How to Settle a Freight Claim

I recently got a call from a customer asking me to help them out with a freight claim. They told me that they were completely dissatisfied with amount of money the freight carrier decided to pay (which was about 10% of the filed amount) and wanted to continue the battle. So I rolled up my sleeves, made a few of phone calls, asked them to fax me documents and emailed a claim expert friends - only to find out that - THEY ALREADY CASHED THE CHECK!!!

Golden Rule #1: If you get a check from a carrier in response to a claim that is less than what you accept, DON'T DEPOSIT IT!

Depositing a check will close the claim forever 99% of the time. Usually the check will even have verbiage near the endorsement spot that states: By depositing this check you accept this claim as closed (or something like that).

But don't feel bad if you have done this. It is actually not that uncommon especially with the automated way company's process checks these days. But this actually brings up another point; that just because a carrier sends a check it doesn't mean the claim is settled and done with.

A claim is not dead until you say it is. The carrier may send you a check in the hopes that you will setlle. In fact, a lot of times they hope the claimant will take the bait.

If this happens, just don't deposit the check and let the carrier know of your unhappiness. Golden Rule #2: The squeakier you are, the more likely you will get your claim resolved to your satisfaction.

If you make it clear to the carrier that you do not accept there resolution to the claim and that you won't stop until you get fair value, than you stand a much better chance in getting what you want. This usually takes a lot of calling, writing and fighting. But sometimes you just need to do that to get what you deserve.

Everybody hates claims, carriers more than anybody. So I am not telling you to start digging up things to start filing. But I am saying that you don't need to settle less than what you expect.

But if you do decide the fight a big battle, make sure you have your facts straight. Carriers have seen it all when it comes to shadiness so if they detect something smelling fishy, you are SOL (Sorry, Out Of Luck!).

Also, there is a governing body called The Transportation & Logistics Council, that will assist in helping companies settle claims through arbitration. This is a non-for-profit organization that can help people out before spending thousands on a lawyer.

The bottom line is that if you feel you are getting hoodwinked on a claim, and you have all of your facts straight, than you will get what you deserve. Don't accept a check for less than what you are due. Just fight for what you deserve and you will get what is due you.

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The Savings Impact of Consolidating Shipments!

By George Muha

Since freight is such a huge cost center at companies and a big part of their sales gets eaten up by freight, I get a lot of calls from sales people asking for ways to lower costs to their customers. The first challenge is trying to convince sales people that freight is a real cost - something I know a lot of accounting and operations people can sympathize with. Hey, I am a sales guy so I am allowed to pick on other sales people.

Actually, all I really need to do is to delve into some simple shipping patterns. There is a really easy way to provide a cost cutting solution to your customers, without lowering your invoice price and without threatening your relationship with your freight carrier. This innovative solution is called consolidation!

It is really amazing with what a little consolidation of shipments to the same customer will do for your cost per lb. The reason for this is that most freight carriers charge less per hundred pounds for heavier shipments than for lighter shipments.

So it will cost you less per hundred lbs for a 1,000lb shipment than it will for a 200lb shipment. In fact, your cost per lb will be less than half for a 1,000lb shipment than for a 200lb shipment.

I have a customer who is based in Cleveland who has particularly high classed items. We recently did a review that showed that they ship three 200lb shipments a week to the same customer in King of Prussia, PA. Each one of these shipments carries a cost per lb of .41 cents. However, if they got their customer to buy one large 600lb shipment at the beginning of the week, then their cost per lb dropped to .24 cents per lb. That is a savings of about $100 a week to that customer!

If you multiply that over a year that is $5,200 in savings to their customer. My customer didn’t have to lower any invoice prices. Plus, their customer was happy because they don’t have to expend the labor to unload the truck three times a week.

What if my customer won’t consolidate orders?

Sometimes getting with customers to consolidate their orders is an eye opening experience for them. A lot of times, they don’t even realize how often they are ordering.

