Six Common Reasons for Denied Freight ClaimsWritten by Neal Willis
Freight claims are never a pleasant issue to deal with. Unfortunately, if you’re a shipper they’re part of the business and they’re usually denied for one of six reasons: 1) Incomplete/Inadequate Documentation, 2) Mitigation, 3) Freight Charges Not Paid, 4) Pallet/Piece Count, 5) Clear Delivery and 6) Act of God.
The National Motor Freight Traffic Association (NMFTA) publishes the National Motor Freight Classification (NMFC), which functions as the industry standard for freight claims guidelines, including time limits, required documentation, etc. A thorough understanding of the rules will help to ensure that your claim is reviewed fairly and processed timely.
Incomplete/Inadequate Documentation – When filing a freight claim, shippers should be sure to follow NMFC minimum documentation requirements. Probably the most common reason for a claim being denied is because of incomplete information and/or documentation.
Mitigation - Per NMFC guidelines, it is the duty of a shipper to mitigate the costs of a claim to the least amount possible, which essentially means shippers are required to do their part to help minimize financial loss. Mitigation is usually done by selling the damaged item at a discount, selling it for parts or scrap, or by repairing the item rather than replacing it completely. If making repairs, the cost of repairing the item would be the amount filed for in the claim.
Freight Charges Not Paid – Even if the freight charges are going to be refunded or credited in their entirety¸ per industry guidelines set by the NMFC, the freight charges for a shipment must be paid before a claim can be settled. Some carriers will overlook this policy and issue a credit, but they aren’t required to do it that way.
Pallet/Piece Count – A bill of lading will typically denote having received “x” amount of skids/pieces intact (shrink wrapped/non-shrink wrapped) when a shipper performs their own load and count. When a carrier doesn’t perform the load and count, it’s considered that the number of pallets/skids tendered to the carrier is the quantity shipped, since they aren’t able to perform a piece count of the broken down shipment before it was packaged to verify quantity.
For example, a carrier is tendered 2 shrink wrapped skids comprised of 25 individual boxes on each skid for a total of 50 boxes for the entire shipment, which the shipper shrink wrapped and loaded onto the truck themselves. The carrier will likely mark the BOL as having received 2 shrink wrapped skids said to contain 50 boxes. When both skids arrive at the consignee and a shortage of 1 box is discovered, it’s difficult to prove that the shipment actually contained 50 boxes to begin with.
The shipper could have packaged the shipment with only 49 boxes by accident. The only thing the carrier knows for certain is that 2 skids were tendered and 2 skids were delivered, as there was no opportunity for the driver to verify or count all 50 boxes, especially when skids are already shrink wrapped when a carrier arrives for pickup.
Clear Delivery – Establishing carrier liability without notation of damage on the delivery receipt can be difficult. In spite of what some shippers may think, writing “Subject to Inspection” on the DR doesn’t serve as sufficient evidence of any specific damage having occurred, because it can create a scenario in which the consignee is the only witness to the discovery of damage, which leaves reasonable doubt as to who was in possession of the shipment when the damage occurred.
Act of God – Carriers are considered to be exempt from liability for things like hurricanes, floods and fires, which are considered an act of God and beyond a carrier’s control.
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