The 4 Freight Claim Programs You Need to Be Running

Freight claim management involves more than just filling out a few forms. Ideally, your company will have a number of procedures in place in order to minimize losses and ensure maximum recoveries. Here are the top 4 freight claim programs you should be running.

No More Customer Giveaways

If a customer hasn’t received their shipment, your customer service department will typically credit them for the price of the missing product, or send them a new product free of charge. In order to reimburse your company for this loss, the next step is to file a claim against your carrier. However, what happens if the customer does end up receiving their shipment, after you’ve credited their account? In this case, the carrier will reject your claim. This is where most shippers lose track of the claim. The key here is to keep track of credited customers and rebill those who did end up receiving the product. This way, your company is still made whole.

Don’t Limit Claims to Carriers

Carriers frequently deny claims because they are legitimately not responsible for the damages. If this is the case, don’t abandon the claim without further investigation. If your supplier sent a damaged or poorly packaged shipment, then you can file a claim against them, instead of your carrier.

Keep Suppliers in Line

While you should be prepared to file claims against your suppliers when necessary, ideally you’ll help your suppliers to avoid mistakes that lead to damages. You can do this by implementing a program to provide detailed instructions to suppliers regarding proper packaging and shipping. While this will prevent some damages, it will also help you to recover losses from suppliers in the case of non-compliance.

Review the Data

Of course, the best thing you can do is to prevent freight damages entirely. You should be regularly reviewing your reports to find trends in your claim data. Which products are damaged most often? Are there certain carriers, warehouses, or shipping routes that are most prone to damage? Use this data to revise your processes and retrain personnel.

While many of these programs consist of relatively simple ideas, actually implementing them is an area where most companies struggle. For help implementing these programs and other freight claim management processes, read about our Freight Claim Assistance Program.

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Your Graphic Guide to The Effect of Selling Terms on Distribution

How do your selling terms affect who pays for shipping, who finds insurance, or who files the freight claim? This infographic explains everyone’s responsibilities in each situation.

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What Happens When Santa’s Shipment is Damaged…On Christmas Eve?

North Pole Ltd. has a unique business structure. The non-profit is a large manufacturer and also maintains all of its shipping and logistical responsibilities in house. The president and founder Santa Claus started the organization in order to deliver Christmas toys to deserving children around the world. Like any shipper, they struggle with freight damages. However, Claus knows that it only takes one damaged package to ruin a child’s Christmas.

Ensuring No Child’s Toy is Damaged

In order to avoid this issue, Claus checks each and every one of his gifts for damage after they are placed under the tree. (He currently holds the patent for AntiGrinch, his handheld damage detection system.) However, once he finds a damaged gift, it needs to be replaced.

The damaged package is scanned with their RFID system, and the order is sent to the nearest Major Expedited Replacement & Repair Yard (MERRY). “We make extras of the requested toys, specifically as replacements in the case of damage,” says Claus. Supplementary teams deliver the replacement toys to the houses that need them so Claus can continue on his route. They will even repair the toys in the home, where possible.

While the extra inventory of replacement toys works most of the time, sometimes they run out, and sometimes toys cannot be fixed. There’s also the issue of rarely requested toys that they don’t make replacements for. This is where Expedited Lean Fabrication (ELF) comes into play. “We have a team that will make the necessary toys from scratch.” This is all in the name of ensuring that no child wakes up to a broken toy.

The Cost of Replacing Damaged Toys

“A 5% damage rate doesn’t sound like much, but when you average 10 billion toys per year, that’s 500 million toys,” says Claus. “Of course, we try to be as generous as we can, but we do have a budget, and the damaged toys eat into that budget.” And the costs are huge, since the cost of MERRY’s process is sometimes twice the cost of the average toy, and toys made through ELF can be as high as 10 times. “If I had a 0% damage rate, I could give out an extra 1 billion toys, easily. But that’s what I need to do to ensure that no child opens up a damaged toy on Christmas morning.”

“It seems the most popular toys are also the ones that are most prone to damage. Electronics, paints that are prone to leaking, craft kits with breakable little pieces.” Claus sighs. “I never have an issue with clothes. Kids don’t want clothes, but I send them anyway because they don’t get damaged.”