Even with the above situation with the King of Prussia customer. When we approached them, they initially didn’t want to go for it because they didn’t think they were ordering that frequently. In fact, they didn’t believe us when we told them they were shipping three times a week!

It wasn’t until we showed them two years of data of them ordering three times, sometimes four times a week, did they consider listening to us. In this case, it was multiple purchasing people ordering at different times. But now they are ecstatic that they are saving these extra dollars and not clogging up dock space.

I have also found that even customers who won’t or cannot handle a consolidated order, appreciate you looking out for them.

How do we go about reviewing this?

The first thing you need to do is pull out a spreadsheet of all of your shipments for the last quarter and sort them by “customer” then by “date”. Then scroll down and break down all the shipments into week blocks.

Then it is simple. Just get your rating program to price out all of the consolidated orders as if it were one big order. Then subtract them from the total of the multiple freight invoices and there is your savings.

This is not rocket science but it is a great way to provide an excellent cost cutting solution for your customers that does not affect your bottom line!

If you are an LMI customer and you want to look into seeing the impact of consolidating shipment to customers, just contact me and we will perform this review for you.

If you are not an LMI customer and you want to lower your freight cost, the first thing you need to do is have LMI perform a FREE Freight Evaluation. Typically, LMI’s program provides over 20% savings to shippers. Contact me today!

Reducing Freight Damage

Through my 12 years in this industry no other topic has been brought up more often, nor with more passion, than the topic of concealed damage. Customers are distraught when they open a vendor order a week after delivery to find that it is completely destroyed, despite the intact box.

Shippers are perplexed when they get a call from a customer, asking for a new order at NO CHARGE! And motor carriers cannot understand how they can be expected to pay for something that was delivered free and clear weeks' prior.

My goal with this piece is to educate the general public about this distressing subject. My hope is that after this short article, everyone reading this will have a better idea of how to protect their company from dreaded freight damages.

First, I would like to explain some of the rules surrounding claims and filing statues. A lot of people think they have 15 days to file a claim for a concealed damage. There also seems to be a popular belief that if they do file a claim in that time frame, concealed or not, the claim should be paid in full, end of story.

But the Interstate Commerce Act (in the Carmack Amendment) states that a shipper has nine months to file a freight claim, damaged or otherwise. So you can take your sweet old time when filing a claim.

However, when it comes to damages, the person filing the claim is responsible for the "burden of proof." So the claim filer is basically guilty until proven innocent in a way.

When filing a claim, there are three factors involved:

a) That the shipment was tendered to the carrier in good condition.
b) That it was delivered in damaged condition.
c) The shipper suffered economic injury as a result of the damage.

Letters a) and c) are usually easy ones to come up with. But letter b) is the tricky one. How do you proof that your shipment was delivered in damaged condition? Well, the first and most important way is if the consignee signs for the freight with a remark about the damage on their delivery receipt.

When a consignee signs for something with damage, nothing counts more than specifically noting it on the delivery receipt. The remarks should say things like, "Bottom half of the box looks to have two pallet marks indenting and seems to be touching products" or "Big rip in middle of box with dented unit exposed".

DONT DO THIS: I have seen consignee's sign for everything saying "Subject to inspection". This will not fly. These people are better off not putting anything on their delivery receipts. The carrier is asking for proof of damage. They can easily pull all your other delivery receipts and prove that you put that on every DR.

If the damage is concealed and not noticed quick enough to note it on the delivery receipt, then the thing to do is to contact the carrier the second they notice it. If you call the local terminal that delivered the freight, they will send an inspector in right away.

We have seen concealed damage claims with clear delivery receipts that were paid in full because the consignee reacted quickly. However, we also have a tough time getting a 3rd of the claim if a few days go by, even if the damage was legitimate.

Remember, a bill of lading is a contract between the carrier and you. Claims can go to court if they are big enough. The longer the freight is the consignee's hands, the tougher it will be to convince an impartial jury that the damage has occurred while the carrier was transporting the goods.

What do we do?

