Damaged Shipments: What You Need to Know

One of the major areas of concern for receivers of freight is when a package, packages, or a full shipment for that matter, is delivered in a damaged condition.  Who is responsible for the making the owner whole? If a claim needs to be filed, who files the claim? And, what processes and procedures need to be followed to ensure that a claim will in fact be paid.

This scenario has been the topic of discussion for decades and we suspect will continue to be a topic of discussion for decades to come.  A critical time in the establishment of a sound argument for a freight claim is when the shipment is being delivered.  Many receiving departments are busy from morning till night and sometimes overlook sound receiving procedures.  That will surely end up costing their companies considerable dollars in the long run.  So we thought it would be a good idea to provide our readers with our Seven Step Process to Ensure Your Claims are Settled Promptly.

1. All shipments when delivered MUST be inspected thoroughly.  First of all, does the receiving department actually know what they should be receiving?  How many cartons on how many pallets, etc.  It sounds like a huge undertaking to inspect all packages whether they are loose or on pallets, but it is a critical step in the receiving process.  Do any of the packages look damaged; are there any holes in the boxes?  If there are signs of “VISIBLE” damage, the carriers delivery receipt MUST be noted with a clear explanation of the actual damage discovered.  Don’t be intimidated by a driver who may just want you to sign for the goods without exception, because that should clearly be a red flag.

2. When you find obvious damage, you should open up the packages in the presence of the delivery driver and take a cell phone picture of the damage as “proof” that the damage was discovered at time of delivery and was not caused by the receiver after the driver left.  Also be aware that on palletized shipments the shrink wrap and/or bands must be intact and the shrink wrap should be the same on all pallets.  If not, be sure to check the pallets with a different shrink wrap or banding as the pallets may have been re-wrapped somewhere in transit; perhaps even after contents may have been removed from the inner cartons.  NOTE: Do not sign any delivery receipt “received subject to further inspection” as this notation has absolutely no value, because ALL shipments are subject to further inspection.

3. When product is received damaged the receiver should request an inspection by the freight carrier.  This can typically be scheduled on the freight carriers website.  If an inspection is requested the receiver should place all of the damaged merchandise in a safe place as close to the receiving area as possible.  The carrier should be notified of an inspection request immediately following delivery of the shipment, but no later than the end of that business day.  Be aware the carrier may waive its right to inspect the damaged merchandise and in that case the receiver should create its own inspection report which will become part of a formal claim to be filed against the carrier.

4. Some receivers are under the impression that they must file a claim within 15 days after delivery.  That may in fact be true with specific express type carriers, but is not the case with motor carriers.  The timeline for filing claims is 9 months from date of delivery.  It is clear however that a receiver should file its claim as soon as practical after the delivery has taken place.  The “15 Day Rule” as it has become known is an arbitrary timeline when the burden of proof shifts to the receiver to prove that the damage actually occurred while in the carriers’ possession when there was no notation of damage at time of delivery; that becomes a very difficult task after 15 days.

5. Receivers are encouraged to accept damaged goods along with any undamaged goods at time of delivery.  If on the other hand an entire shipment is deemed to be damaged beyond repair, the entire shipment may be refused.  Refusing partially damaged shipments can create a situation where the carrier places the goods in storage and then expects to have the storage bill paid for by the receiver, further adding additional and unnecessary costs.  Avoid such situations wherever and whenever possible.

6. When shipments are received in apparent good condition but are later found to be damaged, these damages are referred to as “Concealed Damages.”  Concealed damage claims are handled differently by the freight carriers.  There is a presumption that the damaged goods are a result of the receiver damaging the goods after delivery.  In 99% of the cases the carriers will immediately refuse to pay claims for concealed damages.  It’s important to notify the carrier as soon as possible when concealed damages are discovered.  The longer the receiver waits to contact the carrier, the more difficult it will be to collect from the carrier on these claims.  oftentimes the carriers will propose a compromised settlement offer for concealed damage claims, such as a one third settlement.  They reason that the shipper, receiver and carrier each bears one third of the responsibility in those transactions.

7. As stated previously, freight claims MUST be filed within 9 months of date of delivery or no settlement can be achieved.  In the case where a complete shipment is never received the timeframe would be 9 months, plus a “Reasonable” time for delivery.  All claims MUST be filed electronically or in paper format.  The nine month statute of limitations for filing freight claims is one that the claimant must be aware of because if the carrier does not acknowledge that they received the claim within 9 months they will immediately deny the claim.  Make sure you receive an acknowledgement from the freight carrier within 30 days of filing a claim, which is the carrier’s responsibility.

Motor Carrier Freight Claims Processing Rules are published in the National Motor Freight Classification for the carriers participating in the NMFC.  All shippers and receivers of freight should have a copy of these freight claims processing rules in their possession.  So, if you do not have a copy of the rules, reach out to your freight carrier and have them provide you with a copy.