Freight Claims 101 (with | Episode 245

Freight 360

May 24, 2024

Join us as Mike Schember and Brad Berlin from unveil their revolutionary three-step wizard for managing freight claims. Utilizing AI and OCR technology, they transform this critical but often complex process into something much more manageable. Tune in to discover the intricacies of freight claims, from legalities and insurance to the pivotal role brokers play in ensuring smooth logistics operations. Whether you’re a seasoned professional or new to the industry, this episode offers invaluable insights and a fresh perspective on freight claims management.

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Show Transcript

See full episode transcriptTranscript is autogenerated by AI

Speaker 1: 0:20

All right, welcome back for another episode of the Freight360 podcast. We've got a special one, like we do oftentimes, today we're going to have some guests on with us to talk about a topic that we don't hit on much, which is freight claims in this wonderful industry of ours. We'll get there in just a bit. But first, if you are new brand new or just newer to our content and our channel, you can get all of our content on our website,, as well as all the podcasting platforms and YouTube, if you'd like to watch us or see some shorts or some chopped up clips or educational videos. But while you're at our website,, you can also check out the Freight Broker Basics course if you want a full-length educational option there for how to get a brokerage started, grow the customer base, build a carrier network and even hire the right folks. And please, share us with your friends.

Speaker 1: 1:11

If you have questions, you can leave them in the comment section on YouTube. We answer those every single week on our Final Mile podcast, which comes out every single Tuesday, or you can email us at info at, or just use the contact button on our website and you'll get ahold of us that way. So, without further ado. Before we get into any fun industry news or sports, we've got some special guests with us today. We've got Mike Schember and Brad Berlin of freightclaimscom. Gentlemen, welcome Mike. I'll give you a chance real quick. For those that don't know you, just a quick intro on who you are, what FreightClaimscom is, and then we'll throw it over to Brad for his quick intro and we'll get into it.

Speaker 2: 1:54

Well, thank you, and I appreciate the time and you having us on. My name is Mike Shember. I'm the CEO of FreightClaimscom. I've got 25 years experience in managing a freight claims, both on the shipper side and on the carrier side. I was director of freight claims for two yellow owned companies back in the day and then I ran a brokerage for about 16 years, so I've got a lot of experience on both sides. And FreightClaimscom is some software that's designed to simplify the process and, as our trademark tagline says, it's, freightclaimscom is some software that's designed to simplify the process and, as our trademark, tagline says it's Freight Claims Simplified, and we believe that we've done that.

Speaker 1: 2:32

Awesome. Well, it's good to have you on, Brad. How about yourself? A little background on you.

Speaker 3: 2:34

Thanks. Thanks for having us. Yeah, brad Berlin, ceo of the company. I've been with the company just over a year or so. My background has always been in logistics ever since I got out of ASU College Night brokerage, cut my teeth in brokerage at Global Trans. I was one of the first, and four employees helped them build out their technology. Moving over to the logistics space in consulting, where a company called Car carrier direct was now also known as metaphor about eight or nine years. So got to look under the hood a lot of cool companies to see how the operations work. And then I joined over here, mike, so excited to be part of the company and I think we really have something special here, something that freight claims people just don't want to talk about. But but we're making that front and center and again, like Mike says we're simplifying it for everybody.

Speaker 1: 3:27

I love it. I love it. Well, yeah, and we'll dig into claims here in a bit. It's definitely one of those necessary evils in our industry. No one enjoys dealing with them, but it's part of the business, so appreciate having you guys both on Ben. What's going on in South Florida today, man?

Speaker 4: 3:43

Doing well, Just trying to catch up. Had a busy week just with some other things, and that's about it. Man, Nice Weather's getting super hot and super humid and muggy, but other than that that's to be expected.

