Filing Claims: When Shipping Goes Wrong

filing claims
Filing claims helps carriers keep their promises

The Pursuit of Perfection

The logistics industry these days is a global force, driving or contributing to every single physical or digital marketplace currently in operation, anywhere in the world. Modern supply chains span countries and continents, utilizing multiple carriers to draw from numerous suppliers and manufacturers, delivering to countless customers, in record time.

And while our current system is indeed a marvel of technological innovation and systemic progress, no system is perfect. Even packages and shipments electronically updated in real time can still be lost or misplaced. The insights that digital tracking capabilities have granted both the carriers and their end users are nothing short of remarkable, but they can also be a bit of a double-edged sword: if customers now have the ability to track their package through every stage of the shipment process, it does indeed create engagement with the product, but it also creates higher expectations of delivery. And if those higher customer expectations are not met, the carriers now have nowhere to hide, as every step of the process was theoretically recorded using their own digital systems.

Feedback Mechanisms

This is where filing claims comes in. Parcel and freight claims can act as restorative feedback mechanisms to the shipping process, as all carriers acknowledge a certain level of responsibility for packages or shipments taken into their care. If those packages or shipments do not eventually arrive at their intended destination, the shipper can file a claim with the carrier for the cost of the goods, and the associated shipping costs, and the carrier will then pay the shipper back. This system helps to re-establish trust and keep the relationship intact for future business. Simple right?

Unfortunately, this process is littered with complications along the way, that can make it difficult, if not impossible, for shippers. Here are some of the ways the claims filing process can get bogged down:

Record Keeping: To protect themselves from false claims, carriers require a fair amount of documentation from shippers in order to start the claim process, and rightly so. This can include requesting complete invoices, written descriptions of the lost items, declared value, etc. These are not always bits of information shippers have on hand, but today’s automated logistics platforms can actually help to simplify this part of the process, by storing all the necessary shipping information in a centralized, easy to access hub.

Timing: Delays happen during the shipping process, especially with larger freight shipments or international packages, but that doesn’t necessarily mean a package is lost. With this in mind, and considering the costs carriers can incur to store/display data for long periods of time, both parcel and freight carriers have designated windows of time in which they allow shippers to file a claim. The shipper often needs to wait a certain number of days after the package is shipped to file the claim, but then they also only have a certain number of months after the item was shipped in which to submit the claim, as the carriers do not want to store the pertinent shipping data indefinitely. Pulling together the proper documentation is important, but it doesn’t mean much if you can’t keep track of each shipment’s filing window and submit the claim appropriately.

Filing: There are numerous options to choose from when it comes to carriers these days, from international giants to regional partners, and usually the more choices one has, the better. However, when it comes to claim filing, this can mean navigating multiple online claims portals, or possibly keeping track of multiple file transfers to separate batch EDI systems, all with different requirements for submission. The larger your supply chain grows, the more it pays to have someone who knows their way around this complicated submission process.

Follow Up: Once the claim is properly submitted, in a timely manner, with accurate documentation, the process is still not complete yet. The carriers all have internal processes they follow on their side to validate the package is lost before they will pay for the missing items, and those processes always take time. Following up with the carriers to ensure the proper steps are taken, and that each individual claim status is accurately updated, not to mention making sure that payment is ultimately sent out and received, can often times be a full-time job.

Benefits of Filing Claims

Simply put, the biggest benefit to filing claims is that it can lead to a very large amount of refunds. Very large. If your company is not currently filing claims with all your carriers, or if you’re not doing it effectively, you’re taking a massive hit to your bottom line, and absolutely leaving money on the table.

There is, however, a science to it. Here at FreightOptics, one of our clients was using an outside auditor who was supposed to be filing claims for them, and yet when we were given the chance to “audit the auditor,” we still managed to uncover over $300k in claims that the previous auditor had missed, in just the first year.

The other benefit to filing claims is that it can repair and maintain your relationship with your carriers. Parcel and freight carriers are businesses composed of real people, just like any other company, and those people will make mistakes. But unless they are given the chance to learn from those mistakes and make them right, the relationship will suffer. Instead of resenting your current carriers for poor service and eventually switching to new ones, just to go through the same cycle a few years down the line, give them the feedback they need, and the chance to make good on their promises.

This is just one way the logistics industry is evolving every day. The companies that will benefit the most are the ones that are best poised, through their technology and partnerships, to not only rise to the occasion, but to chart their own path. If you’re ready to be a part of that bright future, reach out to us for a Free Demo today.