Minimizing Freight Claim Headaches
Communication and documentation are the keys to mitigating claims before they get too messy.
March 17, 2011
As a grower, you know it can take months or even years to produce a finished product. You put tireless hours, hard-earned money and personal pride into growing products that please your clients. And how unpleasant it is when you get that phone call from one of them reporting a claim on those products. You want nothing more than to make sure your client is happy, yet you know you must minimize your out-of-pocket costs, especially when it comes to claims.
The question is then: How do you mitigate most of these claims up front and handle them professionally when they do occur? The answer is to have a claims process in place before you ever load your product on a truck. The two basic components of that process are communication and documentation.
If you use your own drivers and local delivery trucks, you have much more control over the product and, therefore, are in a better position to avoid claims. You probably have communicated to your drivers how to properly load and unload the truck, how to interact professionally with the receiving client and, most importantly, how to document the situation when there is a problem with the product.
If you must rely on common carriers for longer-distance loads, you still can employ the same process used with local drivers; it just requires even more communication and documentation.
Claims Mitigation Process
Here are some of the steps you could include in your claims mitigation process:
• Order a truck that fits your needs. Remember you know your products better than anyone else, so order a truck that fits your specific needs. Do you need a 53-foot reefer or is a 48-foot large enough? Do you need decking? Load locks? Are there specific instructions about the weight or temperature? What are the specifics of the pickup and delivery dates and times? Does the driver need to unload? List all these requests upfront on your own load tender form and be sure the carrier confirms them by signing the form.
• Set forth your claims process upfront. The load tender form should outline your claims process clearly, describe the frequency of check calls and explain your general expectations. It is best that the carrier know your expectations for claims processing upfront. This puts the responsibility to meet your expectations on the carrier and will also help you to obtain all necessary documentation.
• When the truck arrives, don’t overload it. If you can’t fit the client’s order on the truck without risking breakage or the load being overweight, don’t load it. The client should understand that a smaller order is better than a ruined one.
• Don’t load questionable product. Train your loading staff on what to look for in a healthy product, as well as when and how to report products that don’t look their best. It is better to have a second set of eyes on the product before it leaves the dock than to have a disappointed client, a claim that won’t be paid and no way to get the product back into inventory to rework and resell later.
• Ensure the carrier reads and understands any special instructions. Even though you list special instructions for the trucking company or driver on the load tender, list them again on your bill of lading (BOL or POD) and reiterate them to the driver. Everyone can make a mistake and listing this information in several places will help to prevent errors on the part of the trucking company, the driver and your staff. You want the carrier, driver and your own staff to communicate and to be accountable, so give them the instructions they need to achieve this goal.
• Place claim information on your BOL or POD. Remember to state that the claim must be filed upon receiving the goods and while the driver is present. Provide the name and phone number of the contact person, and/or the e-mail address for reporting claims, on the BOL. Both the receiver and driver should sign the BOL that notates any overages, shortages or damages (OS&D). The prompt reporting of this is key.
• After the truck is on its way, check its delivery status often. This process is easier if your carriers have an online transportation management system (TMS), but even if they do not provide this service, you should still require updates from them. Let them know upfront that they must inform you of delays that may cause late deliveries. Delays caused by traffic or weather are sometimes unavoidable, but a good carrier will inform you or your client of the delay, at your request. Open communication between the carrier, your client and you means you are all working together to get the product there in good condition.
When Claims Are Reported
If you follow the steps above, you already have taken significant steps to mitigate any possible claims long before the truck arrives. If a customer does report a claim, you can still take steps to avoid paying the claim when you believe it cannot be justified.
• Request that the customer take pictures immediately – and as many as possible. Request both close-up shots and wide-angle shots. Each may tell a different story. If your receivers or customers say they do not have a camera, urge them to use their cell phone camera. If they expect to claim you, they should expect to provide you with proof of the damage.
• Request that the driver take pictures, as well. This keeps everyone honest. The driver may have a different view of what occurred during delivery. It is better to have both sets of photos to compare and see where the problem may have occurred.
Claims Documentation Process
Next, you should start your claims documentation process. This process should include the steps listed below.
• Send a claim form to your client. The form should ask the client to state exactly what the claim is for, the date of delivery, the quantity, item name, pot size and the description of the quality of the product when it arrived. The client should specify why the product is unacceptable and the reason for filing a claim.
• Also send a claim form to the carrier asking the carrier for a full description of what happened at the time of delivery. A driver may not have access to e-mail or a fax machine at the time to give you a written statement, but ask the driver to complete the form within 24 hours or submit it via his dispatcher.
• Ask both parties to send their completed forms along with their respective photos and their copies of the BOLs. Once you receive the forms, photos and BOLs, you should have enough documentation to determine where the problem may have occurred – either internally or with the carrier or the client. Remain professional with both the client and the carrier and remember to send each of them a confirmation of the claim, summarizing all the documentation. State that you will provide a determination within five business days. Whether the claim is legitimate or not, this is your chance to shine with your clients. You have a chance to show them you are professional and willing to work with them to get their claims resolved.
Claims happen. Ignoring them will make things worse. It’s how you handle them that’s important. A well-documented claims process will discourage frivolous claims, reduce legitimate claims and enhance the professional image of your organization.
Please note that this article’s objective is to assist you as a shipper in setting up a process to help recognize legitimate claims and is not presented as legal advice.