Speaker 1: 3:55

That's what I'm hearing. Well, we got some unseasonably warm weather in Buffalo this week. It's mid-80s and sunny, so we'll take it. I actually have a friend that lives in Tampa, the Tampa area, and he's like, yep, I'm migrating North to the Carolinas for the summer. He's like I don't like the heat. So you guys in Arizona I don't even know You're pretty much in the desert, literally in the desert, right. So yeah.

Speaker 2: 4:21

Yeah, we got 120s right around the corner, so there you go fair enough.

Speaker 1: 4:28

Uh well, good stuff. So we'll hit a little sports here real quick. Um, nfl schedule dropped last week, so um the did you guys see? Um, everyone was like giving crap about the Jets getting six primetime games throughout the season. The jokes are like let's hope Aaron Rodgers doesn't bust his leg up again four snaps in. Are you guys Arizona guys here? Are you guys big football fans or anything?

Speaker 2: 5:00

Yeah, I am. I'm actually a Packer fan. I followed them before the cardinals came to arizona. Okay, on my age, a little bit. But I don't like kyler murray very much. I just think that, uh, he can. He's got a big ego with not a lot of arm behind it.

Speaker 2: 5:16

So that's just my impression, that's just my opinion, but bill's cardinals is week one, I believe, for uh, for us in western new york so, yeah, I heard that I've got some friends that live here that transplanted from Buffalo and they asked me if I wanted to go with them to see it. So I might. You might see me up there nice Brad.

Speaker 1: 5:34

How about you football guy?

Speaker 3: 5:35

yeah, absolutely. Um, I actually won my first fantasy football league in like eight years, uh, with a bunch of friends that I've been, so it's a pretty exciting year last year. But there you go cardinals fan, viking fan, detroit fan uh, cardinals, a cardinal fan because they we didn't have a team like I was born and raised in arizona. They came in 88, so my family came from minnesota, so I was a viking fan and I was always a big Barry. Sanders fan so that's where the Detroit link is, so there you go.

Speaker 3: 6:05

I wrote it Love it.

Speaker 1: 6:06

Good stuff, ben, the shift into golf here real quick. Scotty, give us the rundown on your take on the jail cell incident at the PGA Championship.

Speaker 4: 6:19

It was wild Like the most mild-mannered guy maybe in like all of sports, for sure in golf right gets arrested on the way to the course. It was friday, right?

Speaker 1: 6:30

the uh, yeah, yeah, round, yeah.

Speaker 4: 6:33

Friday morning yeah, so friday, apparently, from what I've read, I listened to it and was following it, but like he was driving to the course and there was a fatal accident, I guess somebody that was working the tournament got hit by, I think, a bus and so horrible accident somewhere around like six something in the morning and it was also raining and Scotty was driving a what do they call it? Like an issued vehicle that all the players have. So he's driving the same vehicle that everybody has. What do they call it? Like an issued vehicle that all the players have. So he's driving the same vehicle that everybody has. It has the decals on the front as well as the back that he's, you know, a tour player trying to get into the course and apparently he was only like 20 or 40 yards from the entrance.

Speaker 4: 7:13

Like he was so close that like reporters literally saw this happen and like they had video from it. So he's right by the entrance and apparently one of the traffic officers directed him to be going around to get into the course for his tee time. It was like 6.30. And another officer either didn't know that happened or tried to tell him to stop and I guess he didn't see the second officer or know, because it was raining and the second officer was wearing like a black raincoat and couldn't be identified like visually as a cop and he just drove around the median to get into the course. That cop apparently like jumped on the side of the car or like hung on to it and got dragged. At the very least like it didn't describe that part, just that his pants were ripped and that I saw something. Yeah, I saw the $80 pants comment.

