How to File a Freight Claim?

The cargo business is full of uncertainties. Even the most trusted companies are not immune to the unpredictable conditions of the oceans. Meanwhile, shippers have the right to request financial compensation for lost, stolen, or damaged items by filing a claim.

In the following article, we are going to look at different types of freight claims closely and how you can accurately categorize and file your claim when a loss is caused. We will also discuss what documents you will need to file a claim.

What Is a Freight Claim?

A freight claim or cargo claim is a legal demand made by the shipper against a carrier in exchange for a lost, damaged, or stolen cargo. Such damages to the cargo are more common in sea freight than in air freight, and this is one of the reasons why shippers pay a higher price for air freight.

In this case, insurance for your cargo is necessary. But do remember that there is also a certain time limit to file for reimbursements. The time limit is usually present on the bill of lading or air waybill.

Common Claim Types

When a shipper files a legitimate claim, the carrier is liable to compensate either by replacing the goods in question or offering reimbursement.

There are some cases in which you may file cargo claims:

Damaged Goods

The goods delivered were in a damaged state to the extent that they’ve lost their actual shape and commercial value.

Incomplete Goods

The goods received were incomplete, and the items mentioned on the bill of lading were missing from the shipment.

Concealed Damage

The items lost or damaged were concealed and previously undetected, but were discovered after the proof of delivery (POD) was already signed. Examples include crushed boxes or broken items inside sealed cartons.

Lost Shipment

Your shipment was lost during transit, or it wasn’t delivered to you even after the estimated delivery date.

Contaminated Goods

Your goods were not contaminated before loading, but they got spoiled by environmental contaminants before they reached the destination. For instance, any chemical got spoiled or steel goods got corroded.

Refused Products

The goods reached the delivery points, but the recipient refused to take them without any justifiable explanation.

Broker Liability in Freight Claims

Although freight forwarders or freight brokers are generally not liable for cargo claims, there are some exceptions. Some of the major ways a broker can become liable for cargo damage or loss are:

The broker signed an agreement and agreed to be liable for cargo damage or loss.
The broker shows itself as a motor carrier.
The broker holds too much control over the motor carrier.

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Moreover, brokers may also face liability if they knowingly choose an unqualified or unreliable carrier, fail to communicate important shipping details, or misrepresent carrier capabilities to the shipper. Authorities view such negligence as a breach of duty, making brokers financially responsible for the shipping loss or damage.

Process of Filing Freight Claims

Once a freight cargo claim is filed, it is evaluated to determine whether the claim is genuine or if the broker is truly responsible for the loss or damage. Shippers hoping to get paid for their claim must provide related evidence or documents.

Here is the freight claims process that you can follow:

Step 1: Inspect the Freight Immediately

As soon as your shipment arrives, before signing POD, thoroughly check every item. If damages or shortages are visible, take photos and videos and clearly mention them on the POD.

If you sign your POD as “clear”, it will hinder freight claims later. Supposing you find any damage after signing the POD, file the claim as soon as possible, as different carriers may set different time limits for damage freight claims, normally within only 5 days.

Step 2: Evaluate and Save the Damaged Items

Make sure you calculate your loss carefully. It’s better to maximize the loss upfront, since the number can be corrected later during the investigation.

Do not discard anything, even if it seems non-recoverable. Keeping the actual cargo serves as the most important evidence. If repairs are impossible, clearly document the reason. If you discard the damaged goods too early, it will be easier for the carrier or broker to reject your freight claims.

Step 3: Submit a Claim Form With Documentation

Notify the carrier and complete the freight claim form. Attach all the documentation required for your case. Freight claims are often denied due to incomplete documentation. The more detailed your submission is, the smoother the freight claim process.

Step 4: Look for the Carrier’s Liability Limit

Understand your carrier’s maximum liability limit. It is based on the commodity, weight, and packaging. The liability limit can range from $0.25 to $25 per pound, up to around $100,000 per truckload. The freight claims can’t exceed this limit or your declared value.

Step 5: Keep An Eye on Claims Timeline

According to federal rules, carriers must acknowledge and respond to the claim within 30 days. Carriers are bound to pay, decline, or offer a settlement in writing within 120 days. As a shipper, track these dates and follow up if there’s no response.

Who Can Make Freight Claims?

To submit freight claims, you must be either the legal owner of the damaged or legal freight, an entity taking the risk of loss in transit, or a legal representative. Also, the claim you’re making must be directed to the carrier of the origin or destination. The claim request is sent to the carrier’s claim manager at the headquarters along with the proof.

In general, your freight forwarder can help you with this claim request. It is not a good idea to estimate the amount of reimbursement you will get, as this largely depends on the process. Always wait for the investigation to complete.

Freight Claim Documents Needed

To file freight claims against the lost or damaged freight, you may require the following documents:

The freight claim form
Original shipping documents, including the bill of lading
Inspection reports
Proof of delivery
Proof of the value of your lost or damaged freight
Invoices
Packing certificates
Photos or videos of damaged freight

The documents you need vary from case to case. Consult your insurance broker in advance.

What Happens If My Freight Claim Is Denied?

In most cases, freight claims are denied because of incomplete documentation, insufficient proof of damage or loss, or missed deadlines.

If your claim is denied, take a deep breath and carefully review your entire case. Go through the explanations given by the carrier or broker. You can directly file an appeal with your carrier or broker, making sure all required documents are included.

Even if your case hasn’t been resolved, you can still pursue legal action within the time frame.

Consulting a freight claim specialist or attorney can further increase your chances of success.

Conclusion

If you’re new to the shipping world, filling freight claims may be overwhelming initially. However, it will become far more manageable after you understand the process.

Always remember that a successful freight claim depends largely on timely action, complete and proper documentation, and clear communication between all the parties involved. Even if your claim is denied in the first place, you still have the option to appeal or pursue legal actions. Being informed and prepared helps you in handling the uncertainties during the process.

Frequently Asked Questions (FAQs)

What are the rules for freight claims?

A claimant must submit a formal written claim to the carrier within 9 months of delivery. If the claim is denied or not resolved, the claimant can pursue legal action within 2 years of the delivery date. However, the individual carrier contracts or Bill of Lading terms may be stricter.

There are usually 6 steps to file freight claims. These are as follows:

Confirm that your freight is damaged or lost.
Notate the bill of lading. In sea freight, the consignee should mark the BOL with any visible damage or shortage at the time of delivery.
Contact the carrier or broker.
Submit the formal freight claim form.
Wait for the carrier to inspect the shipment and review the documents.
Wait for claim resolution. Claims are usually processed within 30 to 90 days and this depends on the carrier and case complexity.

Is double brokering freight illegal?

Yes, engaging in double brokering can have certain legal consequences. In fact, in some cases, this may result in criminal charges and lead to imprisonment. The severity of penalties and likelihood of imprisonment hinge largely on jurisdiction and the specific circumstances of the case.