In what may be one of the easiest interviews in the history of logistics, this week we talked to Liesel Borovsky, IL2000 Director of Client Services, about freight claims.
OK, let’s start with the easy question. What is a claim? And I have a note here from our head of marketing that I should ask you to explain this to me like I’m seven.
“I get this question a lot. Here’s the thing. The word “claim” is often misunderstood when it comes to freight. When we hear the word claim we usually think about a regular insurance claim. You know the deal: one party is seeking financial restitution from another party because something went wrong.
“When we’re talking freight, a claim is strictly an issue that relates to the physical freight. Merchandise is either missing or damaged. So in this context, a claim isn’t a service failure — that’s something else entirely. Nor is it a grievance or complaint. A claim is all about damage or loss to the product.
The mind-shift that pivots away from a subjective complaint to an objective product focus is vitally important.”
Interesting. Why is that product focus so important?
"Before they come to us, companies often associate claims with hassle and conflict. The carrier claims process can feel convoluted and frustrating — a zero-sum game even. After a few difficult experiences, they just don’t want to do it again. It just doesn’t feel like it’s worth the time or effort. And this attitude ends up getting entrenched. Claims end up becoming a kind of no-go zone and companies end up eating those losses. And let’s face it, many carriers bank on that.
“When a company in this position starts working with IL2000, one of our first priorities is to get the claims process back on the table again. So we want to move away from the grievance mindset. We’re able to make the process not some intractable dispute scenario and more of a nuts and bolts workflow that makes sure the client is suitably compensated for lost or damaged merchandise. And that gets back to the product claims mindset.
“We’re able to demonstrate early on that freight claims are winnable and that submitting a freight claim needn’t jeopardize a company’s relationships with its carriers.
“All it takes is the right approach…”
Hmm, I was going to ask you more 101 questions about claims but now I’m curious about what you meant by the right approach.
“Hey, it’s your interview. Fire away with any question you like!”
OK, I’ll bite. What does IL2000’s approach look like?
“So let’s start at the beginning. One of the great things IL2000 can do for clients is handle claims on their behalf. In other words, we aren’t only offering broad overarching advice or guidance on how to do claims better — although that is one part of it. We’re diving down into the weeds to handle freight claims successfully for them.
“That does a few things. Obviously, having IL2000 handle the claim removes a ton of frustration. Fewer difficult conversations in anyone’s day? Instantly that’s a big plus.
“Secondly, IL2000 produces more favorable outcomes. We’re experts at negotiating how physical products are handled. Having done this a million times before, we have a deep and practical understanding of how the process works and we’re darned good at filing strong, evidence-based claims. So we’re talking more money back, essentially.
“And finally, we help our clients figure out the whole claims process. So let’s say a client comes to us with a claim, and we can see the carrier is likely to decline. We’ll lay out why it’s not a strong claim and give them the option to proceed or not proceed. That saves time, sure, but it also opens up some useful dialog between IL2000 and our client on what they could do differently to build smoother shipping practices moving forward.
“So that’s our approach to freight claims, broadly speaking. Of course, I could go into a bit more detail on our process for handling a claim… or is that too much detail?”
Let’s do it! How does IL2000 handle freight claims?
“OK, so we’ve set the overall scene: IL2000 dives in and begins the claims-handling process. We take the tough negotiations away, deliver the best possible outcome, and feed key findings back into company practice. All of that begins with data validation.
“Whatever claim we’re submitting, the carrier is going to want to see a particular set of data presented in a particular way. By giving the carrier that documentation as cleanly and precisely as possible, we instantly eliminate much of the potential for delay and hedging early in the claims negotiation process. Through validation we can also make sure the claim itself is fact-based and that our paper trail has a strong evidentiary foundation. That puts things on the right footing, you know? We know exactly what we’re claiming against, and the carrier can instantly see that the freight claim is credible.
“Quite often, the next big hurdle we jump for our client is moving the process past decline status…”
But wait, “decline status?” Isn’t it game over at that point?
“Not at all! A carrier will often classify a claim as declined right at the beginning of the claim negotiation process. Unless they approve it immediately, it’ll generally go into a declined status, and all that means is that they’re waiting on more documentation or need to clarify something about the shipment.
“So what many clients thought was a red light is really just an inevitable part of the negotiation process. It boils down to experience. IL2000 has been handling freight claims for decades and we’re able to see where, when, and how to push back. A lot of this process is quite counter-intuitive, but more than that, it requires a certain quality of relentlessness that a lot of our clients simply don’t have time or energy for. Just recently, I had a carrier cut a client a check for four dollars and seventy-two cents. It was incredibly satisfying.
“Most of our claims are for thousands of dollars, so it might seem absurd at first that we go after claims for such inconsequential amounts. The thing is, it’s the principle. If you’re consistent and absolutely thorough, service quality improves and everyone is operating on the same page.
“See? Relentless! Our whole team is like that!”
Remind me to stay on your good side. Beyond the mindset and the obvious value of working with tenacious experts, do you have any basic advice for companies struggling with freight claims?
“First off, only sign off on your delivery receipt once you’re satisfied the product is there and free of damages. If you do notice damages, note it right there on the delivery receipt with as much detail as possible. Doing this one thing can save companies hours in negotiation and goes a long way to making freight claims smoother and easier to manage. Oh, and don’t accidentally lowball the extent of damages. Let’s say a spot check of merchandise received in a shipment reveals that three items were damaged. You shouldn’t sign off on three items being damaged until you check and quantify damages in the whole shipment. If you don’t do that, you may miss out on being able to claim the full amount.
“Secondly, if one of our clients does notice additional damages or missing freight after signing off on the shipment, it’s important to act really fast. Notify IL2000 immediately. Generally, we do have a small window of time in which to notify a carrier of damages after the shipment is received. Even if we can’t then pursue the whole claim, we may be able to pursue a partial payment.
“And finally, it’s important to understand that the insurance you take out on a shipment and the freight classification you use is a big factor in how much you’ll get back should you need to file a claim. If you’re unsure of what classifications to use, it’s best not to take a stab in the dark. Again, that’s a big value add IL2000 offers. We can help our clients classify their freight correctly so that their shipments are adequately insured and protected.”
You just had those points ready to fire off like that, didn’t you? Are you always this organized?
“Yep. It’s what we do.”
We have a few minutes left. Can you make my job even easier and give me a neat way to sum up the value the freight claims team can offer IL2000’s clients?
“Sure can. First and foremost, we offer knowledge — a breadth of industry-leading expertise you just won’t typically find in a conventional supply chain management company. Everyone on our team has a nuanced and deeply technical understanding of the freight claims process, and as you can see, it’s complicated.
“After that, it’s well worth mentioning advocacy. Or, put another way, strong representation. To be brutally frank, the ruleset governing freight claims starts out heavily stacked in the carrier’s favor. Our vigorous representation goes a long way to creating a level playing field for our clients.
“And then there’s patience. When a company needs to submit a big shipment claim, the whole experience can feel rather fraught if they’re going it alone. We understand how stressful the many steps in claims negotiation can be. We’re used to it, and every member of our team has opted to work here because they revel in the details and have the fortitude to see a lengthy process through to completion. At the end of the day, that makes our clients’ lives so much easier.”
Schedule a no obligation consultation if you need help with freight claims and would appreciate having some world-class supply chain experts like Liesel in your corner.