Speaker 4: 8:02

The very least like it didn't describe that part, just that his pants were ripped and that, yeah, I saw the 80 pants comment yeah, and then he stopped and they basically took him out of the car, threw him in cuffs and took him to jail and then the reporters videotaped and he's like asking the other cop like what happened, and the other cops like he's going to jail and there's nothing anybody can do about it and like that was the only comment and video like from the scene. But he was supposed to tee off like pretty early too and they took him to jail, processed him and then I guess one of the pga's attorneys got him released on his own recognizance, came back at 10 30, teed off at like 10 45 yeah, I saw he had like 30 minutes or 25 minutes and he was saying, yeah, like I, I was doing some stretching in a jail cell.

Speaker 1: 8:44

So that was a first. Yeah, and he's literally the first hole yeah, he's like.

Speaker 4: 8:49

I just sat there. I was really worked up so I worked on my breathing and just played the round in my head and just tried to focus on bringing myself back to like I guess you know center, where he was trying to. And then, yeah, shot like six under.

Speaker 1: 9:02

I can't remember exactly what he shot, but like a great he had a great round yeah, fantastic round that day I mean, yeah, that was wild regardless, a tragedy that like started the whole incident off with him, but um, seems like it was kind of um spiraled out of proportion a little bit, but hey it, uh, it definitely got everyone watching tv that day.

Speaker 2: 9:22

So it sounds like it helped his game that day a little bit too.

Speaker 1: 9:27

Yeah, maybe he's got, maybe he's onto something there, cause he shot like five or six under. So, um, well, yeah, interesting um news. So, um, our producer threw us an article here from overdrive online. Um, they're a great source of news for the industry, along with a bunch of the others out there. But we've shared some of this stuff in our newsletter twice a week.

Speaker 1: 9:53

But TIA did release their 40-page document on fraud and things to look out for how to combat it. There's been a 6x increase since I think it was spring of 22, so about two years ago, which everyone's aware of. But a lot of this stuff that TIA has been echoing for months and years at this point now is officially pen to paper and you know there's a lot of stuff that's been changing with multi-factor authentication across the load boards. I know the federal government. When the FMCSA met with all of us TIA members last year in September at the policy forum, they announced that they were going to be implementing some multi-factor authentication and ID verification for new applicants for the FMCSA's system for motor carriers and freight brokers. So the government makes a lot of promises. We'll see what actually pans out.

Speaker 1: 10:39

The government makes a lot of promises. We'll see what actually pans out. But you know it's been a hot topic for the last couple of years now and we'll see, you know we'll see where things pan out from there. But yeah, it's definitely been a it's been an uphill battle. Ben, have you heard anything else in the fraud world that's new or different lately? But it's just kind of the same thing over and over, it seems like. Yeah.

Speaker 4: 11:01

Everybody's doing more to try to mitigate it, prevent it and help with it, but nothing outside of that.

Speaker 1: 11:11

Yep, Exactly, Just got to stay on top of our game and be vigilant, I suppose. Well, cool, let's get into some freight claims discussion here today. Get into some freight claims discussion here today. So this discussion will kind of act as like a basic education, one-on-one level discussion on what freight claims are, what that process looks like to facilitate a freight claim, whether it's the shipper doing it or the broker on behalf of them, where the insurance comes in different types of incidents. Broker on behalf of them, where the insurance comes in different types of incidents. But first, Mike, if you don't mind, with FreightClaimscom, just to kind of set the stage. What is it that FreightClaimscom does? How did this come to fruition?

Speaker 2: 11:57

And we'll kind of weave that in and out of the discussion today. Yeah, I appreciate that FreightClaimscom, the current process for managing freight claims, is very archaic it's. You know Brad likes to refer to it as herding cats trying to gather all the documentation. A lot of people use multiple software applications to manage their freight claims. So when we designed FreightClaimscom we realized we're really competing against Outlook, excel spreadsheets and maybe a Google Drive or a Dropbox or something of that nature.

