LTL Freight News

A freight claim is not intended to be a profit center for a claimant, but rather to make the shipper “whole”, as if the carrier had performed their obligation according to the terms of the BOL contract and delivered the shipment as expected, with full market value intact. There are cases where the loss of profit as a result of the damage can be justified within a claim filing; however, in most cases, including profit in the claim is unacceptable. It is presumed that in the event of damage, the shipper would send a replacement for the damaged item out to the consignee and that the shipper’s profit would be secured with the replacement shipment. With the intended profit secured by the replacement and profit also included in the claim, a double profit would occur, causing the carrier to be unreasonably burdened. A freight (damage) claim is a demand from a carrier by a shipper or claimant for monetary reimbursement of a lost or damaged shipment, and the outcome of a claim settlement should...

Freight damages are certainly not pleasant surprises, but they are inevitable at some point if you are a regular LTL shipper. An understanding of the process will help you be more successful at bringing claims to a satisfactory resolution. WHO FILES THE CLAIM? Typically, the payer of the freight can only be reimbursed for the freight charges, so they are usually the ones to file a claim. Anyone can file a claim, however, but this is usually the simplest way to do it. HOW LONG DO YOU HAVE TO FILE A CLAIM? The answer to this depends on the type of claim being filed. There are generally two types of damage claims, Noted Damage and Concealed Damage. The difference between the two is that noted/visible damage claims were noted at the time of delivery, usually on the delivery receipt, and concealed damages were not. Concealed damages must be reported to the carrier within 5 days of delivery. Anything reported past the 5 day window will not be considered for a settlement and will be d...

There are some important changes that have been made in Supplement 1 to NMFC 100-AO regarding guidelines for filing and investigating damage claims. New NMFC guidelines effective April 18 require concealed damages be reported to carriers within 5 days after delivery. Currently concealed damages can be reported up to 15 days after delivery for consideration of a valid claim; however, per NMFC guidelines effective April 18, 2015 the time period for reporting concealed damages is being reduced to 5 days. The closer to the time of delivery that the damage is reported to the carrier the more likely the claimant is to receive some type of settlement offer, but just because the damage is reported in a timely fashion doesn't necessarily mean that the claim will be approved for a settlement. Other changes effective on 4/18/2015 include one day being removed from the time frame allotted for filing suit on a claim. The new time period for filing a suit is two years. Previously, it was two...

Broker model 3PLs buy freight from the carriers and put a markup or margin on it and resell it to the shipper at a higher rate. This is how they make their money, and their margins can be adjusted on virtually every shipment as they fit. With the 3PL broker model shippers are normally unable to go directly to carriers for copies of the actual freight bills, and in some cases they are unable to obtain rates directly from the carriers. Since the 3PL broker is actually the one “buying” the freight from the carrier, they invoice the freight to a shipper on their own freight bill instead of one from the carrier. Otherwise, if shippers had direct access to the carrier freight bills then the shippers would be able to see how much the freight actually cost versus what the 3PL was "re-selling" it for.   As a part of their proposed value to shippers, many broker model 3PLs will tout that they file claims for their customers. They portray filing claims as their willingness to go th...

Concealed damages must be reported to the carrier within 15 days of delivery. Anything reported past the 15 day window will not be considered for a settlement and will be denied for filing too late. A claim for noted/visible damage may be filed for up to 9 months after the delivery date. Any later than that and it will be denied. A concealed damage claim is much harder to prove, since no party other than the consignee was there to bear witness to the discovery of the damage. This leaves reasonable doubt as to who could be responsible. In all cases, report the damage to the carrier immediately after discovering the damages. The sooner it’s reported, the better chance there is of receiving a settlement offer. With concealed damage claims where the carrier accepts liability for the damage, the carrier will typically only pay 1/3 of the amount claimed. They view this as there are 3 parties involved: the shipper, the carrier, and the consignee. The carrier will sometimes accept responsibi...

It is important to keep in mind that each claim is different and involves different circumstances, so not all of the below information will apply for every claim. Typically, the payer of the freight can only be reimbursed for the freight charges, so they are usually the ones to file a claim. Anyone can file a claim, however, but this is usually the simplest way to do it. If the item was noted as damaged and refused, someone will first need to take possession of the freight. The carrier will typically only store the refused items for 15 days at the terminal until they begin to charge storage fees. If warranted, it is typically during this time that the carrier will have an inspection done by an independent third party. This third party, or inspector, will mainly be looking for the extent of the damage, what type of damage, and as to why/how it occurred (i.e. was packaging sufficient). After it is completed, someone qualified to make an assessment will need to do so in order to estim...

FAK stands for Freight All Kinds. If a shipper has an FAK it means that they have an agreement with their carrier or service provider (3PL) that allows different items falling into multiple different freight classes to be billed and shipped at the same class. An FAK may be beneficial for shippers with several commodities shipping at multiple classes, but it doesn't always make sense. A shipper’s volume, product mix and product types (value) are all things that should be taken into account before an FAK is considered. Let’s say a shipper has several commodities ranging from class 50 to a class 77.5. This shipper may want to consider asking for an FAK 50, which if implemented would allow all of their shipments ranging from class 50 up to a class 77.5 to be rated and billed at class 50. This would provide savings for some of their shipments. More specifically it would save them money on the shipments that had historically shipped above a class 50 and below or equal to class 77.5. And ...

When an LTL freight shipment is refused because of damage the carrier will notify the shipper and request a RGA# (or RMA#) to have it sent back to the shipper. If the shipper refuses to take it back the carrier will notify the consignee about accepting the freight again. In a case where the shipper will not accept the freight, the consignee should ask for it to be redelivered to them and take possession. If it is a third party drop shipment, the party paying the freight charges may accept it as well. If no response from anyone the carrier will send a letter with time limits before they sell it at salvage.  The important takeaway is that someone must take possession of a refused damaged shipment before the carrier sends it to be sold at auction for salvage and all hope of receiving a claim settlement is lost. In most instances carriers will send the freight back to the shipper or party taking possession of the damaged freight at no charge, or free astray. If a c...

Before you implement any type of FAK parameters into your freight tariff, be sure to ask what claims liability limits apply to the proposed FAK. More often than not, when under an FAK, your claims liability limits per domestic shipment are greatly reduced. One damaged shipment could nullify the FAK savings.

The LTL industry standard is that concealed damage must be reported to the carrier within fifteen (15) days of delivery of the shipment in order for a claim of this type to be considered. Once concealed damage is noticed, the carrier needs to be made aware of the concealed damage as soon as possible. This can be done by calling the local delivery terminal within 15 days of delivery date. Emailing the carrier is helpful as well. The main idea here is to make sure you have and keep documentation of where someone at the carrier was notified within the 15 day window. Notification closer to the delivery date will increase your chances of receiving a settlement. Please make sure to make note of the person you spoke with, time and telephone number. Additional notes of the conversation with the terminal may also be made for future reference if required.  Very Important: ALL packaging that went with the specific shipment must be retained for the carrier’s inspection. F...