Tracking and Preventing Damage to Toys

It was only two years ago that Claus started using MyEZClaim Freight Claim Management System to help him track damaged gifts. “The data I gained from the system was incredible,” says Claus.

Down the Chimney

A key feature is that the system allows custom fields. It was the first time MyEZClaim had ever listed a field called “Chimney”, but it was essential for Claus to track.

“I quickly realized that 10% of my damages came from houses with chimneys. While it was once my most effective delivery method, chimney construction has changed over the years, and it turns out the gifts are more likely to be damaged when delivered this way.”

A Bumpy Sleigh Ride

Then there’s the ability to sort damaged toys by route. “The system shows a map with all my shipping routes, and it was clear that some of them have higher damage rates than others,” Claus explains. “It turns out that some routes put the sleigh through some pretty strong turbulence.” And to correct the issue? “Now I use extra dunnage bags and straps on those routes to keep the toys from moving.”

Feliz Navidad

Another key feature that Claus found useful is the ability to sort shipments by multiple fields. At a glance, electronic gifts did not have a noticeably high damage rate. However, when toy type was sorted by region, a pattern emerged.

“Electronic toys delivered to the tropical regions were being damaged by the high humidity. When you spend all your time up North, and it’s so cold and dry, humidity just isn’t something that you think of.” Since realizing this, Claus has adjusted electronic toy packaging based on the region. Electronics going to tropical regions are given more drying agent packs, or utilize fully sealed plastic packaging instead of cardboard. “But I can keep the packaging costs lower in dryer regions, because humidity damage just doesn’t happen there. And now we know that.”

Goodbye SCROOGE

MyEZClaim also allowed him to identify issues by individual plants. “When I noticed a difference in damage rates for china dolls coming out of two of my plants, I didn’t understand why. It turns out, one of the managers had implemented a SCROOGE initiative (Simple Cost Reduction Out Of General Expenses) and they had switched to a thinner grade of foam. I’m a huge fan of lean initiatives, but now we know that it was costing more in damages than it was saving.”

The Results Are In

So what is the end result? “Thanks to the data I got from MyEZClaim, I was able to reduce damages by 20% last year. That means that this year, I don’t need the same budget for replacements. Instead, I can give out 200 million more toys.” He smiles a big smile. “And this year, I don’t have to give out clothes!”

Not a Believer Yet?

Mr. Claus isn’t the only provider of Christmas gifts who uses MyEZClaim.
Click here to download our case study with Best Buy.

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How Logistics is the Cause – And Cure – Of the Ebola Outbreak

The Ebola outbreak in West Africa is not the first Ebola outbreak the world has seen, but it has been the widest spreading and the deadliest. In the past, outbreaks have burned out quickly, but the current Ebola outbreak is spreading with a rapidness that some are calling an international crisis.

And the reason for that is our improved logistics system.

The Spread of Ebola

With faster, increased travel between communities and countries, Ebola has been able to spread quickly. CTV has created a timeline of the progress of the disease. Here are the key dates that illustrate how Ebola has spread:

March 23rd: Ebola is confirmed in Guinea

March 28th: The disease spreads from a remote area of Guinea to the capital

March 30th: Ebola is reported in Liberia

May 30th: Sierra Leone reports deaths from Ebola within their borders

July 25th: Ebola reaches Nigeria

Aug 29th: The outbreak expands to Senegal

Note: Ebola has also been reported in the Congo, but this appears to be a separate case and is not due to spread from West Africa.

The patient who brought Ebola to Nigeria nearly brought it to the United States as well. He was planning to fly to Minnesota to visit his wife and children. The severe, quickly acting symptoms are what make the disease so deadly, but also what prevent it from spreading more quickly; the man was quarantined and soon died before he was able to leave Nigeria.

The Role of Logistics in Stopping Ebola

At a glance, it would seem that travel restrictions would be the best way to contain Ebola, which several countries and carriers have initiated. The CDC has declared a Warning, Level 3 travel notice for travel to Guinea, Liberia, and Sierra Leone. A Warning Level 3 advises Americans to avoid any unnecessary travel to these countries. The CDC has also declared an Alert, Level 2 travel notice for Nigeria and the Congo, meaning that travelers should take extra precautions if traveling to these countries. British Airways, Kenya Airways, Arik Air, and African airlines ASKY have stopped flights to Ebola stricken regions.

