Including Profit Loss in a Freight Claim FilingWritten by Neal Willis
Carriers require either the manufacturer’s invoice or the seller’s invoice to be included when filing a freight claim for several reasons, including to help determine if there’s been an attempt at mitigation and to verify the monetary value being claimed. Determining which invoice you need to provide to the carrier depends on whether or not profit loss is included in the claim. Freight claims aren’t intended to be a profit center, but that doesn’t mean that lost profit can’t be filed for and included in a claim settlement. If profit loss is included in the claimed amount, the carrier may also require the claimant to provide the invoice from the alternate seller to prove that the sale was lost and awarded to another vendor.
The goal of a freight claim settlement is to restore the claimant to their original position, as though no loss or damage occurred. In many cases, including lost profit as a part of the claim filing isn’t warranted, since claims aren’t meant to be a profit center. It is the shipper’s responsibility to mitigate the cost of a claim to the lowest amount possible, so the manufacturer’s invoice is normally used for determining cost. It is presumed that in the event of damage the shipper would send a replacement for the damaged item to the consignee and that the shipper’s profit would be secured with the replacement shipment. With the intended profit secured by the replacement, a double profit would occur and the carrier(s) would be unreasonably burdened should the seller’s invoice always be used as the value guideline.
In the event that a sale is lost as a result of damage and/or a replacement unit not being sent, then lost profit may be eligible for reimbursement as a part of a claim settlement. Keeping in mind that the goal of a claim settlement is to restore the claimant to their original position as though no loss or damage occurred, full market value would include the anticipated profit from the sale of an item that is delivered without damage and sold as originally intended. When claiming profit lost in a claim filing, the seller’s invoice along with the invoice from the alternate vendor should be presented to the carrier.
For example, including lost profit in a claim filing might be warranted when there isn’t enough time to wait for a replacement shipment to arrive from the original vendor. If a replacement is needed immediately and must be obtained from another source, then it could be revealed that a sale along with its inherent profit was lost as a result of the damage. In order to have a shot at securing the lost profit in the claim settlement, the claimant would need to provide the carrier with a copy of the original seller’s invoice along with a copy of the invoice for the replacement that was purchased from the alternate seller.
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