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The Real Freight Claim Costs

Posted on Sunday, November 22nd by Pallet2ship logo

Freight claim costs are commonly associated with the costs of damaged goods or the amounts lost upon partial reimbursement. However, they include an entire range of other costs as well. Let us take a closer look at what they are.

1. Labour costs

Filing a freight claim manually is usually a 2-3 hour's job and that only includes the time you spend filing the necessary freight claim documentation. However, the overall procedure also requires a number of other tasks to be completed. These include following up the carrier and meeting with their inspector, repackaging the damaged goods for return, sorting them, looking up repair rates or replacement options and handling the customers expecting the goods, among others.

2. Storage costs

Naturally, the storage costs will vary depending on the volume of damaged goods and the space available in a particular warehouse for they determine your exact storage needs. Depending on these needs, the rent or mortgage costs, the utility costs, the taxes and the disposal costs will all vary.

3. Salvage costs

Most often, carriers do not reimburse the original value of damaged goods, but the amount representing the difference between it and their current value. When it comes to your selling these salvage goods though, the drawbacks are many. Firstly, they will be competing with the new products sold for their original value. Secondly, they may damage your reputation as a seller. And the list can go on.

4. Customer dissatisfaction costs

Goods may be damaged upon receipt by the customer. Should this be the motivation for the freight claim, the customer's actions must also be considered. Will they reorder the goods from your company or order them somewhere else? Will they blame it on your company? Will they buy from you again in the future? Will they share their bad experience with other potential buyers? Such experiences are even worse if they involve deadlines or additional costs being borne by the customers.

5. Opportunity costs

Less commonly associated with freight claims, opportunity costs refer to the money lost as a result of business opportunities being lost. These may include potential profits, investments or the like that are lost on account of the staff being busy filing freight claims. The fact that reimbursement procedures may stretch over several months should also be noted in this context.

6. Time sensitive losses

In a first scenario, should any ordered products lose their value unless delivered by a given date, the customer must draw attention to it, otherwise the reimbursement may not be a valid option. Another scenario involves grocery items, household items and so on, whose unavailability on stock may cause the customers to do business with another retailer or seller.

7. Costs of unfiled freight claims

Finally, the costs of unfiled freight claims are often overlooked, mainly because they do not stand out as being too high separately. However, they are worth considering in the context of a very large number of freight claims being left unresolved.

So how should you manage these freight claim costs? By taking preventive measures, whether before filing the freight claims or after. You might want to note the ability of 3PL providers and freight claim software to provide assistance with this matter.

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