When Does Carrier Damage Result in Declined Freight Claims?

"It's okay; accidents happen!" While this response might suffice when mishaps happen in many walks of life, it certainly won't fly in the supply chain world. Carrier damage can significantly impact shippers in terms of cost and administrative time. Additional complexities in paperwork add to an already overabundance of freight invoice errors within the industry. While most shipping companies and carriers would hope they could resolve a damaged load with those simple words, it's vital that both parties adequately understand who is responsible for damaged freight and how to move forward in the billing process.

Carrier Damage Is Also Known as Carrier Liability

Depending on the context, carrier damage describes the situation and the carrier's legal responsibility for the items in question. However, a shipper and trucker likely have different vantage points on carrier liability limits for damaged goods. Unishippers writes, "Depending on the carrier, limits can range from $0.15 to $25 per pound — which means there is often a gap between the reimbursement amount and the actual value of the shipment." Therefore, even when validated carrier damage occurs in a tremendous shipper-carrier business partnership, shippers should not expect to see the total value of their freight shipment due to the carrier liability limit. This freight bill financing detail often takes a shipper from thinking positively into a worst-case scenario reality.

When Does Carrier Liability Not Apply?

In the 1800s, the states held carriers liable for any goods that did not reach their destination in full. Some shippers took advantage of this and made fraudulent claims for damage to shipped goods. However, in 1935, the Carmack Amendment was passed to protect motor carriers from these fraudulent claims while holding them responsible for damage that was indeed their fault. The Georgia State College of Law published a guide that describes the five carrier defenses that would nullify their liability:

(a) an act of God.

(b) an act of the public enemy.

(c) an act of the shipper.

(d) public authority.

(e) the inherent vice or nature of the goods.

With these carrier damage categories covering situations from a natural disaster to the nature of the commodities, the amendment also limits the timeframe that shippers can file a claim to nine months after the incident. Again, these are vital details for freight accounting employees to know not to miss a logistics cost-saving opportunity.

What Shippers Must Do to Hold Carriers Liable

Before entering a situation where a shipper must properly assess who is responsible for damaged freight, shippers can take preventative action. Shippers who require signed reports of freight condition at the time of drop-off are better set up for success regarding freight invoices and a claim for damage on shipped goods when necessary. When a shipper has to follow through with carrier liability for damaged goods, they must prioritize filing the claim by:

• Filling Within Nine Months of the Delivery Date. This timeframe is extended if the shipment was lost and the filing was determined to be completed in a reasonable timeframe.
• Maintaining Documentation of Value and Loss. By requiring proof of value documentation before a shipment is on the road, shippers can protect themselves in advance for use in carrier damage and insurance claims.
• Keeping Track of Carrier Response Time. Under the Carmack Amendment, carriers must acknowledge the carrier damage claim within 30 days and formally respond to it within 120 days.
• Utilizing a Carrier Performance Tracker. Shippers can use machine learning-enabled technology, proper documentation, and communication to prove that the carrier did the damage.

Track Your Real Cost for Every Carrier Damage Claim With Intelligent Audit

As trucking costs' inflation continues to impact carriers and shippers alike, shippers must optimize their operations through actionable analytics. With the data found via that single source of truth, shippers can track carrier performance, or lack thereof, to navigate future interactions based on applicable carrier policies. Moreover, maintaining these optimizing logistic operations gives shippers an upper hand, whether facing freight invoice errors or needing to file a claim for damage on shipped goods. Start a conversation with Intelligent Audit today to learn how a premier business intelligence company can turn your data into a logistics self-defense option in the face of carrier damage.