67. Freight Claims Process

 67. Freight Claims Process

How to Handle Loss, Damage, or Delays in Cargo Transportation

What Is a Freight Claim?

A freight claim (also called a cargo claim or transportation claim) is a formal request for compensation made by a shipper, consignee, or third-party when goods are lost, damaged, delayed, or delivered with discrepancies during transit.

Freight claims are a crucial part of logistics risk management, and understanding the process is essential to protect your financial interests and maintain trust in your supply chain.

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When Can You File a Freight Claim?

You can file a claim when:

• Goods are physically damaged (e.g., broken, crushed, contaminated)

• Part of the shipment is missing (shortage)

• Goods are completely lost

• Delivery is significantly delayed beyond contractual terms

• Wrong items were delivered

• Concealed damage is discovered after delivery (within a limited time)

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Types of Freight Claims

Type	Description
Damage Claim	Filed when goods arrive in visibly damaged condition
Shortage Claim	Filed when part of the shipment is missing
Loss Claim	Filed when the shipment never arrives
Delay Claim	Filed when time-sensitive delivery is late
Concealed Damage Claim	Filed after delivery when damage is discovered inside packaging

Legal Frameworks Governing Claims

The process and liability rules depend on the mode of transport and the country involved:

• CMR Convention – for international road transport in Europe

• Hague-Visby Rules – for sea freight

• Warsaw / Montreal Conventions – for air freight

• Carmack Amendment (U.S.) – for rail and motor carriers

• INCOTERMS – define who (buyer or seller) is responsible for the shipment

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Basic Freight Claims Process (Step-by-Step)

Step 1: Inspect the Goods Immediately

• Upon delivery, inspect for damage or shortages before signing the delivery receipt.

• Note all visible damage or missing items directly on the Bill of Lading (BOL) or Proof of Delivery (POD).

• Take photos as evidence.

Step 2: Notify the Carrier Promptly

• Send a written notice of intent to claim as soon as possible.

• Most carriers require notification:

  • Within 7 days for visible damage

  • Within 15 days for concealed damage (varies by country)

  • Within 30–60 days for loss or delay

Step 3: Gather Documentation

You’ll need to provide:

• Original Bill of Lading (BOL)

• Delivery receipt with noted exceptions (if any)

• Commercial invoice showing the value of goods

• Packing list

• Photographic evidence

• Repair estimates or replacement invoices

Optional: Insurance policy, correspondence with carrier

Step 4: File the Claim

• Submit a formal freight claim to the carrier or their claims department.

• Include all required documentation and specify:

  • Amount claimed

  • Description of the issue

  • Supporting evidence

Step 5: Carrier Reviews the Claim

• The carrier investigates by:

  • Verifying delivery records

  • Interviewing drivers

  • Inspecting packaging

  • Comparing against terms of carriage

• Carriers typically have 30 to 120 days to respond.

Step 6: Claim Resolution

• The carrier accepts, partially accepts, or denies the claim.

• If accepted, the carrier will pay compensation (based on liability limits or actual loss).

• If denied, you can appeal, seek legal advice, or claim through your insurance provider.

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Limits of Carrier Liability

Most carriers are not liable for the full value of lost or damaged goods. Their liability is usually limited by:

• Weight (e.g., €10 per kg or $0.50 per pound)

• Declared value (if not pre-declared, liability is minimal)

• Transport mode rules (air, sea, road)

• Incoterms agreements (e.g., under EXW or FOB)

For high-value shipments, it’s often essential to purchase cargo insurance to recover full value.

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Best Practices to Reduce Freight Claim Risk

• Use proper packaging suited for the transport mode

• Label shipments clearly with handling instructions

• Take photos before and after packing

• Train staff on receiving and inspection procedures

• Work with reputable carriers and 3PLs

• Buy cargo insurance for high-value or sensitive goods

• Keep digital records of all documentation and communications

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Common Mistakes That Lead to Claim Denials

• Signing the delivery receipt without noting damage

• Filing the claim too late

• Missing required documents

• Poor packaging that shifts blame to the shipper

• Failing to follow the claim process properly

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Example

Scenario: A shipment of 500 bottles of olive oil arrives with 120 bottles broken and leaking due to improper handling.

Claim Process:

• Damage is noted on the delivery receipt

• Shipper sends notice of intent within 48 hours

• Photos and commercial invoice attached

• Claim filed for €1,200 (cost of damaged units)

• Carrier accepts partial liability (€0.50/lb limit)

• Remaining value covered by the shipper’s cargo insurance

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Summary

The freight claims process is a structured method to recover losses from transportation damage, loss, or delays. It's essential to:

• Act quickly

• Provide clear evidence

• Understand who is liable

• Know the rules of transport

• Maintain proper documentation

In modern logistics, knowing how to handle freight claims is a sign of operational maturity and risk awareness. It protects your business, your customers, and your financial stability — especially when things don’t go as planned.

Lesson 68