In a perfect world, every freight shipment would reach its final destination intact and in perfect condition. But in the real world, damaged freight is an occasional and unfortunate occurrence that business owners and carriers alike have to account for.
Carriers must also prepare for damaged freight, as even one bad shipment can lead to wide-ranging negative consequences.
Let’s take a closer look at the cost of damaged freight for carriers and shipping companies.
What’s Considered Damaged Freight?
“Damaged freight” in the logistics industry is:
- The partial or total damage to a shipment or part of a shipment
- The loss or partial loss of a shipment
Because of this generalized definition, damaged freight can take many different forms. For instance, a business product smashed in transit counts as damaged freight. So does a piece of furniture with the edge chipped off because of an impact with other cargo in the back of a truck.
However, a box missing from a freight shipment also constitutes damaged freight, even though the box might be safe and sound somewhere else. Carriers just need to know that damaged freight is any freight that arrives in less-than-perfect condition and lost freight.
What Are the Costs of Freight Damage?
Unfortunately, freight damage can cost you dearly as a carrier or trucking owner-operator. You can anticipate three major expenses and try to counteract them in this industry.
Replacement Costs
Firstly, you may face high replacement costs depending on whether you are responsible for the lost or damaged cargo. In many cases, carriers have no choice but to pay for the replacement costs for damaged cargo, even if they don’t believe they were responsible, because clients will threaten to stop doing business with them otherwise.
Depending on the damaged cargo and its value, replacement costs can be quite expensive. Although insurance could cover some of these costs, it may not cover all of them. In the worst cases, the damaged cargo you are responsible for could make a shipping contract less profitable or not profitable at all when everything is said and done.
Due to this potential cost, it's imperative that your drivers be as careful as possible when loading and unloading freight and when making sure that freight is secured/unable to move around while in transit. If freight is damaged through no fault of your own, you may not have to pay for the replacement costs of that cargo.
You can contest such claims if you’re not responsible for damaged freight, either because a client misplaced a shipment or made some other error. But keep in mind that this may cost you in terms of time and money and likely prevent you from picking up other shipments from the same client until the situation is resolved.
Freight Claims Costs
Companies and clients may also make freight claims against your carrier business. A damage claim will require you to refund some or all of the shipping costs to your client if the claim is successful.
In other cases, a client might accuse you or your workers of concealing damaged cargo. They may file a concealed damage claim as a result, which means that damage was hidden or not noticed until after delivery and is not noted on a POD or freight inspection notes. Although concealed damage claims are hard to prove, they can cost your carrier business massively in terms of time, money, and reputation.
For one, you’ll need to perform an in-depth inspection and investigation of the people involved in the alleged concealment attempt, like individual drivers or dockworkers. For another, you may need to hire legal representatives to ensure you are defended properly.
Freight claims costs can quickly add up, whether because the client is correct or because you simply want to pay them off so that business resumes as normal. Add legal fees to the mix, and freight claims can be financially devastating for any shipping business.
Reputation Damage
Reputational damage could be considered the worst cost of freight damage overall. As a carrier or truck driver, your reputation is highly important, as it allows you to get more work from your clients and continue money flowing into your business coffers.
If, after several unfortunate incidents with damaged cargo, more clients get wind of your “subpar” cargo protection, they may stop contracting you for work. Even if damaged cargo isn’t your fault, it can be difficult to clear your name or ensure the right version of events gets spread around.
Reputational damage can happen instantly, but it may take months or even years to repair. This is another reason some carrier companies don’t fight replacement cost requests or freight claims if they aren’t too expensive, even if an individual truck driver isn’t at fault for damaged cargo.
You must do everything you can to avoid damaged freight in your carrier business if you want to avoid reputational damage as well.
Can You Avoid Cargo Damage?
On the plus side, you can avoid cargo damage and minimize the chances of seeing any of these costs by practicing some preventative measures with each cargo shipment you load into your truck.
As a carrier, you can:
- Use impact protection materials and blocks for fragile items. In theory, your business customers or clients should already do this to some extent, but you might pay for your own impact protection mats, bubble wrap, and other supplies to reinforce or cover those items yourself.
- Use the right straps and tie-downs for the job at hand. For instance, if you have an LTL or less-than-truckload shipment you need to deliver, it might be a wise idea to tie down any heavy items that might slide around and bump into lighter items on the journey.
- Make sure that items are packaged correctly. If, for example, your client wants you to ship fragile boxes stacked or prepared haphazardly or dangerously, you can request that they be repacked before transit. If the client refuses, take a handful of photos of the products beforehand; that way, you’ll have visual evidence showing that any damage incurred during the journey is not due to your driving.
In fact, it's a good idea to take pictures of cargo shipments you pick up before leaving the pick-up location each time you have a new load. Then take some more photos when you arrive and drop off your shipments. This is a great way to protect yourself from legal liability and from accusations of concealed freight damage.
The Bottom Line
In the end, even the most careful trucker or owner-operator can’t avoid damaged cargo entirely. From time to time, you’ll need to know what to expect if someone brings a freight damage claim against you or if someone tries to accuse you of concealed freight damage.
Fortunately, end-to-end transportation services like RPM can protect you from legal action and ensure you receive the resources you need to fight false claims. With our help, you’ll avoid some of the worst costs of freight damage and retain your reputation and working abilities.
Contact us today to learn more.
Sources:
Freight damage claims FAQs | GSA
HOW TO FILE A FREIGHT CLAIM FOR LOSS OR DAMAGE A claim against a motor carrier is a legal demand for the payment of money arisen | TL Council
What To Consider When Choosing A Shipping Company | Forbes
