LTL Freight News

Approach filing cargo claims as if you are filing a claim with your automobile insurance company. Do not do it unless it is necessary. Impulsively submitting claims against carriers every time something goes or perhaps just looks to have gone wrong, taking that approach won’t lower freight rates nor your car insurance premiums. When both parties stay committed to the partnership, over time, a mutual trust established creates a superior work dynamic. Partners work together to find, to solve and to prevent problems. Whenever things are going good and whenever things are not going good, partners continue working together. When something goes wrong, both shipper and carrier work together making the best of a bad situation and moving forward. Rather than placing blame when something goes wrong, partners look ahead searching for solutions. Whether carrier pricing adjustments or car insurance premium increases, once you file a claim against the company, you will continue to pay for it years i...

Electronic Data Interchange (EDI) has been the industry standard for years. EDI is a form of communication between two systems where the specific status or value of something is conveyed to another system at a particular time, and ongoing communication between the two systems endures based on scheduled batch exchanges or data transmissions that take place at regularly scheduled time intervals. For example, a shipper may send a carrier a list (or batch) of shipments they would like the carrier to pick up every morning. In turn, the carrier will transmit an EDI file back to the shipper at the end of the day that acknowledges receipt of the request sent by the shipper asking for pickup of those shipments, so the shipper knows the carrier received their request. Shippers and carriers can communicate using this process daily, but the exchange of information is essentially only an exchange of status messages that acknowledges communication being sent and/or received. It doesn’t give any f...

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...

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. WHO FILES THE CLAIM? Typically, the payer of the freight bill 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 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 m...

Right now there is a big driver shortage in the trucking industry and the ports are backed up for multiple reasons. This is causing chaos in the supply chain and shippers not aligned with quality partners are facing tremendous rate hikes and delays in transit. There are some key government regulations on the horizon for the trucking industry including electronic logging devices, speed limiters and your typical “going green” initiatives for cleaner emissions and more fuel efficient trucks. Additionally, many carriers have placed or will be placing new equipment orders for new trucks that should yield better fuel mileage, and these investment costs from the carriers in new equipment and driver training and retention will be passed along to shippers in the open market. Also, in an effort to improve productivity and better align pricing to reflect their costs, carriers have begun using density scanners to analyze the freight in their systems for a better understanding of the shipments ...

If you've been using the same courier or transportation company for some time, maybe you have grown comfortable with the status quo, and the communication is stagnant. There may be some efficiencies that can be leveraged to help stabilize, and even lower costs for you and your carrier(s). Having your shipping team come in a little earlier or later than normal may allow the carrier to come in for an earlier or later pickup or delivery. This could reduce damages if your freight is now picked up at the end of the day rather than in the morning, or on the flip side it could enable you to receive orders first thing in the morning instead of at the end of the day. Small adjustments to help accommodate the carriers’ needs, like having the shipping team come in an hour or two earlier or later, can create efficiencies that produce immeasurable soft dollar savings for the shipper and the carrier. Savings can take the form of reduced damages and faster turnaround times on new orders. The wi...

The reasons for the driver shortage can be debated amongst several issues, but the bottom line is that freight companies have been turning down business because they already have enough problems dealing with the business they have. In an economy where supply (capacity) and demand (freight) aren't matching up something has to give. The trucking industry is at full capacity and there is excess demand for trucks and the movement of freight. The trucks are there in many instances, but there is not enough qualified drivers to operate the tractors. "The American Trucking Associations has estimated that there was a shortage of 30,000 qualified drivers earlier this year, a number on track to rise to 200,000 over the next decade. Trucking companies are turning down business for want of workers." This is quoted from an article in the New York Times on August 9th: http://www.nytimes.com/2014/08/10/upshot/the-trucking-industry-needs-more-drivers-it-should-try-paying-more.html Wit...

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 ...

Many shippers write something similar to this on their bills of lading: “No additional services will be paid unless prior authorization is obtained,” thinking this protects them from any unforeseen charges for additional accessorial services performed by a carrier at the time of delivery.  This looks good on paper and may make shippers feel good, but the fact remains that this more than likely doesn't mean anything. A note or disclaimer on a bill of lading written by the shipper as such is generally not binding.     The positive side of this coin is that the note does provide the carrier with information that they otherwise would not have. In some instances a carrier may be able to alert the paying party of the needed services before they are performed, but this is the exception to the case. It is unreasonable to think that a carrier could call everyone that requested prior notice for approval for services required that were not originally requested. (...

