What is Freight Claim?

A freight claim or shipping claim services, is a legal demand by a consignee to a carrier for financial reimbursement for loss or damage of a shipment. Freight claims are also known as shipping claims, cargo claims, transportation claims, or loss and damage claims.

The intention of a freight claim is to have the carrier do its best to carry out the shipment the way it is tasked according to the bill of lading. Claimants are generally expected to file a claim to recover their costs, not including profits, although in some rare cases, claiming profits may be considered acceptable.

Claimants are also expected to take reasonable measures to mitigate their losses. For example, if the damaged product has retained some value, the carrier would only be required to pay for the difference between the original value and the damaged value. The claimant would then be free to salvage the damaged product by selling it at a reduced cost.

There are two types of freight damages for which you can open a claim: standard (or visible) damage and concealed damage. Standard, or visible damage, is noticeable at the time of delivery. This means that the carrier provides a detailed description of the damage to the goods in the delivery note at the time of delivery. Concealed damage is when you discover the damage or loss after you have already signed the delivery memo and the driver has left the premises.

Each carrier typically provides a form specifically for filing freight claims. However, by law, no particular form is necessary, as long as the following four details are specified:

  • The shipment
  • The type of loss or damage
  • The total of the amount claimed
  • A clear demand for payment is requested

Information to identify the shipment may include the freight bill PRO #, the vehicle number, and the delivery date.

FreightOptics offers the following claim services:

Shipping claim services includes the following claims to be serviced:

LOST OR DAMAGED SHIPMENTS

You should get in the habit of always checking your freight for shortages or signs of damage every time you receive a shipment from any logistics management company.

FOR A SHIPMENT SHORTAGE

If you feel part of your shipment is missing, count the pieces and check the number against what is indicated on your delivery receipt. Then write a precise description of the shortage on both your copy and the freight company's copy for shipping claim services.

HOW TO HAVE A SHORTAGE TRACED

Make a note of a shortage on both copies of the freight bill as it acts as a written alarm for service center personnel who will make every effort to locate your missing freight from the logistics management company. If it becomes necessary to have your shipment shortage traced, contact the person in charge of OS&D (over, short & damage) at your local freight service center.

FOR VISIBLE DAMAGE

If the containers in your shipment show visible signs of damage, open them immediately to check the contents, and ask the driver to inspect the contents with you. Then write a detailed description of the damage on both your copy and freight's copy of the delivery receipt to the shipping claim services company.

FOR CONCEALED LOSS OR DAMAGED

As soon as possible after delivery, unpack and inspect your shipment. Should you discover any concealed loss or damage, report it to the freight company within five business days of the delivery date and request an inspection.

How to Report or File Freight Claims

Qualifying factors for making a claim with the logistics management company are listed below.

What constitutes as a freight claim?

No specific claim form is required by law, but there are four key elements that are essential in filing a freight claim:

  • The freight shipment must be identified to enable the carrier to conduct an investigation.
  • The type of loss or freight damage must be stated and recorded.
  • The amount of the freight claim must be stated or estimated.
  • A demand for payment by the carrier must be made.

The shipment identification information must include the carrier’s

  • “Pro number”
  • shipper’s number
  • vehicle number
  • origin date
  • delivery date
  • commodity description

The claimant’s name must be either:

  • The entity having title to the goods in transit
  • The entity assuming the risk of loss in transit
  • An assignee of either 1 or 2.

The carrier against whom the claim may be filed is either the originating carrier or the delivering carrier.

  • Freight claim details
  • Amount of the freight claim
  • Supporting documentation
  • Suit deadlines

What is a Freight Claim?

A freight claim, found in FreightOptics shipping claim services, is a legal demand by a consignee to a carrier for financial reimbursement for a loss or damage of a shipment. Freight claims are also known as shipping claims, cargo claims, transportation claims or loss and damage claims.

The intention of a freight claim is to have the carrier do its best and to carry out the shipment the way it is tasked according to the bill of lading. Claimants are generally expected to file a claim to recover their costs, not including profits, although in some rare cases, claiming profits may be considered acceptable.

Claimants are also expected to take reasonable measures to mitigate the loss by the logistics management company. For example, if the damaged product has retained some value, the carrier would only be required to pay for the difference between the original value and the damaged value. The claimant would then be free to salvage the damaged product by selling it at a reduced cost.

What constitutes a freight claim?

No specific claim form is required by law, but there are four key elements that are essential in filing a freight claim:

  • The freight shipment must be identified to enable the carrier to conduct an investigation;
  • The type of loss or freight damage must be stated and recorded;
  • The amount of the freight claim must be stated or estimated and
  • A demand for payment by the carrier must be made.

The shipment identification information must include the carrier’s

  • “Pro number”
  • shipper’s number
  • vehicle number
  • origin date
  • delivery date
  • commodity description

The claimant’s name must be either:

  • The entity having title to the goods in transit
  • The entity assuming the risk of loss in transit
  • An assignee of either 1 or 2.

The carrier against whom the claim may be filed is either the originating carrier or the delivering carrier.

It is not recommended that claims be filed against intermediate connecting carriers, although it is permissible to do so if it is definitely known which carrier caused the loss or damage.

The claim must be delivered to the carrier within the time period specified in the carrier’s contract and/or tariff, or that time prescribed by law, (usually nine months from delivery). Since the date of receipt by the carrier determines whether or not the freight claim is filed on time, claims should be filed via delivery methods which give some type of confirmation of receipt and guarantee as to length of time for delivery, such as:

  • Facsimile transmission (FAX);
  • Registered or Certified mail, Return Receipt Requested (RRR);
  • Express Mail;
  • Express Courier Services;
  • Electronic Data Interchange (EDI).

Freight claims should be addressed to the carrier’s claims manager at the carrier’s home office.