For people where freight damage is a concern there are two things you can do. First, consider better packaging. This past year, one of my customers invested in hiring a packaging consultant to find better packaging practices.

Although they put some of their hard earned revenue dollars back into packaging, they have noticed a tremendous result. They have a dramatic decrease in damages, happier customers and a savings of man hours. People who were dealing with calling carriers, filing claims and writing letters are now focused on their core business.

The second thing you can do is to educate your customers on how to receive your product. Make sure they know how to properly note their delivery receipts of any damages. It might even be worth buying your bigger customers a cheap digital camera to keep on their receiving dock. Remember, the "burden of proof" is on you.

THIS IS A GREAT IDEA: One of my customers even sends a letter the day an order comes in. The letter runs down a quick three bullet check list of how they should receive and inspect the shipment when it arrives. That is a .50 cent way to educate your customers.

All of the customer service people at LMI are trained experts in the proper way to receive freight. You can contact them anytime for the rules or tips about claims and preventing damages. LMI can even visit our customer's customer service departments to better educate their customers about receiving freight.

Article by George Muha

Beware When You Hit FREE Freight Levels from your Vendors!

Of course, every buyer in the world wants to buy enough product from their vendor so they can hit their "free freight" threshold. It is always wise to attain this goal if you can. However, you would be suprised how many vendors are continuing to ship collect to its customers who are hitting these FREE levels.

A customer recently brought to my attention that they found out that they were being billed for freight on a shipment that happened to have met the vendor's free freight policy. I emediately got involved. We wanted to contact the vendor on this apparent mistake. But before we did, we went back to see if there happened to be any more that might have slipped through the cracks.

Much to our suprise, there were more than a few from this particular vendor. Then we started to look at other vendors and we found even more. In just a few minutes of digging, we discovered over $1,000 in freight charges that should not have been billed. Of course, my customer was more than agitated.

So we decided to call all of the vendors right there. They all seemed generally concerned and upset as my customer was. Every one of them was quick to credit their customer and a few of them even lowered their free freight threshold on the next order.

But my customer was still pissed that if they didn't happen to stumble on these mistakes, they would have been unjustly billed.

After talking to the vendors, we pretty much determined the problem was basically laziness on the vendors end. The culprit was that the one hand didn't know what the other hand was doing. In other words, the order would come through sales at the FREE Freight level. But the shipping clerk was not looking at the pick ticket close enough. Then, they were shipping the way they normally do for that particular customer.

At the end of this day, I couldn't help to wonder how common this is. So the following day, I called a bunch of my customers and told them this story. I asked them when they had time to review their receivables to see if they are getting billed on orders where they are hitting the FREE Freight Levels.

Sure enough, there were instances where they were getting nailed.

I thought this was epidemic enough that people should be made aware of this. I highly recommend taking some time and dig through some recent vendor invoices.

If you find more than a couple of these, it might be neccesary to make the effort help stop this. One suggestion is to establish a matching process to confirm every thing is billed the way it is supposed to be.

Another is to implement a rule in your purchasing terms that if you are charged for freight on free freight orders than you will charge back your customers for the freight plus a $150.00 fee for making you go through this hassle. Nothing cures laziness better than a chargeback.

There is another thing that one of my customers brought to my attention. They confronted one of their vendors on why they were billed freight when they hit the free freight level. The vendor explained that even though they hit the free freight levels, they shipped it out on two separate bill of ladings. They basically explained that they were penalizing their customer because they didn't have the inventory. Don't buy into that balongna! It is not your fault they don't have the inventory.

All in all, I beleive good vendors try to do the right thing by their customers. However, their are some slimy people and their are some lazy people. A rule of thumb if you decide to thumb through your files, start with the vendors which already raise question marks. That will be the likeliest spot you will find the biggest nuggets of gold first.

ADVERTISEMENT: For a FREE Freight Cost Savings Analysis to determine the savings to your company contact George Muha at (908) 879-2978 or gmuha@lmiservices.com.