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...

There are differing opinions and reports from professionals in the supply chain industry about the use of the gain share model by brokers or 3PL’s. Some shippers are happy with the model and some aren't. There’s no denying that it works in some instances, but many logistics experts are reporting that there is a lack of visibility and control associated with it. The model is similar to a consultant finding a client ways to save money on their business processes. The consultant may ask for a percentage or fee of the achieved savings since it took their expertise to find the cost reduction. This sounds good in theory and usually works well in a consultant type situation, but in the freight world this may not be a true representation of what's happening. With the gain sharing model a shipper agrees to pay a percentage or flat rate fee of the savings a broker has said to have obtained for them. For instance, if a gain share 3PL proposes that they can save a shipper $10,000 off th...

LTL carriers typically make modifications to their base rates yearly through the form of a General Rate Increase (GRI). Historically speaking, these increases occur once a year, but there have been years where there were none passed along and there have been years where there have been more than one. These increases are given with multiple factors taken into account, including but not limited to the economy and the carrier’s network and current operating ratio. An important thing to remember with GRI’s is that the announced increase reflects only the average rate increase across all lanes combined. It’s a weighted average. It isn’t necessarily indicative of the true impact the GRI will have on a shipper’s total freight costs since it’s not a flat percent increase across the board. And yes, this can work both ways for individual lanes. The impact may be less than what’s announced in some lanes, and it may be a lot higher in others. The takeaway here is that a shipper could be seri...

Old Dominion Freight Lines reported this morning that compared to Q1 2013, revenue for Q1 2014 climbed 15.2% to $620.3 million, net profit rose by 13.2% to $45.9 million, and its operating ratio improved to 87.1% from 87.8%. ODFL’s CEO, David Congdon, said: “Due to the significance of our first-quarter growth, we have increased our projection for capital expenditures in 2014 by an additional $25 million for tractors and trailers.” 

With capacity issues becoming more and more evident, Transport Topics and the American Trucking Association (ATA) recently reported that the March truck tonnage index was up 3.1% over March 2013. The ATA's Chief Economist, Bob Costello, said “Tonnage continued to claw its way out of the hole that was dug in December and January. However, with a cumulative gain of 2.5% during the last two months, we still have a way to go to offset the total loss of 5.2% in December and January." The brutal winter weather in the US this year coupled with the trucking industry's driver shortage, tightened government regulations, and even a shortage of diesel mechanics contributes to lower than expected US truck tonnage reported for December 2013 and January 2014.  Meanwhile, according to the Department of Commerce, new home sales in the US dropped to its lowest level in 8 months. The worst decline in home sales was in the Midwest which saw a 21.5% drop.  

The capacity crunch in the U.S. trucking industry is here and it is very real. Analysts are reporting that annual rate increases levied to shippers by the LTL carriers in the open market this year are sticking. The tight capacity constraints are a result of numerous factors including a severe driver shortage, new hours of service regulations imposed by government regulation, a harsh winter that caused delays in the movement of previously scheduled to move freight, and even shortages of diesel and heavy equipment mechanics on hand to maintain and keep carrier fleets on the road. Add all of that to the fact that the U.S economy has shown some life – even if minimal - with regards to turning around, and you have what has set the stage for the proverbial perfect storm that is changing the tides in favor of carriers instead of shippers for the first time in several years. The capacity crunch in the truckload segment of the market is also spilling over into the LTL sector, and shi...

FAK stands for Freight All Kinds, and it is an agreement made between a shipper and a carrier that allows different items falling into multiple freight classes to be billed & shipped at the same class. An FAK can be beneficial for shippers with several commodities shipping at multiple classes. This is because they help with simplifying the bill of lading and freight payment process and can also provide savings. It may not make sense or be feasible to pursue an FAK in some instances. Shipper’s volume, product mix and product types (value) are all things that a shipper and a carrier take into consideration before an FAK will be put into place. Here’s an example of where it may be beneficial: let’s say a shipper has several commodities ranging from class 50 to a class 77.5. They may consider trying to negotiate an FAK 50, which 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 all of th...

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.