However, there is a delicate balance between restricting travel enough to stop the spread of Ebola, and restricting travel so much that supplies and medical personnel cannot be shipped in – thus making the outbreak worse. The WHO has already had difficulties travelling to and from affected regions, and they report that further restrictions could create a “humanitarian emergency”.

For these reasons, it is crucial that airlines and other carriers cooperate with health officials to limit the spread of the disease while continuing to provide transit for medical personnel, food, fuel, and other essentials.

Transporting Vaccines

Another important area of logistics with regard to Ebola is the transport of vaccines. In fact, Winnipeg, Canada developed an experimental Ebola vaccine and offered to donate it to the WHO. However, weeks after offering the vaccines, they were still stuck in Canada due to logistics problems.

Transporting a vaccine is challenging. One of the issues is that the vaccine must be kept at a cold enough temperature to keep its effectiveness. This can be especially difficult when transporting the vaccines to areas with underdeveloped or unreliable supply chains and storage facilities.

Moving Forward

Overall, the international supply chain will continue to play an important role alongside health care officials in stopping the spread of the Ebola outbreak, as well as transporting vital people, supplies, and vaccines to aid in recovery.

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Securing Your Freight – Part 2

Here are some additional ways to prevent freight damage through proper freight securement.

Friction Mats

Friction mats reduce the risk of your freight sliding around. They are especially important when using slippery plastic pallets.

When using friction mats for several pieces of freight, use one full length mat for all of the pieces, rather than cutting the mat into individual pieces for each unit of freight. The mat should extend beyond the edges of the freight for proper effectiveness.

Dunnage Bags

A dunnage bag, or airbag, is an inflatable bag used to fill the space between two pallets or between the pallet and the wall of the dry van. This helps to prevent the pallets from moving or tipping during transit. When using dunnage bags, keep these tips in mind:

  • Do not use the bags between the pallet and the door; changes in temperature or altitude can cause the dunnage bags to expand. This can cause the doors to open forcefully when unlatched, potentially causing injury.
  • Use the right sized dunnage bag. The dunnage bag should not extend beyond the edge or top of the cargo. If it does, the dunnage bag may pop out during transit.
  • Follow the instructions and do not overinflate.

Blocking & Bracing

Blocking are pieces of wood that are nailed to the floor of the trailer or container to prevent freight from sliding around. They are positioned behind and in front of the freight, and/or the sides. Bracing are pieces of wood that extend from the ceiling to the floor or walls to prevent cargo from tipping. When using blocking and bracing, ensure that you use quality wood without rot, knots, or signs of splitting.

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Securing Your Freight – Part 1

As we’ve stated on this blog several times before, the best way to reduce freight claim costs is through prevention. An excellent way to reduce damaged products is by ensuring that your freight is properly secured in the trailer or container. Here are a few tips and methods to help you protect your freight from damage.

1. First Things First

If you get nothing else from this article, just remember this: do not assume that your carrier will secure your freight. If you are loading the trailer or container yourself, make sure that you secure your shipment. If the carrier is responsible for loading, make a point of asking them to secure the load. Not all dry van drivers will take the extra time to secure freight within the dry van, so make sure you specify that they need to do so.

2. Pre-Check

Before loading, check the trailer or container for anything that could harm your freight. Are there wood shards or nails left from the last shipment’s pallet? Is there anything protruding out of the floor, ceiling, or walls of the trailer or container? Small but sharp objects like these can be especially harmful if you are shipping boxes filled with bags of liquid products.

3. Straps

Straps can be used on both flat bed trucks or within dry vans to ensure that freight does not move around. In order to determine the strength of the straps that you need to use, look up their working load limit. This is the maximum amount of weight that the strap can hold. You can then use the working load limit of each strap to find the aggregate working load limit, which is simply the total of the working load limits for all of your straps or securement devices used to secure a section of freight. The aggregate working load limit should be at least one half of the weight of the freight that you want to secure. If the aggregate working load limit is too low, add more straps.

4. Edge and Tarp Protectors

Although securing your freight is meant to prevent damage, you may run into a situation where the act of securing your freight actually causes damage! Straps pulled tight across cartons may begin to crush the carton edges. Even a tarp pulled over a load can damage carton corners on some of the more delicate packages. To avoid these issues, you can use edge protectors and tarp protectors. Edge protectors spread the tension of the strap over a wider area of the carton to reduce the risk of the carton being crushed by the strap. Tarp protectors work in a similar way to protect delicate corners from being crushed. These tools will also ensure that your straps and tarps last longer.

