Reducing the Risk of Damage, Loss and Claims

The best laid plans of mice and men often go awry, especially when it comes to inbound logistics. Even the best plans of smart shippers can be undermined by the great gadfly of shipping—damage, loss, and claims.

Not only do damage, loss, and claims increase your overall transportation costs, they can also drive a wedge between you and your shipping partners. Fortunately, you can take many steps to reduce these risks.

The best way to minimize risk for all parties involved is to insist on strong partnerships between you, your supplier, and the transportation provider. With everyone working together, the process of packaging, shipping, and receiving becomes streamlined and ensures that your freight gets delivered on time, on budget, and in the proper condition.

Here are some proactive steps your organization can take both externally and internally to avoid freight damage and claims.

On the vendor/supplier side: The most basic step you can take begins with how your vendor prepares the freight. It is often the simplest guidelines that make the most difference. You should consistently check how well your vendors and suppliers adhere to proper procedures when packaging your shipments.

Some things to check include:

1. The packaging. Shipments should be in a container that is suitable for its contents. Never exceed the container’s maximum gross weight, which is identified in the Box Maker’s Certificate printed on the bottom flap of the box.

Containers or boxes should be large enough to allow room for adequate cushioning material on all sides of the contents. They should be in good, rigid condition with no punctures, tears, rips, or corner damage. All flaps should be intact.

Each item within the container should be wrapped separately. Fragile articles need both proper separation from each other and clearance from the corners and sides of the box. Glass items must not touch other glass items. Proper cushioning material, combined with a strong outer container, will protect the shipment.

Proper closure and banding of the container is as important as adequate cushioning. Boxes should be closed securely with strong tape—such as pressure-sensitive plastic, water-activated paper tape or water-activated reinforced tape—two inches or more in width. Never use masking tape, cellophane tape, string or paper over wrap.

2. Shipment labeling. To ensure precise delivery, freight needs to be labeled appropriately. Always follow these guidelines:

  • Remove or completely cover old labels.
  • Place labels on the top of the box.
  • Use only one address label to avoid confusion.
  • Do not place labels over a seam or closure on top of sealing tape.
  • Place a duplicate form of address information inside the container for added protection.
  • You should always be able to locate a full return address on the shipping label.

On the inbound/receiving side: Change of custody is a critical moment in the logistics process, and is perhaps the single most important consideration when your freight arrives. It is imperative that you have qualified and trained employees to thoroughly inspect the freight.

Each shipment must be compared to the airbill or truck bill. Is the correct number of boxes accounted for? Are the boxes damaged? If the bands are broken or if boxes are open, are all the contents accounted for? Most importantly, are these inspections being done thoroughly prior to signing for the shipment?

The next critical element is making sure that all the freight is moved and stored properly. If unpacked, adhere to the special cargo handling labels, as well as to proper stacking and palletizing procedures.

The best way to ensure that you are taking all measures to prevent loss and damage on your end is to select qualified individuals to manage the process. You also need to provide clear direction through training manuals and reference guides.

On the carrier or transportation partner side: Perhaps the final and most important aspect of managing damage and claims is to partner with a reliable carrier. You should frequently inspect your carrier’s vehicles. In determining their condition, you can draw conclusions about their operation in general. Also, do a site inspection of your carrier’s operation and facility. See, firsthand, how it stages and mingles its freight.

When considering a transportation partner, here are some questions to ask:

  • Does the carrier conduct background checks on the individuals responsible for receiving, warehousing, and storage?
  • What is the current claims rate?
  • What quality standards, such as ISO9000, does it adhere to?
  • How is cargo moved within the carrier’s facility?
  • Is the carrier’s facility secure?
  • Does the carrier maintain separate shipping and receiving operations for security?
  • Is the carrier’s equipment state of the art?
  • Does the carrier conduct dock checks?
  • Is the carrier T.A.P.A. certified?

Managing damage, loss and claims is a vital component of an integrated logistics program. Proper preparation of freight is one way to manage the process. Working closely with your vendors and shipping partners is another means to making sure your freight gets delivered on time, on budget, and in the proper condition.

Remember, an ounce of prevention is worth a pound of cure.

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