Cargo Claims - BAM !!!

fedup

Member
5
Typical Scotlynn & Cargill - isn't the first time this has happened but hopefully with this ruling their approach will change.
On top of this Scotlynn's policy is not to pay ANY invoices to the carrier until that particular claim is settled.
 

Michael Ludwig

Well-Known Member
20
"On top of this Scotlynn's policy is not to pay ANY invoices to the carrier until that particular claim is settled."
Which is a huge bonus to the carrier with the claim against them. Suppose they owe you $10k and have a claim against you for $250k. All of the rules on both sides of the border, TTA and Carmack, dictate that the carrier does not have to pay the claim if they have not been paid for the transportation.
Check with your insurance company's cargo claims expert.
 

loaders

Site Supporter
30
If a carrier is dragging their feet and not investigating a legitimate claim, I see nothing wrong in withholding payment of the freight charges. In today’s economy, where so many carriers are having difficulty obtaining and maintaining reasonably priced insurance coverage, some have become extremely reluctant to even discuss a freight claim, let alone actually investigate one, regardless of how legitimate it might be. Involving their insurer in a claim has become tantamount to committing suicide for some companies. As we all know, carriers are legally obligated to investigate every claim filed with them. However, once a claim has been settled, payment of the freight bill is required prior to the release of the funds. There are unfortunately, a very few carriers who would be better off spending their energy on basic claim prevention as opposed to avoiding their responsibilities.
 

Michael Ludwig

Well-Known Member
20
Mmmm ... I don't think that's exactly correct. Both TTA and Carmack stipulate that the shipper making the claim needs to establish the prima facie case. However, once established, the carrier is obligated to respond to the allegation, to which the carrier can reply, with sufficient reasoning, that they are not liable. Outside of those bounds, as in the shipper does not establish a case, the carrier has no obligation to investigate, mitigate, or even respond to the allegation.
What needs to be understood is that contra-balancing an account payable with an account receivable is illegal without the express written consent of the person or entity whose account is being contra-balanced, and especially so if the account receivable is only an estimate or unproven receivable.
Consider it in this light ... I hire you to do a job for me. When the job is done I decide not to pay you because you might owe me money one day. There's nothing in that statement about how well you did the job, nor does it matter.
Here's another way to look at it ... You hired me to do a job. I did that job. You refuse to pay me. Your refusal to pay makes it as if I did not do the job. If I did not do the job, how can I be guilty of causing damage while doing it?
 

loaders

Site Supporter
30
Once a carrier has been served with an Intent to Claim, and followed up with repair and or replacement cost estimates within the regulated time limits, they are indeed obligated to investigate the claim, inspect the goods, etc., etc. Payment of a freight bill and investigating a bona fide freight claim are two separate matters. I know that there are a few carriers out there who subscribe to the incorrect notion that shippers are always looking for ways to screw them. That every claim is a fraudulent attempt to extort money from a poor, struggling carrier. In the freight transportation business, things do get damaged in spite of the best efforts of all concerned. Why for some folks this comes as a complete surprise astounds me. Even the best carpenter occasionally hits his thumb. Instead of looking for ways to deny, avoid and ignore a legitimate freight claim, why not spend that time, money and energy on some solid best practices to avoid them in the first place. I don't like to withhold payment from any supplier, but a delivery made that includes damaged freight, is not a completed delivery, the contract of carriage has not been satisfied if only a portion of the shipment arrived safe and sound.
 

Michael Ludwig

Well-Known Member
20
but a delivery made that includes damaged freight, is not a completed delivery,
That is absolutely incorrect, hence the reason "Payment of a freight bill and investigating a bona fide freight claim are two separate matters." ... your words, which are correct. There is no part of the contract of carriage, the Truck Transportation Act, or the Carmack Amendment that says the cargo must be delivered intact. All it says is that it must be delivered with due dispatch.

I like your analogy to the carpenter though. It's spot on :)
In my opinion there are two reasons carriers immediately deny a claim;
1) Their insurance is not correct. Either they don't have enough (any?), or have had too many claims.
2) They do, or used to, haul produce. Produce shippers and receivers were, and are, notorious for claiming carriers for poor quality produce ... as if the driver is a produce quality expert !!!

