Freight Tip: Should You Accept Damaged Freight?
You work hard in your business. You have plenty of responsibilities, and your business is expanding its operations to include shipments that may circumnavigate the globe. But, the risk for damage increases with each additional step in the shipping process. Unfortunately, you will have times when you encounter a damaged freight delivery, and you will be faced with the choice to sign for or refuse the damaged freight. If you think refusing it is your best option, you are sorely mistaken, and you could be on the hook for additional shipping costs, depending on the carrier. Rather than simply turning the driver away, you need to know a few things about accepting or refusing damaged freight.
Accept the Damaged Freight!
Do you know what happens if you accept damaged freight? Well, the answer is pretty simple. If you notate the specific damages and file the claims appropriately, you will probably be compensated by someone. If the damage was to insufficient packaging, the original shipper is probably at fault. Meanwhile, if the damage was caused by the activity of the carrier, the carrier will likely have insurance to cover the loss. But, if you accept damaged freight without documented each and every damaged item, you could be stuck with the bill in the end.
Don’t Carriers Automatically File Damaged Freight Claims?
NO. NO. NO. NO. NO. NO. I cannot stress this enough. It is your responsibility to follow through with a damaged freight claim.
In general, you only have 15 days to file the damaged freight claim. Some carriers may have longer claim times, and newer technologies, such as RFIDs, may be used to prevent missing freight from being an issue. However, even these technologies can have faults, and when you accept damaged freight, you should immediately notify the appropriate carrier.
Once you have notified the carrier of the issue, which begins the moment you sign for the freight in a detailed notated list of all damaged items, the claims process should begin. Unfortunately, you may be under obligation to contact a claims’ department or fill out additional paperwork.
If you fail to thoroughly document the damages, you might as well eat the cost of the damages. Basically, a signed, unannotated bill of lading (BOL) is a receipt acknowledging the freight was delivered in good condition. Even if the BOL does not clearly state this, it is a common practice to use the BOL as proof of undamaged delivery.
What’s the Problem With Refusing the Freight?
Take a moment to think about what refusing freight means.
The carrier will need to ship it back to its facility and store it until the claim has been processed. Some carriers may willingly take on this responsibility, but it could cost more than you realize. Since you are responsible for the failure to accept the freight, you could be on the hook for storage and processing fees.
More importantly, putting freight back into the hands of a carrier that may have damaged it does not seem like a good idea. According to Neal Willis, damaged freight is going to get in the way, and it may be more susceptible to further damage as a result. Even if the freight were to sit in one place indefinitely until the claim has been processed, it will still need to picked and removed eventually, increasing the risk of damage.
There are also specific considerations for the filing of an insurance claim. If you have purchased a third-party insurance policy, does the policy have any repercussions for refusing the freight in the claims’ process?
Your insurance company may require you to accept the freight, submit pictures and even allow inspectors to come review the status of the freight in person. Ultimately, refusing to accept damaged freight means you are putting the hope of easy access to it in the hands of the carrier. In other words, you have more control over the situation if you keep it. Do you really trust that carrier to not make the same mistake again?
Should You Keep the Freight in Your Facility?
YES. DO NOT, UNDER ANY CIRCUMSTANCES, GET RID OF THE DAMAGED FREIGHT DURING THE CLAIMS PROCESS.
There is no easy to deal with damaged freight, but you should not get rid of it. You will find a use for it in the future. Sure. You may need to reorder freight for your customers, or you may need to explain any delays to business partners or other customers. However, you can still benefit from the process.
Since the damage claim is for the items damaged, you may be able to use the items for other purposes. Obviously, you would not want to put any future customer relationships at risk, but some salvage operations may be willing to purchase the damaged items after the claim has been processed. However, you should always check and double-check to make sure the carrier or insurance underwriter will not be taking possession of the products.
It’s also imperative that you only do something with damaged freight once any claims have been processed and the carrier’s appeal dates have passed.
The Big Picture.
You have a choice when freight arrives at your door in damaged condition. Do you accept it, or do you refuse it with the hope of a successful claim for freight damage? While refusing it may seem like the obvious answer, you should make every attempt to accept it and document the damage at the point of delivery. In other words, write what is damaged, where it is damaged and a complete, specific number of damaged items in detail on the bill of lading.
No one wants to deal with or accept damaged freight, but can you afford to just lose the money it by doing anything else?