Every day thousands of shipments are processed by Less than Truckload(LTL) carriers. Many national carriers are trusted by US businesses to ensure that their freight makes it to the final destination safely and in one piece. However, an issue that stands out with many customers is that they do not really understand that when one of their shipments is damaged, just how much the carrier is liable for.
A Logistics Nightmare
Our customer booked an ocean shipment from New Jersey to Hawaii. Any shipments that go to Hawaii are transported by an LTL carrier from the pick-up location to the port in Los Angeles where they are prepared for the steamship.
Initial thoughts were that no one in their right mind would ship $52k worth of material in a cardboard box, across the country.
Freight was booked through the freight forwarder, an inland carrier was selected, and no cargo insurance was applied. The customer “packaged” the freight in a cardboard box on an undersized pallet. By the time the freight arrived to the port in Los Angeles, the customer’s worst nightmare began – The cardboard box was ripped to shreds and the freight was damaged.
The paperwork process began with the LTL carrier first asking, “what is the value of the freight that has been damaged?” Answer was $52,319.00. Initial thoughts were that no one in their right mind would ship $52 K worth of material in a cardboard box, across the country. Let alone, be put on a vessel and rocked on a boat for a week. But our customer insisted the value was correct, so we began what we knew would be a long claim process.
The Importance of Packaging
Based on the LTL carrier’s rules for the class and limit per pound, the payout from the inland carrier was $1,123.00 and that is only if they agree they are at fault. After a three-month process, including an inspection of the freight, it was determined the freight was not packaged properly. However, the carrier did agree to pay a portion equal to a third of the required amount. Essentially the customer would get $374.33 for a $52,319.00 piece of equipment (a loss of $51,944.67 for the equipment alone). The $374.33 didn’t even cover the freight cost.
This was not a satisfactory solution for the customer. The forwarder was then held accountable for the freight, but again under the limits of liability is only required to pay $1,123.00. After 11 months of negotiations going back and forth, the customer finally received the payout for the damaged freight in the amount of $1,123.00.
This meant that once again, their freight was improperly packaged and would be susceptible to damage yet again.
Several weeks after the first shipment was damaged, the company asked for a rate to ship the same product over. Since the freight was damaged and never made it, they now had to ship the replacement. After being asked if they have had the replacement shipment professionally crated, they replied with “What do you mean – we bought a pallet and shrink wrapped it down, is this not sufficient?” This meant that once again, their freight was improperly packaged and would be susceptible to damage yet again.
Moral of the Story – Carriers know that damages will occur and have built that cost into the shipment ahead of time. The carrier’s liability has been predetermined to cover the bare minimum of what damages have been projected to incur. In addition, customers themselves can put their own shipments at risk with no fault of the carriers by simply not having their shipments packaged properly.
The BlueGrace Difference: No Hassle Insurance
Insuring your products at a minimal cost to you, give you peace of mind that if the worst occurs, you are fully protected.
BlueGrace Logistics can provide full coverage cargo insurance on every shipment regardless of how high the value is. Insuring your products at a minimal cost to you, give you peace of mind that if the worst occurs, you are fully protected. Keep it simple, values are based on purchase order or invoice amount of your product and not some complex or confusing rate table. Please reach out to your BlueGrace Sales Representative or call customer service today at 1-800-MY-SHIPPING for more information!