A Million Reasons to Have a Freight Claim Management Review
Here’s how we turned around the freight claim management for one company, increasing their freight claim recoveries from $150,000 to $1.2 million/year.
Our client is a successful Fortune 300 company that manufactures heavy equipment. They have worked with CDS since 2006. They ship domestically as well as internationally, utilizing all modes of transportation.
Freight Claim Management Before CDS
Our client asked CDS to review the existing processes, procedures, collection and resolution process of a Third Party in charge of their freight claim management.
- Processed an average of 300 claims per year
- Collected about $150,000 per year
- Had been working with the client for over 5 years
Our Freight Claim Management Review Process
Our investigation process and review started by contacting each shipping location to determine what freight claim management short falls existed and to determine their individual needs. We understand that the best plan is nothing without implementation. Therefore, this was also important for ensuring buy-in from the shipping facilities. Next, we conducted a review of the existing filing, follow-up and collection processes and procedures of the company in charge of the freight claim management.
What We Discovered
We found a number of areas for improvement through-out our investigation, and we designed and implemented solutions for each of these issues.
Improper Supplier Packaging
We found that suppliers were not packaging products correctly, leading to more freight claims for damages. This was a serious issue, as claims for these damages were being denied by the carriers. To correct this, we put a process in place create a chargeback to the supplier for the claimed dollars, so our client is made whole. We also amended the Carrier Contract to include reporting within 24 hours of any shortages or damages the carrier identified on Shippers Load and Count Trailers.
Improper Packaging by Company Plants
We also identified company plants that were not packaging products to withstand shipping. We then put new packaging rules in place to ensure products are packaged properly and shipping damages are minimized.
In addition to company plants and suppliers, we discovered that customers were also contributing to freight claim expenses. When a customer indicated that they had not received a shipment, they were issued a company credit for the value of the lost shipment. However, upon filing the freight claim, carriers often proved a Proof of Delivery. In order to deal with these cases, we helped institute a process to re-bill the customer for the credit memo when they received both the product and the credit memo.
Unfiled Freight Claims
We found shortfalls in the freight claim filing process as well. Plants were not filing freight claims on small parcel shipments or following up with carriers for collections. A minimal number of LTL claims were being filed because the on-site shipping and receiving personnel did not fully understand the process of freight claim management. In addition, proper documentation was not supplied to the carriers. We corrected these issues by taking over the claims filing for the company.
Our New Freight Claim Management Process
Once the investigation was completed, we completely revamped the decentralized outsourced program with the above changes and centralized the client’s freight claim management. Our client’s management asked us to take over the freight claim management with control and oversight by the client. Here are some highlights of the new program:
- Implementation of a web based freight claim management system for up to 60 users.
- The claim management system includes access to filed, open, paid, cancelled and denied claims.
- The system is password protected and access is provided on a “need to know” basis.
- Monthly and Year-to-Date Reports are generated by CDS, at the facility level, as well as at the Corporate level.
- Each user has the ability to generate management reports at any time.
These are the new financial figures since CDS took over the program:
- CDS files an average of 2500 claims per year
- Compared to the previous 300/year
- Last year we recovered $1.2 million
- Compared to the previous $150,000/year
- This is an increase of 700%
- Carrier denials resulting in re-billings to customers amounted to over $350,000 last year.
- Last year, 74% of claims we filed were resolved in less than 60 days.
As a part of an on-going program, CDS and our Client have identified and corrected additional internal problems. What’s more, is that we have now begun to prevent the number of claims that occur annually through review and analysis of trends in the claim data.
Download our full length MyEZClaim Case Study for more information on our past work.
Want to see how CDS can improve your own bottom line? Contact us to find out what we can do for you.