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Canadian Freight Claim Filing Deadlines

No matter how knowledgeable you might be about freight claims, if you don’t file on time, the carrier will likely decline your claim. Therefore, it’s essential that you keep track of time limits for filing claims or lawsuits.

Deadlines differ depending on the shipping modality, region, and even the type of product being shipped. Here is a brief summary of Canadian filing deadlines by shipping modality.

Ground Shipments:

Claims against ground carriers (truck or rail) need to be filed within 9 months of the shipment date. The exception is for livestock; in this case, the approximate amount must be given within 90 days of delivery, or within 90 days of expected delivery if no delivery was made. (Highway Traffic Act).

According to Freight Claims in Plain English, there is some room for interpretation when it comes to the time limits to file suit. To be safe, shippers should file suit within the 9 month claim period. The alternative interpretation would give the shipper 2 or 6 years to file suit, depending on which province suit is filed in.

Air Cargo:

For freight shipped on an international flight, a claim must be filed within 14 days for damage claims, or within 21 days for delay claims. (Schedule III, Article XV of the Carriage by Air Act, R.S.C. 1985, c C 26).

Actions against the carrier must be initiated within 2 years of the delivery date or expected delivery date, or the date when carriage ceased. (Schedule I, Article 29 of the Carriage by Air Act, R.S.C. 1985, c C 26).

For domestic flights, time limits for claims are left up to the individual carriers’ tariffs.

Marine Cargo:

Documentation of the claim must be made when the cargo is received, or within 3 days if the damage is not immediately apparent.

The time limit to take action against the carrier is 1 year from the date of delivery, or 1 year from the expected date of delivery in the case of lost goods. (Article III(6), Schedule 3 of the marine Liability Act, S.C. 2001, c. 6).

Note that this article provides a summary for each modality, and special circumstances may result in different time limitations. And remember, the time limits illustrated above only apply to Canadian shipments.

For time limitations for filing claims or lawsuits against American carriers, download our whitepaper: USA Claim and Lawsuit Filing Deadlines.

Disclaimer: The information on this blog is for personal reference only. This is not official legal advice. We accept no responsibility for consequences resulting from the use of this information. For official legal advice, talk to a certified professional.

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Factors to Consider When Choosing a Forklift

When it comes to forklifts, there is a wide variety of types to choose from. Here is an overview of a few factors to consider when looking for a forklift.

Indoor vs Outdoor Forklifts

The first question to consider is where you will be operating the forklift – indoors or outdoors? If you are operating outdoors, you may need to move over uneven surfaces. For this reason, you will want a forklift that features pneumatic tires. If the ground where you will be operating on is especially rough, you may even want to opt for rough-terrain tires.

If you are operating indoors, cushion tires are generally preferred. If you are operating in a showroom or other client-facing environment, it is important that your floors are kept clean and scuff-free. In this case, you may want to consider non-marking tires.

Power type is another factor to consider if operating indoors. Forklifts running on gasoline or diesel fuel will compromise the indoor air quality of a confined indoor space. They are also noisier than battery powered forklifts. Battery powered units are ideal for indoor use for these reasons.

Load Types & Requirements

The type of materials and products you are moving is another important consideration. Are you just moving small, compact loads? A manual pallet jack or pallet truck may be sufficient. A pallet jack is similar to a dolly, but it includes a pneumatic or manual lift to raise the load off of the ground. Are you carrying long loads such as pipes or beams? In this case, a sideloader will provide better load stability and ease of movement, compared to a traditional forklift.

Also consider the information you need to collect about the load. Is it important that you know the weight of each load prior to loading it onto a trailer? It is possible to add a weigh scale directly onto the forklift for this purpose.

Forklift Movement and Maneuverability

The third factor to consider is the movement required. If you need to maneuver around tight spaces, a 3 wheel counterbalance forklift is a good option. This forklift includes a single rear wheel which gives it a tight turn radius for navigating small spaces.

If you need to stack warehouse shelves, reach trucks are an attractive choice. This type of forklift features stabilizing legs which enable it to reach out into stacks of product and lift over 10 meters high, all in a compact design.

