digital receipts form the paper trail you’ll need for a swift claim resolution.  

• Everyone on the Same Page
  A well-trained team that knows the correct protocols will handle damaged goods without missing a beat. Warehouse employees can document issues on the spot, while customer service reps have predefined steps and templates ready to reassure clients and kick off the claims process.  

• Building Customer Loyalty
  A frictionless returns and claims experience can turn an upset customer into a loyal advocate. Research shows 67% of customers will leave a retailer after a bad return encounter, while 84% remain loyal to businesses that offer hassle-free returns and quick refunds.  

Shippers need to realize that while filing loss and damage claims can be a tremendous headache, it’s an endurance race worth running because successful claim resolutions could result in significant monthly revenue.  

Intelligent Audit files on average 11,000 to 14,000 claims with UPS and FedEx on behalf of customers each month. With UPS, the success rate is 70% on loss claims and 65% on damage claims. With FedEx, the numbers are 65% and 60%, respectively.  

That success translates into real cash back for shippers: Intelligent Audit recovers $640,000 a month on average in lost and damaged parcel claims alone.

By streamlining the claims process, large-scale shippers can recoup costs more effectively, ensuring the 1% to 1.5% of lost or damaged parcels doesn’t become a major drain on their bottom line.

3. Ongoing Freight Auditing and Performance Monitoring

Lost and damaged shipments wreak havoc on your budget, your brand, and your relationships with customers. The final piece of the puzzle in mitigating this chaos lies in freight auditing and continuous performance monitoring.  

• Spot Trends Early
  A robust audit process highlights recurring trouble spots, whether it’s a specific carrier with a high damage rate or a certain route prone to mishandling.  

• Data-Driven Decision-Making
  Each audit returns invaluable data that helps you allocate resources for better packaging on certain product lines or adjust shipping strategies if a particular carrier falls short.  

• Expert Intervention
  Professional freight auditors go beyond just reconciling invoices; they provide deep-dive insights and recommendations, helping you optimize routes, negotiate better carrier terms, and improve processes long-term.

For companies handling thousands of parcels a month, Intelligent Audit can be the secret weapon. With decades of logistics experience and leading-edge technology, we help shippers transform a daunting claims marathon into a predictable and profitable process.

Closing the Loop on Lost and Damaged Goods

Dealing with damage and lost shipments is a day-to-day reality that can rattle operations, erode budgets, and jeopardize customer loyalty. Fortunately, a proactive stance—from fortified packaging to streamlined claims to ongoing freight audits—can help you turn a recurring nightmare into a manageable, even profitable, challenge.

Yet, the ever-growing parcel mountain means you’ll be running this claims marathon indefinitely. That’s why Intelligent Audit exists. We pair our deep industry know-how with powerful technology to offer total visibility across your shipping operations.  

Whether you manage local, regional, or international freight, we’ll help you pinpoint costly inefficiencies, automate tedious tasks, and make data-driven decisions—so you can focus on delivering top-notch service without drowning in paperwork.

Ready to cross the finish line? Reach out to Intelligent Audit today and discover how we help companies turn never-ending claims into streamlined recovery, fueling a healthier bottom line and happier customers.