Speaker 2: 12:27

So everything's just kind of all over the place without any consistency to follow up on timelines that are required. You know, an freight claim is a legal demand of payment by a shipper or consignee for loss, delay or for cargo in transit. So there are some required documents that are required to file against the claim or, I'm sorry, to file against the carrier, and we help facilitate that. So we're we're literally setting the standard for freight claim processing. So our software has a three-step wizard to help you gather all that documentation. More importantly, keeping everything in one software solution with follow-up deadlines that give you follow-up reminders to keep you on task with that freight claim.

Speaker 1: 14:21

Now that's awesome because one of the things that a lot of people that are listening right now or watching they might not have a total understanding of how the claims process works, or there's a chance they've never dealt with a freight claim yet, which you know cross your fingers. Knock on wood, it's likely to happen at some point or other, depending on the commodity you're dealing with. But even when I was, I started with an asset based company years ago and I was just like, all right, this is damaged and then somebody else handled the rest of it. I had no idea how it all went down. This is damaged and then somebody else handled the rest of it. I had no idea how it all went down. And the same thing even in moving over to brokerage on the 3PL side.

Speaker 1: 14:56

There's oftentimes at a larger company, there's a department that has to be in place to handle all this Because, just like you said, you're in multiple different systems.

Speaker 1: 15:05

Yeah, you might have a claims module in your TMS, but more likely, especially if you're a smaller brokerage or just a single one guy or gal broker, this is a very manual process You're trying to figure out. Who am I supposed to call at the insurance company? What is the shipper actually looking for here? Do I need pictures? Who took pictures? When were they taken? What documents are needed? All that stuff, and you're right, you're saving them in OneDrive or in a Google Drive, and then you're also got stuff in your email and you might even have a customer facing portal as well where you're trying to upload stuff and the whole process. I've seen claims that I feel like should be able to be handled in days that take six months, so it's definitely a frustrating process and I'm glad you guys have put something together to take some of the burden off of folks in brokerage to make the necessary evil a little bit less nerve wracking and frustrating to deal with. I'm curious too, mike, when you finish up, and then I'm curious how you and Brad got hooked up together.

Speaker 2: 16:07

Yeah, well, let me just state that the one thing I always say is freight claims is the last department in any organization to get any resources. We're trying to fill that gap and I believe we have so, and you know, a lot of the feedback we get from our customers are twofold. We've gotten carriers that have reached out to us to give us some guidance on what they expect in order for them to fully investigate a claim and hopefully settle it expect in order for them to fully investigate a claim and hopefully settle it. And we've had shippers and brokers that reached out thanking us because it's keeping them on task and keeping their customers happy, because they're able to process that claim in a time frame that doesn't take six, seven months.

Speaker 1: 16:44

For sure, yeah, absolutely so. How did you and Brad get together and get this thing rolling?

Speaker 2: 16:52

Well, I was actually. I met Brad at Global Trans in the very beginning. I was going to start this company back in 2006 because I was leaving a carrier and I knew all the things that carriers would do to not pay a claim. We literally had drawers full of claims that we knew that we owed but we didn't pay unless somebody called on them. So I called on Global Trans and I said, hey, let me manage your freight claims for you. And I saw how quickly Global Trans was growing, so I pivoted into starting a brokerage. And then I reached out to Brad about a year ago. Several years ago we started talking about this, but then he finally came on board a year ago to help put the software together, and it's been fantastic yeah.

Speaker 4: 17:37

Awesome. I'd like to ask some follow-ups, unless you had some, because that was really interesting and that was a good segue. Right, like you had said, you know when you're working from the carrier side, like you, kind is the standard process, what are the standard procedures from A to Z, what is supposed to happen and who, by the way, is supposed to be controlling or overseeing the process, right, who's ultimately responsible and how does the process play out? And it's typical freight claim, yeah.