Don't get me wrong though. I'm not saying screw the shipper, or screw the broker, or screw anybody. I'm simply saying follow the GD rules. They are laid out in plain English and they are so simple a chimp could follow them.

Addressed properly, a cargo claim is such an easy thing to get through that no one should ever lose sleep over one ... unless of course they were stupid enough to haul million dollar cargo with only $100k worth of insurance.

And shippers don't get to bypass the stupid train either. Innumerable times they will ship million dollar cargo without checking the carrier's insurance, or worse, without filling in the declared value box, or shipping said cargo on a sale invoice and not a properly completed bill of lading a.k.a the contract of carriage.
 

loaders

Site Supporter
30
Exactly….sort of. A freight claim is actually a breach of the contract of carriage. If cargo appears at the receiver in a condition different from that when it was loaded, or in a quantity that is different from that when it was loaded, the contract between the shipper and the carrier has been breached. If a carrier was only obligated under the B/L to deliver the shipment with due dispatch, why would there be any description of the goods? Why indicate the nature of the shipment, the number of skids, the size of the pieces, do not stack, keep from freezing, etc., etc.? When a claim occurs, both the shipper and the carrier have certain responsibilities that must be (should be) followed to resolve the matter, including mitigating further loss (maintaining the integrity of the shipment) on the part of the shipper, and a comprehensive investigation on the part of the carrier. Claim resolution, as Michael pointed out, shouldn’t be complicated. However in these days of skyrocketing insurance costs and carriers willing to accept higher and higher deductibles, resolving freight claims without the involvement of an insurance company has become unnecessarily troublesome.
 
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Michael Ludwig

Well-Known Member
20
"A freight claim is actually a breach of the contract of carriage." How about we agree to disagree on that point :) but I will reaffirm that nothing on the bill of lading, in the Truck Transportation Act, or The Carmack Amendment dictates that the carrier must deliver the goods in any particular condition. However, it is to the carrier's advantage to deliver the goods to the receiver in the same condition the goods were delivered to the carrier.
"If a carrier was only obligated under the B/L to deliver the shipment with due dispatch, why would there be any description of the goods? Why indicate the nature of the shipment, the number of skids, the size of the pieces, do not stack, keep from freezing, etc., etc.?"
How else do you identify the subject, or parameters, of the contract?
If you did not identify the subject of the contract, how could you file a claim?
A properly executed bill of lading simply states this; I am contracting you to transport goods from Point A to Point B.
A "Schedule A" if you will, of said contract would be 400 cases of widgets to be kept them from freezing. The freight description is an addendum to the contract, not the contract itself.
Anyways, we're really talking semantics here. The processes and parameters have been well established in case law, and it is highly unlikely it is going to change now, if ever.

You make a valid point about trying to resolve cargo claims without insurance involvement. A fools errand if there ever was one. That's not saying that when a carrier experiences a cargo loss that they immediately turn it over to the insurance to handle. Many carriers actually have the ability to handle them in-house, but a carrier should notify their insurance immediately for two reasons;
1) The carrier is going to need the insurance company's guidance on the matter.
2) Your policy says you have to notify them. If you don't think you have to, read your contract.
Really, not involving your insurance company is like driving without a seat belt. When you crash, and you will, it's not going to end well for you ... LOL

At the end of the day, honest, reputable carriers are not going to try and snake out from underneath a claim. As per Forrest Gump "It happens". It's part of the cost of doing business. Honest and reputable carriers will of course take the shipper task to follow the rules of the claims process, and that's not a bad thing. Do it right, learn from the errors, and be done with it. Simple.
 

