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Damage to your product during shipping or transit is something that can happen regardless of precautions taken. Minimizing the risk of damage occurrence and ensuring that your product cost is 100% covered by the carrier or added insurance are probably the best safeguards for a seller.
Who is liable for shipping damage?
From the simplest standpoint, the carrier has responsibility and liability when they take control of cargo from the seller. The buyer takes responsibility when it signs off on the shipment after delivery by essentially stating the cargo was in good condition when they received it.
To what degree a carrier accepts liability has a lot of qualifiers:
If the contract is FOB (Freight on Board) then the seller loads the goods at its own risk and can be held responsible for negligence in loading.
After loading, the carrier has accepted liability for damage, but under most standard contracts and laws, the carrier is not liable for damage due to the following:
“1. Act of neglect, or default of the master, mariner, pilot or the servants of the carrier in the navigation or in the management of the ship.
Addressing full liability in every situation would require added insurance. The other tidbit is that in general, liability is limited to the direct value of the shipment as it cannot include loss of future profit, losses incurred because of delays or most other types of losses suffered not directly related to the value of the cargo. For shipments within the US, the carrier is liable for the cost of the product as stated on the Bill of Lading. For international shipments, there may be liability limits unless specifically stated in the shipping contract.
When the product arrives at the buyers dock, the buyer has the option to reject the shipment if they see damage. In this case they inform the seller immediately and then it normally becomes an issue between the seller and the carrier. For most damage, the carrier is responsible, unless the carrier claims that the packaging was inadequate.
Filing a claim
The transportation and Logistics Council has a fairly comprehensive document on filing claims for shipping damage: http://www.tlcouncil.org/sites/default/files/how_to_file_a_claim.pdf. Some highlights of this document:
When product is damaged during shipment, the claim approval process can drag on for months. If there is no other contract provision, FMCSA claim regulations require a carrier to acknowledge receipt of the claim within 30 days. The carrier must the pay the claim, offer a compromise or disallow the claim within 120 days. The less evidence of carrier liability, the longer it could take to resolve and the less likely that the carrier will agree to a full payment. There are a number of ways that a seller can reduce its odds of an unfavorable outcome:
Packnet can customer engineer packaging that will minimize the risk of damage during transit, we also provide packing and crating services. We can provide corrosion protection as well as implementing the proper monitoring devices. Our next article will focus on some of the questions and issues surrounding what exactly is damage.