Question

Freight claims processing can be a significant activity for organizations making frequent shipments, and effective handling of freight claims can be an important part of customer satisfaction from both the carriers’ and shippers’ viewpoints. There are three customers for the claims process that must also deal with the result of freight loss, damage, or delay.   

• A carrier, as a seller of transportation services, is concerned about the “shipper’s” (the carrier’s customers for their transportation services) perception of quality and timeliness.
• The shipper is concerned about the impact on the consignee, the customer for the goods.
• The shipper is also concerned about being a preferred shipper in the eyes of carriers.

Please respond to the following questions with your initial post to the discussion board.

1. Describe how a delay could cause “economic injury.”
2. Although freight loss, damage, or delay is a problem for all three parties, how can the handling of the claims process itself effect the satisfaction and perceptions of the shipper, the carrier, and the consignee?

You may wish to provide actual or hypothetical examples.

Answer 1

Solution -

Freight claims management is an important activity. It is true that nobody wishes to get into a stage of freight claims but with the aspect of uncertainty such incidental claim management is a necessity. These claims are the legal demand in case of loss, damage, shortage or concealed damages to cargo. These demands are made by the shipper or the consignee on the carrier. Now in such circumstances as per the law mostly the costs are recovered as per the bill of lading and the profits are looked upon as economic loss.

The carriers that are prompt in settling their freight claims are mostly looked upon as favorable and preferred business partners but those that delay such claims actually end up eroding their future business prospects. The shipper and the consignee need a prompt settlement as their capital gets blocked in case of a delay and they also bear the economic loss. The carrier has to in turn lodge a claim with the insurance to manage their own losses. In all the cases the loss of profit is like a loss of opportunity and is irrecoverable. The delay in the settlement of freight claims on part of the insurance company or the carrier leads to a blockage of capital and further opportunity loss as well as some interest and future business loss. For instance, let us assume that a shipper A Inc. sends out a consignment to C Inc. through a shipping company S Inc. Now due to some fault at the port, there was a misplacement and the delivery got delayed. The consignee C Inc. refused payment in such a case. Now there was a loss on part of the shipper A and they file for a claim against the carrier company. If now the carrier delays in the settlement then it would be the cost that was wasted by the shipper along with the loss of profit. A similar case arises with the consignee when they file a claim and it is delayed. Now assume there was a loss due to some fire incident and the carrier had filed a claim with the insurance company. If there is a delay on their part then the loss is borne by the carrier. Hence it is necessary that a prompt freight management exercise is carried out to ensure some solace in terms of cost recovery and cushion for business.