Personal delivery to a carrier’s representative may be effective if the freight claim is actually delivered in time, but an acknowledgment should be obtained in writing, and a copy sent to the carrier’s freight claims manager.

Receipt by the carrier is deemed to be a notice to all connecting carriers as well.

The names and addresses of the consignor (shipper) and consignee (receiver) must be stated, including all stop-off locations for completion of loading and/or unloading.

Information on who is liable for the freight charges should be included in the freight claim (Collect, Prepaid, C.O.D., etc.). Information on any liability limitations must be noted on the bill of lading.

Details of a Freight Claim

A detailed description of the freight loss, damage or delay must be stated, setting forth the specific commodities, number of units of each type, extent of loss suffered, the value of each unit, the amount of salvage realized, the net loss, and a description of the events which caused the loss.

Here is an example of recording the details of the freight claim:

  • 10 cartons of clothing, water damaged; @ $100 ea. = $1,000
  • 2 cartons shoes short; @ $500 ea. = $1,000
  • 3 cartons china crushed; @ $100 ea. = $ 300;
  • Total Cost of damages and lost: ($1,000 + $1,000 + $300 = $2,300)
  • Less Salvage: -$150
  • Amount of Freight Claim: $2,150

Amount of Freight Claim

The amount of the claimant’s loss should always be stated in the freight claim. When the extent of a loss is not known at the time of filing, it is not good practice to state that “this is a claim for $100 more or less.” When this is done, some carriers have been known to mail a check in the amount of $100 in expectation that the check will be deposited, thus relieving the carrier of further liability. The best practice is to place the carrier on notice as to its maximum exposure of liability by stating the full potential loss. If a lesser amount is finally determined to be owed by the carrier, the claim must be amended to that amount.

Supporting Documentation

When you are filing a freight claim, you must provide the following supporting documentation if available and applicable:

  • The original bill of lading
  • The paid freight bill
  • Proof of the value of the commodities lost or damaged
  • Inspection reports, if any were completed
  • Copies of request for inspection
  • Notification of loss
  • Waiver of inspection by carrier
  • Special documents, when appropriate
  • Photographs
  • Temperature reports
  • Dumping certificates
  • Laboratory analysis
  • Quality control reports
  • Package certifications
  • Loading diagrams
  • Impact records
  • Condemnation certificates
  • Weight certificates
  • Affidavits
  • Carrier’s passing reports
  • Loading and unloading tallies (Fax copies are generally acceptable)

A “Bond of Indemnity” may be filed with the freight claim indemnifying the carrier for any loss it may suffer as a result of improperly paying the claim on the basis of the claimant’s furnishing a copy of the original document.

Every claim should be numbered by the claimant and recorded in a claim log or computer system. The carrier should also assign its claim number and acknowledge receipt of the claim within 30 days of receipt, pursuant to D.O.T. regulations. Both claim numbers should be shown on all correspondence and checks.

A separate file should be kept on each freight claim. Important deadlines and dates should be recorded in the claim log and systematically reviewed. For instance:

  • If a claim is not acknowledged within 30 days, or
  • If a claim is not paid, compromised or disallowed within 120 days, or
  • If the carrier does not provide status reports every 60 days thereafter, it should be notified of its violations of the government’s regulations.

Suit Deadlines

If a carrier denies liability for a loss for which the claimant has reason to believe the carrier is lawfully liable, the claimant has the right to institute a lawsuit. However, such suits must be instituted within strict time limits.

The most commonly applicable suit time limit is two years and one day from the date the carrier disallowed the freight claim. The date of mailing the carrier’s disallowance letter usually governs, not the date of its receipt by the claimant.

However, some traffic is not subject to the Carmack Amendment, and therefore, the time limits vary.

For example:

  • On some piggyback traffic, the suit must be instituted within one year from the date of delivery (not disallowance);
  • On ocean traffic, the suit must be instituted within one year of delivery, but the carrier may extend that date upon request received before the expiration of one year. Airline claims limits vary for each carrier.
  • A system must be implemented to periodically review the status of pending claims to prevent the expiration of the suit-filing deadlines.
  • Only a written statement declining payment of a freight claim in whole or in part starts the running of the time period for filing suits.
  • An offer to settle or compromise a claim is deemed as declined, but it must also state that the remainder of the claim is not acceptable.

FAQ's

Q - How do I find the time limits for filing freight claims against our carriers?

The carrier’s tariff or bills of lading will specify the various time limits, but they could be different via each mode, or different for carriers within the same mode, particularly on traffic which is exempt from government regulations.

The best procedure is to draw-up a time limit chart listing these key periods for each carrier in your routing guide. This will also help you select the carriers with the most favorable liability terms and conditions.

Q - Do I need to notify our own insurance company of a freight claim against a carrier?

Yes, under most shippers’ freight insurance policies, the insurer stipulates that it must be given notice of claims promptly, or within a reasonable time. If you are not able to recover from a carrier, you may be time barred from claiming against the insurer if you have not given it prompt notice of your claim against the carrier.

Q - Do I need to use a specific freight claim form?

No, any written notice containing the basic elements of a claim will suffice. (See listing above under “What Constitutes a Claim?”)

Q - Can I include interest, administrative costs, freight charges, loss of profits, attorney’s fees, etc. in my claim?

Yes and no. The measure of damage is governed by common law. “Freight Claims in Plain English” reviews the case law on this issue as well as all other legal issues affecting claims.

Q - Can I recover a claim from a carrier after it files for bankruptcy?

Yes, call the D.O.T. at 202-927-7600 for the name and address of the carrier’s cargo insurer. Get the freight policy number and clearly state the date of the loss. Then write to the insurer and demand payment under the BMC 32 Endorsement.