Supply-chain damage claims: Reducing risk & handling claims promptly

Posted by Harriet Mills on Apr 9, 2015 11:33:20 AM

"How's the weather?"

This common ice breaker has much more meaning to logistics professionals than the average person. In a supply chain, the weather, among other influencing factors, can delay freight shipments and even cause accidents that damage goods.

iStock_damaged freight"Over 15.5 million licensed trucks annually transport over $139 billion dollars worth of freight," says James Lee, vice president of legal affairs at Choptank Transport. "These carriers also collect over $650 billion in annual revenues, accounting for roughly 5 percent of America's GDP. Damage claims as a whole is a small percentage of that freight, which is delivered on a timely basis and without damage."

While rare, damage freight claims do happen due to a variety of factors, which is why it's best to take steps to mitigate any issues proactively and know how to handle a claim if an issue does occur.

Start by working with a 3PL that prioritizes communication and vendor relations. You want a partner who is available 24/7/365 so you can always reach a real person for updates. A quality 3PL will provide you the news straight up, both good and bad. Clear communication and problem-solving skills are key to avoiding risks and handling issues properly when they occur.

"The main key is communication," says Lee. "Communication with the shipper to know what they expect of the broker and carrier, and what the broker and carrier can expect of them."

For example, make sure the carrier knows loading/unloading procedures, including proper packaging and palletizing. For food and nursery, they must know the temperature to maintain if refrigeration is necessary. If not an SLC, make sure the driver understands their liability for case count and condition of the product.

Communication can also be streamlined by the technology a 3PL partner uses. Ask what is used and how each supports transferring shipment information in real time. Examples of leading technology include EDI, Macropoint and Locus Traxx.

Even with a trustworthy partner, many variables are out of their control and problems can pop up. That's why you want to work with your 3PL provider to find a solution as quickly as possible.

"The first step is to make proper notations on the carrier's bill of lading, and notifying the carrier or broker of the damage," says Lee. The bill of lading (BOL) is a contract between a freight carrier and shipper, and serves as a receipt of freight services.

Next, Lee suggests taking pictures to further document the damage. Whether you should keep the freight depends on a variety of factors.

"It depends on the extent of the damage, the circumstances of the damage and whether it is salvageable," says Lee. "Many will disagree with me on this, but technically by law, it is the responsibility of all parties involved to assist in mitigating the damage loss claim. In that the shipper or receiver is the best judge as to product viability, receipt is usually the best scenario. Additionally, the law is clear that a 'practically worthless' test be considered before actually rejecting or destroying any shipment."

Finally, work with your 3PL provider to file the freight claim promptly. The sooner you file the claim, the sooner the review process will begin. If you wait too long, the claim may be voided entirely. The Carmack Amendment provides additional insight into the claims timeline and what you can expect.

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