For lifting to even greater heights, a telescopic handler may be used. This piece of equipment functions similar to a crane, and enables such tasks as lifting pallets from trucks directly onto rooftops.

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The New Pirate Headquarters – It’s Not Somalia

While Somalia is well known for its piracy activity, piracy in the region has been on the decline. Over the course of the past three years, Somali pirate attacks have dropped by 95%.

However, in Southeastern Asia, piracy is on the rise. In fact, piracy in the region has increased by an alarming 700% in the last 5 years. Specifically, it appears there is a new pirate haven in the Strait of Malacca, the waterway between Malaysia and Indonesia.

So why is this region and surrounding area drawing so much pirate activity?

Geography

The geography of the Malacca Strait makes for the perfect pirate hideaway. The coastal regions are marshy or forested with a multitude of coves, islands, and shallows for pirates to steal away to. In contrast, Somalia has a well-defined coastline which allows pirates to be more easily spotted.

While pirates have the advantage of cover, the strait puts cargo ships at an additional disadvantage. The narrow, shallow nature of the strait makes it difficult for large cargo ships to travel at high speeds, a key defense against pirates. The awkward, slow-moving ships become easy targets for the pirates’ agile speedboats.

Marine Traffic

Despite being a narrow waterway, the strait is a route used by one third of global shipping. It’s only natural that such a high traffic route would be popular among pirates.

Despite the high volume of goods and commodities passing through the strait – including half the world’s oil supply – pirates in this region prefer to rob the ship and crew for cash before making a quick retreat. This is in contrast to the grand hijackings and kidnappings popular among Somali pirates. However, piracy experts warn that piracy in the region needs to be controlled quickly before it becomes more organized.

Political & Cultural

As in Somalia, the coasts of the Strait of Malacca suffer from poverty, which is the real root of the problem. However, unlike the lawless coastlines of Somalia, the Malacca Strait is surrounded by countries with governments working together to eliminate piracy. With all the advantages the strait offers to pirates, stable, committed governments may be the best tool available in fighting piracy.

Protect Yourself from Piracy

If you’re shipping anything through the Strait of Malacca or near the Somali coastline, piracy is a real risk you take. Learn what insurance coverage will best protect your ship, cargo, and crew in the event of a pirate attack. Download our free ebook Insurance in the New Age of Piracy.

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Upgrade Your Warehouse Receiving Process

When mistakes happen in receiving, they only create more problems down the line. Eliminate mistakes and inefficiencies in your receiving department by upgrading your warehouse receiving process:

Warehouse Receiving Process #1: Advanced Shipping Notification (ASN)

Advanced Shipping Notification means that shippers let consignees know ahead of time what they are shipping and when it will arrive. ASN is usually linked with a warehouse management system, although it isn’t necessary. This warehouse receiving process enables receiving personnel to prepare and plan for incoming shipments. Your carriers will thank you – ASN enables you to schedule receipts so that you don’t have multiple carriers waiting to use the same handful of dock doors. It also enables cross-docking and more efficient outbound shipping.

Warehouse Receiving Process #2: Vendor Compliance Program

A vendor compliance program ensures that shipments arrive in a way that can be easily processed in your warehouse, and by your customers. For example, consistent labeling allows you to streamline scanning and picking. Or you might require that a product is shipped in packs of 6 within the case, so you don’t need to send a full case to a smaller customer. In order to develop and implement this warehouse receiving procedure, your warehouse manager and your procurement team will need to collaborate.

Warehouse Receiving Process #3: Automatic Data Collection

Whether you use bar codes or RFI, some form of automatic data collection is essential. Automatic data collection has been shown to dramatically reduce errors and increase efficiency. Since each error in receiving leads to several more errors later on, your receiving department should be high on your priority list of departments to automate.

Warehouse Receiving Process #4: Suit Up

While it might not seem like a major security upgrade, providing your warehouse team with uniforms enables you to quickly identify who belongs in the warehouse, and who doesn’t. Construction Equipment Distribution even suggests printing the shirts to read “Vault Security Team”. This will remind your staff of the importance of their work, and the value of the shipments that they work with.

Want more information on warehouse receiving? Download our warehouse receiving process checklist here.

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