Once you have isolated all the lost and damaged parcels through a competent and accurate delayed post-audit, (an audit done 3-4 weeks after the arrival of the bill from the carrier) then you have to get claims filed to get back the money. This can easily come to 3-5% of your annual parcel shipping spend.

The Requirement of a Timely Written Claim

To recover money from a carrier for lost and damaged shipments, the claimant is required to file a written claim with the carrier within nine months of the date of the delivery of the property, or if no delivery was made, then within nine months after a reasonable time for delivery has elapsed. This does not mean you have to wait nine months to file, it means if you don't get the claim in within that period, you have forfeited your right to get that claim paid.

The requirement sounds simple enough, but it has given rise to much litigation. First, what is a claim? Second, is the claim filed timely? Third, if no delivery is made, what is a reasonable time for delivery? Failure to timely file a claim is an absolute bar to recovery.

In order to standardize the requirements for a written claim, or in the words of one court, "so a carrier may know a claim when it sees one," the former Interstate Commerce Commission issued a regulation, now appearing at Title 49, section 370.3(b) of the Code of Federal Regulations. Briefly, this regulation defines a claim as a written communication filed with the proper carrier within the time limits specified in the bill of lading, containing facts sufficient to identify the shipment of property, an assertion of liability for loss or damage, and making a claim for the payment of a specified or determinable amount of money.

Each of those separate requirements has been the subject of much litigation. Does the claim contain enough information to permit the carrier to identify the shipment? Does the claim assert liability against the carrier for the loss or damage to the property? Does the claim demand payment for a specified or determinable amount of money?

Once a claim is received, assuming it is a proper claim, the carrier has numerous obligations, which must be met according to the timetable set out by the Interstate Commerce Commission in the Code of Federal Regulation. A carrier must acknowledge the claim within thirty days of receipt, unless the carrier pays it or declines it within that first thirty days. The carrier is also required to create a separate file, assign a successive claim file number to that claim, and affix that number on all documents filed in support of that claim. The carrier is required to pay, decline or make a compromise settlement offer within 120 days after the claim is received. If the carrier cannot do so within 120 days, then at that point, and each 60 days thereafter, the claimant must be advised in writing of the claim status and the reason for delay in making final disposition.

The regulations also describe what documents do not constitute a proper claim. Appraisal reports of damage, notations of shortage or damage on freight bills, delivery receipts or other documents, inspection reports issued by carriers or inspection agencies, even if they indicate loss or damage in dollars or otherwise, are not sufficient to comply within the minimum claim filing requirements of the regulations.

The carrier must be given adequate time to deliver the package before there is any attempt to audit the bill to find and recover money for lost shipments, or the audit will be very inaccurate.

Most Freight Payment companies audit the bill when it comes in, and if this procedure alone is used, the majority of refunds available to a company will never be recovered.

In the third installment on the Carmack Amendment we will look at final details of this law, and how to use this so as to maximize refunds paid back to your company.