Speaker 2: 18:16

How much time do we have? No, I mean, you know, it really is a two-way street. I mean, the thing I always say about freight claims is it's really an emotional topic, right, everybody gets oh my stuff's damaged and the carrier owes me $85,000. And it simply doesn't work that way. I mean it's two parties getting together to take the emotion out of it and really look at the facts. You know, was there a notation on the delivery receipt? Does the carrier have a release value? What does your contract say with that carrier? Is it defaulting to their rules tariff? And you literally have nine months to file a claim from the time that a notation was made on the delivery receipt. But on concealed damage you have five days to report it to the carrier. And concealed damage is just that. And I've seen those claims all the time where they'll say, hey, I didn't make a notation, but there's concealed damage. We'll send an inspector out, the damage is visible, that's not concealed. And we will decline the claim from the carrier side Because if the damage is visible, it should be noted at time of delivery on the delivery receipt. Because from the carrier's perspective, we don't know what the cargo went through after they signed the delivery receipt clear, so they're not going to take responsibility for it. But some carriers will settle at one third of the claim amount because there's three parties in handling that shipment the shipper, the consignee and the carrier. So they say, hey, we'll give a voluntary payment of one third.

Speaker 2: 19:38

But carriers have gotten a lot more sophisticated over the last 10 to 15 years. When I first started, every carrier had a release value of $25 per pound per piece and now it's a sliding scale based upon class of freight that you're shipping specifically on the LTA side. But when you were talking about fraud previously, we're seeing a lot, a lot of theft going on out there. So we're gathering that data behind the theft on when claims are filed for theft so we can kind of help isolate and provide that information to the shipping public where we're seeing those issues occur.

Speaker 2: 20:13

And part of our software too, it's more than just the management of freight claims. It's the data behind it. So we're going to give carrier performance scorecards of freight claims. It's the data behind it. So we're going to give carrier performance scorecards and we actually, down to the SKU level, down to the address, are going to pinpoint where your problems are occurring. So one of the examples we gave at TIA. If you have one specific carrier, I won't name any names. But if you have one specific carrier that might've been nine out of your last 12 claims filed you'll be able to isolate where those issues happen. So you don't have to cut the carrier off across the country. You might just find they're having a problem in Ohio or Arizona and then you can work with the carrier to mitigate those losses.

Speaker 1: 20:52

Yeah, that's super valuable stuff right there. I feel like there's so much data available and that can be collected in our industry, but it's oftentimes nothing is done with it. But that's that's huge to be able to prevent those headaches before they happen. Um, so I had a question to follow up to what you just said about the concealed damage. So it cause, in my mind, an example that would it be like. Um, you know, pallet shifts in transit cause it's not secured, you can't see the damage, but once it's opened up at the receiver, maybe there's some broken items on the inside. Would that be an example of concealed damage or what is that? Can you break that down at time of?

Speaker 2: 21:30

pickup to make sure that the goods inside are not damaged. So the carriers are not going to allow customers to open boxes at time of delivery to implicate the carrier when they don't do it on the front end. If that makes sense, okay, concealed damage you know furniture is a good example of that. So you know it looks, the carton looks fine, everything looks packaged properly, and then the customer or consumer opens it up and finds that the chair is broken. That would be an example of concealed damage.

Speaker 1: 22:06

So it could be damaged before it's even loaded. Then Could be.

Speaker 2: 22:10

I mean that's why they'll pay one third typically, because they don't know. It's impossible to tell where that damage occurred, because the notation was made at time of delivery.

Speaker 1: 22:19

Yeah, we, um, we. We had a discussion with some of the folks at produce blue book and one of the things they talked about was like if, uh, let's say a produce shipper, we'll just kind of we'll dumb it down here, but like they load produce on at the wrong temperature and try to get it loaded real quick, get it out the door knowing that it's going to show up spoiled or something like that. The carrier does everything right, it gets to the receiver and there's spoilage or damage to it and everyone's kind of sitting there like pointing fingers like well, it couldn't have been me, it must be you. I did what I was supposed to do. Who's at fault here? And my personal experience and issues like that as a broker. We've shared one third liability on it just because we were part of it and probably could have done something more to help prevent that. But it's such a frustrating the nuances behind all of it.

