A Simple Guide for 3PLs to Handle Claims for Lost and Damaged Shipments

Claim

A Simple Guide for 3PLs to Handle Claims for Lost & Damaged Shipments

Claim

Shortage, loss, and damage are all part of the logistics business, whether we like it or not. If not handled properly, it will result in a significant financial loss, particularly for 3PL. In such cases, terms and conditions play a significant part when it comes to claims, as they help to determine what base claim procedure is followed. It is critical to have an appropriate Liability clause with both clients and vendors. Typically, the condition will state that the transporter is responsible up to Rs.5000 per consignment. If the value of the damage or loss exceeds Rs.5000, the vendor will produce a Certificate of Fact (COF).

Transporting a freight over a long distance can be done with a freight carrier. Sometimes the items that get transported can get harmed while the freight is moved and stored. If that happens, you will have to go through a series of procedures so that we can  recover the value of damaged goods from an insurance company, such as writing freight damage claims.

Finding that consignments are damaged, short, or lost

First step is to identify the exceptional scenarios at the right time.

Receiver Responsibility:

Because the receiver is usually a distinct company for 3PL, 3PL should recommend that their Client ensure that their Receiver follows the below standards to minimize loss for all parties. When the courier delivers the shipment, receivers can notice the following exception conditions. When receiving products, make sure you are informed of what shipment is arriving, either by an out-for-delivery notification or an email report if a large number of shipments are expected. Prepare details such as the PO number, GRN, and LR number for verification based on this. Remember that a courier has numerous deliveries in the works and is always in a rush.

  • Box Shortage: The receiver must double-check their PO, GRN, and POD copies in their system with the received invoice copy and POD copy. Receiver can simply establish if there is a shortage after checking these details.
  • Product Shortage: Sometimes the number of boxes matches, but a few items inside the box are missing. While a damaged shipment is an unavoidable occurrence, a product scarcity is planned and may not be readily apparent. Receivers should carefully inspect the box for signs of tearing or repackaging, such as double cellophane tape or duplicate cellophane tape. When in doubt, open in front of the delivery person and potentially take video.
  • Damaged: On examining the state of the Carton box, the receiver can identify. If the carton box appears damaged, pushed, compressed, or has an oil spill, it is best to open it and thoroughly inspect the product condition.

If any of the above exclusions are detected, make a note of it in the POD copy. Without this note, you will have a difficult job opposing the courier for exceptions and proceeding with the claim. As a result, this must be completed as soon as possible. One piece of advice is to make a photocopy of the POD with your observations and email it to you (3PL). This is because the delivery person would sometimes change the notes using software tools and post them into the courier system without his manager’s knowledge. Take photos indicating the location of any damaged or missing boxes or merchandise. When opening the package, it is preferable to record a video for confirmation and send it to you (3PL).

Sender(3PL) Responsibility:

The sender must identify the lost shipment here 3PL. While all of the aforementioned scenarios can be detected based on an occurrence, such as when receiving delivery, lost shipments are more difficult to recognize because we have no control over the shipment. As a result, we could only make educated guesses based on one or more of the following symptoms:

  • Shipments will exceed the Assured Delivery Date (ADD)
  • There hasn’t been a status update in a few days
  • Misroutes and missing documents are examples of exceptions
  • The Courier Customer Support team’s location updates are inconsistent
  • Inconsistent status updates from customer service and the sales team

You should have a method in place to detect these factors, as well as be aware and proactive in determining whether or not the shipment was lost. Vendors will stall their feet in accepting the cargo as lost. Set a timeframe for tracing the shipment before declaring it lost. Clients will have a more difficult time claiming if they wait. This may also fade off our radar over time.

Be wary of fraudulent delivery updates. Shipments that are lost are sometimes marked as delivered. It will be too late by the time Client learns this issue with the recipient during reconciliation. It is vital to have a method in place to validate that the shipment was delivered.

My products have been damaged or lost. What should I do next?

As soon as an exception event such as Damaged, Lost, or Shortage is recognized, the following step is to continue with a claim or courier deduction based on the courier’s Liability clause.

If your products are damaged or lost by the carrier, we will first determine the worth of the package. For example, according to the liability provision, if the claim value is less than Rs.5000, you may go for direct debit; if the claim value is greater than Rs.5000, you must file a damage/loss claim to receive reimbursement. There is a time limit for submitting the freight damage claims reimbursement form. A preliminary form for obtaining notice that goods have been damaged or lost, which comprises,

  • The estimated replacement cost of the damaged/lost goods
  • Booking Information – booked date, from and to location
  • Goods classification
  • The nature of loss
  • The Loss’s Circumstances
  • Parties who are liable and those who make a claim

Per example, if a shipment has ten boxes, of which 8 are delivered to the customer in good condition, eight boxes will be delivered, two of them damaged, or none at all, for the notes stated on the POD. Shipment is lost, on the other hand, because POD is not possible under this case. We are now coming to the region of payment. Without knowing that the shipment has been damaged or lost, we are paid service payments to the goods carrier and the client pays a charge against a loss of 3PL for the same Lost/Damage.

It is important to give the facts to the right person/teams whether it is a claim or a deduction. The reporter (Reception company) and the team which needs to act (3PL) are in separate companies in the case of a damaged or short cargo. Your customer service team detects this shipment and sends it to a Billing / Account team member to take appropriate measures if a shipment is misplaced. In each scenario, the purpose is to transmit information in a timely manner within the business or teams to prevent financial losses.

After the shipment is traced, the status of the product is recorded by the system and is shown in what state; if it’s damaged or missing. So If we monitor the claim process for damaged products, it is necessary to know the flow of shipment, which is tough to manage by hand and takes time and can also follow the approach with incoherent data. The technology will surely help you with the Lost/Damage claim reimbursement process, making things easier and better.

Conclusion

There are many moving elements in logistics, and shortages, damage, and lost shipments are unavoidable. Although 3PL should conduct Root Cause Analysis and aim to eliminate such instances, you must also handle it properly to avoid financial damage.

As you can see, there are several stakeholders involved: the client, the receiver, the courier, the 3PL, and the teams inside the 3PL. Certain actions must also be taken in a timely manner. When such situations occur, a stringent protocol or workflow should be developed. With technological advancements, it is quite simple to implement the process without disrupting the present workflow.

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A Simple Guide for 3PLs to Handle Claims for Lost and Damaged Shipments

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