Here are the top 4 mistakes that companies make with their freight claim management.
1. Not Claiming Enough
When filing a damage claim, many companies simply claim the cost of the damaged goods. But there are many additional costs that you are able to claim. Did your staff spend time sorting or testing damaged products to separate what was useable from what was not? You can claim your labor expenses. Did you spend money on disposal costs or return shipping? There are many more costs that are recoverable.
2. Ignoring Small Claims
It’s common practice to ignore small claims for damages under a certain amount, such as $50. It’s hard to justify filing a claim for such a small amount when the labor to file and manage the claims will cost as much or more than the reimbursement itself.
But companies are often unaware of how much these small claims can add up to. Three $50 claims per month adds up to $1800 over the course of the year. If operating at a margin of 5%, it would take $36,000 in sales just to recover this loss.
Of course, it doesn’t help to know this when it would still be more expensive to file the claims in-house then what you would receive back for filing the claim. But like anything, there are professionals who can manage your claims for you at a lower cost than you could do it in-house.
3. Accepting “No” for an Answer
Managing freight claims is a core part of business for any carrier. Therefore, carriers get good at determining when they can turn down claim requests. However, for many shippers, freight claim management is an additional chore separate from their normal business. As a result, they aren’t usually as skilled as carriers in negotiating freight claims.
As a result, shippers are likely to accept a lower payment – or an outright declination – from their carrier. Granted, sometimes shippers are not legally entitled to the payment that they request. However, often times the shipper is entitled to a higher payment then they are being offered – they just don’t realize it.
4. Assigning Freight Claim Management to the Most Junior Team Member
Freight claim filing is often seen as a mundane task that consists simply of filling out forms. And perhaps because at a basic level, this is all that is really required, freight claim filing is often assigned to the newest member of the team.
But filing freight claims properly is a task requiring a high degree of skill. In order to achieve a high success rate of claim payment, the person filing claims must be proficient in freight claim law. In order to avoid costly missed deadlines, they must be highly organized. In order to catch problems with carriers or packaging that lead to damages, they must be highly analytical, in order to find trends in the data.
This is where professional freight claim filing services can help. There are many 3PLs who will manage freight claims for you. Some will even work on a commission-only basis, being paid a percentage of the revenue that they save you. Even if you want to keep your freight claim management in-house, invest in some coaching or training by a professional. When done properly, this chore of freight claim management can actually become quite profitable.
The CDS team are the leading expert in freight claim management. With over 100 years of combined logistics experience, they have done work on both the shipper side and the carrier side. In their infancy, they developed one of the first TMS systems, including a Freight Claims Management Module, used by the Federal Government and Fortune 500 companies. Today, they are pleased to tailor their freight claim services to meet their clients’ needs, whether that is through simple consulting work or full freight claim management. You can learn more about them here.