Jim L

Well-Known Member
30
@loaders , I agree with @Michael Ludwig . Your best bet is to pay the bill and get the process started as soon as possible. It is a common occurrence everyday that freight claims die on the vine because the bill is not paid. It is a stupid aspect to fight against. Get the total amount of claim, including the damages and the freight cost, with supporting documents, send the claim along with payment of the freight to the carrier and a copy to the insurance company with a copy of proof of payment. Insurance companies know that this is the process and will be very happy to write you back with their opinion on the case. The insurance company on the certificate must respond if there is a formal claim. Insurance companies want these cleared up as soon as possible and if you're accurate and the claim sounds somewhat legit then its amazing how fast it can go. Let the insurance company be your friend, pit them against their carrier.
 

loaders

Site Supporter
30
All sound, solid advice. My concerns however, lie not with larger claims that automatically find their way to the desk of an insurance adjuster, but with the growing number of claims that fall below carriers seemingly ever increasing deductibles. It has been my experience that these types of freight claims are the ones that drag on forever, in spite of providing the carrier with every possible bit of relevant information. It is in these cases, where paying the freight bill or not paying the freight bill has absolutely no effect whatsoever on the settlement or even the investigation of the claim, that prove to be the most troublesome. I would rather deal with a handful of large, expensive claims, than one or two 3.5K claims where the insurance company plays no role in the settlement.
 

Jim L

Well-Known Member
30
The insurance company is still liable to ensure that the claim is settled - that is exactly the point of mandatory insurance. If the claim is below deductible it is in the best interest for the carrier to get it settled without involving their insurance company but if the claim is legitimate the insurance company is responsible to get the parties paid in due course even if that involves collecting the funds from the carrier for the deductible. Call the insured's broker, they will assist you as well; they know that nuisance calls which make their way up to the insurance company usually ends right back at the broker to investigate it and get it solved.
In the future, for each claim you submit I would recommend that you get a claim number and follow up with the insurance company to ensure it is a valid number. That will also lessen the headaches and eliminate the push farther down the line if needed.
 

loaders

Site Supporter
30
Jim L, that is exactly procedure we follow when faced with a carrier who is reluctant to respond to a freight claim. If necessary we also employ the services of our own insurer to help convince the carrier and/or their insurer to respond. My point in all this is merely to complain about those few carriers who either don’t know proper claims procedure or simply don’t care.
 

Michael Ludwig

Well-Known Member
20
we also employ the services of our own insurer to help convince the carrier and/or their insurer to respond
Great idea. Insurance companies talk on a whole different level than the rest of us :)
My point in all this is merely to complain about those few carriers who either don’t know proper claims procedure or simply don’t care.
I wouldn't say there a just a few. If I had to make a guess, I would say that probably 65% of all the carriers out there have no idea how to properly process a cargo claim. Of those that don't, they immediately get defensive when they are informed of a pending claim. The situation tends to go downhill from there.
 

mtltrans

Member
10
Just a question on this topic: if a shipper requests a no charge return of goods that were damaged by a carrier, they forfeit their right to file a claim. Correct?
 

PackRat

Site Supporter
20
I do not believe so mtltrans. The return shipment is billed and then becomes part of the claims process. so for example. Outbound shipment is $100 (no wise cracks anyone!) and is damaged. Return shipment is $100. The party responsible for freight payment pays both invoices but then claims the return shipment as part of the claim. As well the shipment to replace the damaged product can also be part of the claim but this can be mitigated by the carrier depending on the value. IE is it cheaper to courier any damaged product? And again, the carrier has the right to do the return shipment to mitigate the loss. All charges are then submitted with the claim for damaged product EXCEPT the original outbound invoice. There are a few more members that will add to this I'm sure but I believe this should be accurate? but always look forward to more input!
 

mtltrans

Member
10
I do not believe so mtltrans. The return shipment is billed and then becomes part of the claims process. so for example. Outbound shipment is $100 (no wise cracks anyone!) and is damaged. Return shipment is $100. The party responsible for freight payment pays both invoices but then claims the return shipment as part of the claim. As well the shipment to replace the damaged product can also be part of the claim but this can be mitigated by the carrier depending on the value. IE is it cheaper to courier any damaged product? And again, the carrier has the right to do the return shipment to mitigate the loss. All charges are then submitted with the claim for damaged product EXCEPT the original outbound invoice. There are a few more members that will add to this I'm sure but I believe this should be accurate? but always look forward to more input!
Thanks! This is helpful!
 
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