The Facts of Freight Claims Management in Logistics

The Facts of Freight Claims Management in Logistics

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Cargo vessels, planes, and semi-trucks portray freight transportation as they cross great distances to get loads to their final destination. However, without the correct paperwork, freight can’t leave the ground. Among the vast amount of documentation required to keep the supply chain running, few bring more apprehension than the carrier claims process. 

Yet, as tools, technology, e-commerce, and automation reshape the 2022 supply chain landscape, even the freight claim process has had an upgrade. Statista reported on how technological advancements have even affected the largest parcel giants, saying, “Although USPS’s total mail revenue has been declining every year, revenue generated from shipping and packages has actually increased in recent times, reaching 32 billion U.S. dollars in 2021. Technology is the main reason for both the decline in traditional mail volumes and the increase in parcel deliveries.” It would follow that an increase in packages and parcels will increase freight damage. With this in mind, let’s consider ten facts about the freight claims procedures.

1. Visible Damage is the Most Common Cause for Freight Claim 

While apparent damage is an obvious reason to file a cargo claim, few know where to start. Shippers must thoroughly investigate ruined loads, documenting the obvious contamination or waste to continue through the cargo claims process. While filing freight claims is tedious, this is the industry-wide step appropriate for shippers seeking compensation for partial or complete loss of products, resulting in a loss of funds from their own customers. Even still, the cause for visible damage is often not perceivable, creating a need for shippers to understand carrier claims if filing for carrier damage correctly. 

2. Loss of Cargo Due to Inaccurate Drop Off and Delivery

Trouble can start with just a few mistyped numbers. Inaccurate addresses can cause delivery havoc and freight invoice errors, which can be a big problem for the intended customer. In this instance, the customer missing their freight can file a freight claim with the shipper for reimbursement or whatever is applicable within their contract negotiations. While locating and delivering the load to the correct location is a possibility, depending upon the contents of the cargo, this delay may result in irrecoverable freight damage due to the fragile nature of materials within. Shippers may also need to file a cargo claim if a carrier drops off a load at the wrong dock or without proper notification, thus jeopardizing the content’s stability and safety.

3. Capacity Shortages Continue to Plague the Industry

Even before the pandemic sent shockwaves across the United States, domestic supply chains struggled on the trucking front. Two years later, despite waning consumer demands, the supply chain still struggles with maintaining the adequate capacity to keep freight from bottlenecking. The fast-paced nature of the industry, coupled with the constant need for capacity, has left room for poor packaging, botched loading, and mishandling. Rushed work on top of current summer freight risks equates to more opportunities for lost, damaged, or delayed shipments. Until reasonable cargo capacity gets reached, a shipper’s reality involves keeping a freight claim form in reach.

4. Driver Shortages and Wage Debates Complicate Freight Transport 

When the pandemic hit amidst the e-commerce boom, government agencies suddenly hailed truckers as essential workers. This fanfare pushed to ensure they received adequate wages, yet according to the Commercial Carrier Journal, “55% of drivers still don’t think pay is competitive enough. Rising wage rates are almost nullified by inflation in some parts of the country, and while 68% of employers plan to step up and increase wages this year (compared to only 44% in 2021), these increases are nominal, only $1 or 2 per hour.” Without sufficient pay, the available drivers and new complications such as CA AB-5 complicate the shipping process, thus adding to the cargo claims process risk.

5. Cargo Delivery Shortages Can Also Lead to Claim Reports

Complicated carrier relationships can result in shippers having fewer options for freight transport. This dilemma might result in shippers choosing to consolidate or spread out shipments without communicating to their customers. While most freight claims procedures start with losing usable products, some can begin due to receiving too many. Without quality business logistics coordinating freight transport, customers can lose valuable products and time accommodating extra products last minute. And on the flip side, despite the concept that “some is better than none,” transporting too little product can still lead to a customer filing a freight claim.

6. Concealed Damage Can Take Days or Weeks to Notice

Sometimes when an item gets damaged in shipping, the issues are pretty obvious. Burst soda cans may have sprayed across the trailer, the smell of thawed meat would permeate the area, and splintered wood would reveal an obvious structural issue. However, when freight damage is hidden behind packaging or at the bottom of a pallet, shippers might learn about damage weeks after it arrives at the end customer. This type of freight claim might be one of the hardest to accept, especially when bank-backed freight payments create a smooth transition that shippers don’t want to shake up. However, following through with the carrier claims process helps carriers continue to grow in their own professional development to minimize future hidden damage.

7. Poor Automation and Integration Slows Claim Processing

Paper pushing is often the last thing a freight admin team looks forward to at the end of the day. The cargo claims process adds extra tracking, monitoring, recording, and other documentation that shippers can often put off too long until the filing becomes a rushed job. There’s plenty of room for manual errors when tired workers scan, print, copy, and paste shipment details at the end of the day. By embracing efficient, automated management, shippers can minimize the time spent on each freight claim and the number of mistakes that often occur in manual processes.

8. Cargo Claim Time Limits Vary Across Industries and Customers

Vibrant shipping companies understand that every customized service is essential for whatever freight they are moving. But when inclement weather, port congestion, labor shortages, and more stack on top of varying service agreements, it can be easy to lose track of the correct cargo claim time limits for active shipments. Although insurance providers made cargo claim time limits to protect carriers from fraudulent claims, it can be easy for shipping companies to miss deadlines without utilizing machine learning and other modern technology to weed through every freight claim’s details.

9. Predictive Planning Can Improve Delivery and Reduce Claims 

Artificial intelligence in business has completely changed the freight management landscape. Shipping companies can use business intelligence tools to understand the past to discover peak claim periods and the primary trends and causes. The new data enables shippers to adjust and plan to avoid the carrier claims process when possible. Shippers can even use historical data and machine learning anomaly detection to discover errors in real-time. Truly, actionable analytics can take back the time spent filing a freight claim and the money lost while focusing on a load from the past instead of focusing on the next shipment.

10. Collaboration Remains Essential to Avoid Freight Damage Claims

Whether addressing a freight claim epidemic or logistics cost-saving opportunities, collaboration and networking is key to today’s shipping success. Collective knowledge and experience can prevent shippers from partnering with a trucking team known for causing carrier claims headaches. Additionally, networking can provide shippers with better tools and insight for carrier contract optimization. Although contract optimization may typically focus on minimizing excessive carrier charges, this can also be an essential part of ensuring the carrier liability aspect of the agreement is fair. Shippers will better set the framework for carrier relationships that minimize freight damage and streamline any future freight claims. 

Increase Visibility Into Freight Claims With Intelligent Audit 

Visibility is everything in the supply chain. Shippers who know where their freight is can plan better drop-offs, just as much as those with a clear vision of their operating costs can better pursue freight cost management. Even amidst global and local supply chain disruptions, visibility offers control and insight to shippers that are imperative for making big freight decisions. Whether filing a new cargo claim or tracking the process of another one, shippers and retailers can smoothly walk through any incidents when analytical visibility reigns as king. If you’re ready to experience a smoother freight claim process, contact Intelligent Audit to streamline your freight admin processes today.

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