30% of failed claims are due to errors in one department (and how to fix them)
It’s only natural to assume that freight claims are the sole responsibility of the claim department. Of course, the claim department plays the most obvious role – but they need to be supported by several other departments – in particular, the receiving department.
According to Dick Lucarelli of CDS Freight Claim Management, the receiving department is the first defense against loss and damage. “Roughly 30% of failed claims I see are due to errors from the receiving department,” says Lucarelli. “Whereas when the receiving department follows proper procedure, I’d say about 90% of those claims are recoverable.”
Here are some key steps your receiving department needs to follow in order to allow you to file claims successfully.
Check the shipment for loss and damage
Before the driver leaves, receiving personnel should thoroughly check the shipment for signs of loss and damage. Stacks should be checked for ripped stretch wrap, as well as “holes” in a stack where a box may have been removed.
They should also look for crushed corners, puncture holes, leaking cartons, or signs of mold or mildew. If any loss or damage is found, they should unpack it in the presence of the driver. Lucarelli advises staff to take as many photos as possible. “Staff should take photos as soon as damage is detected. Take pictures of the unopened package, and then keep taking photos as it’s being unwrapped. Then take pictures of the final unwrapped product. More evidence is better, and with smart phones it’s easy enough to do.”
Mark the delivery receipt
If damage is found, it’s essential that the receiving department notates the exceptions on the delivery receipt, in as much detail as possible.
Even where there’s no noticeable loss or damage, how the delivery receipt is notated can be the difference between recovering or losing thousands of dollars.
“If the delivery receipt lists ‘2 pallets said to contain 20 cartons’, Receiving needs to count the cartons. If they just sign for 2 pallets, and there are cartons missing later, you won’t be able to claim them,” says Lucarelli.
Who signs the delivery receipt can also impact your chances of recovery. “Once staff notate the delivery receipt with the exceptions, they need to make sure the driver signs it.” If the driver doesn’t sign the delivery receipt, that means that the driver did not see the damage or shortage or does not agree with the receiver. “This doesn’t happen often, but when it does, I advise clients to call the driver’s terminal to let them know the issue,” says Lucarelli. It’s important to also follow up with an email so there’s a written record of the interaction.
“Of course, if the driver makes comments on the delivery receipt your staff don’t agree with, they shouldn’t sign it.” The delivery receipt is essentially a contract – signing it signifies agreement with the driver’s comments.
Of course, after notating the delivery receipt, Receiving still needs to notify the claims department about the damage. OS&D Incident software can streamline the process. Instead of taking notes on paper (which is easily lost or forgotten), receiving can enter incident details into a tablet, where it’s immediately accessible by the claims department, insurance adjusters, and anyone else who needs to get involved. Then the incident can be converted into a claim when needed.
Motivate Staff to Follow Procedure
Checking a shipment for loss and damage is an extra step that’s easy for the receiving department to skip. It can feel like a chore with no real payoff. So, help your receiving personnel to see the impact of their actions. Track your successful and unsuccessful claims and share the data with them. If you’re using MyEZClaim, it’s easy to filter rejected claims by reason. (For example, claims rejected due to a clear delivery receipt). “Make it tangible,” says Lucarelli, “show them how these steps actually impact the company.” If you can show the receiving department that $30,000 in claims were rejected due to improper procedure, it shows the value of what seemed like a pointless task.