Speaker 2: 23:13

So just to follow up to that brokers are technically not responsible for freight claims because the goods are never in their care, custody and control. They just arrange for the transportation. But one point to that is, as a broker, if you're specifying your broker name on the bill of lading, the bill of lading is a contract of carriage and you're putting your broker name in there instead of the carrier name, you're assuming carrier liability.

Speaker 4: 23:40

So then all of a sudden you are liable.

Speaker 2: 23:43

And I understand why brokers will do that, because they don't want necessarily the customer to call the carrier directly. But you are taking on that additional risk if you do that. Interesting.

Speaker 1: 23:55

Okay, I didn't know that part of it. That makes sense, though, because I mean bill of lading is a legal document right. So wow. So I guess, ben, you got anything else before we kind of get to the process and how it all pans out.

Speaker 4: 24:07

No, that's interesting. You said that I was filling out an insurance form with one of a larger client of ours and that was in the insurance. You know Q and A for them to quote the policy. Was that question? It was is your name going to be listed on the BOLs? And that's, this client's also a shipper too. And we went right back to him. We're like that's really interesting because, like in some cases it would be, but like it doesn't need to be and I wasn't aware that you assume liability once your name is on that BOL. And it's definitely something I would like to dig into even later at some other time as to what that liability is and how and what that affects.

Speaker 2: 24:46

Yeah. So the advice I would give is make sure that you stipulate in your terms and conditions and you reference your terms and conditions to your website and any document the customer will sign, whether it's your credit application, the bill of lading you need to make the rate con, make reference to your terms and conditions and have those terms and conditions stipulate your responsibility as a broker as it pertains to arranging the transportation that makes sense.

Speaker 4: 25:14

Yeah, it does make sense.

Speaker 1: 25:17

So we'll kind of start with some basic stuff here. I'm just trying to think off the top of my head. I mean I've dealt with too many claims to remind myself of, but some of the common ones damage right. I mean you have something shows up that's you know, you've got a box that's busted in, you could have a reefer breakdown and you've got spoiled produce, melted ice cream, frozen seafood that thawed out. I've had a complete loss with fires that burn an entire tractor trailer. I've even seen equipment that's been delayed and because of that there's a financial loss due to the operation not being able to take place and there's requesting of reimbursement for money there. So can you guys take us through some of the common examples of just what would-.

Speaker 4: 26:16

Are there common ones? Yeah, is there a common, or is there one that happens?

Speaker 2: 26:37

Are there common ones? Yeah, is there a common, or is there to the carrier right? So we see that very often where I don't know. You know the example I give. You're parked at Home Depot and a car rolls into your door of your car and you expect the insurance company to replace your car. Well, I don't want to drive a damaged car. Well, you have a duty to mitigate.

Speaker 2: 26:58

So if that product can be recovered or recouped, that is showing mitigation to the carrier and they're more likely to settle at an amount that's a reasonable amount. That's referring to consequential or special damages and a carrier is not responsible for that. They're only responsible for the damage to the cargo itself, not the special or consequential damages that might happen as a result of that damaged cargo. So unless you have a contractual agreement with the carrier that they will take on that additional liability should that shipment not arrive damage-free, you have no case in that case and as I mentioned earlier, the carriers have done a great job of having that sliding scale of release values, and I think class 50 is down to $2 per pound. And think about this An LTL carrier charges you $150 to move a pallet from I don't know LA to Phoenix and it gets damaged and you want to file a $50,000 claim against them. We're not going to have any freight carriers if that's going to be the standard.

Speaker 2: 28:09

So, you have a duty to mitigate that loss. But food's a whole different animal. I mean, you get contamination. You don't want to put that out on the market to the general public and have something that you know could damage or cause somebody some health problems. But you know, every claim is kind of stands at its own merit, if you will, but it's really you know work with your shippers and customers to figure out what exactly they need when there is a damage claim. They need when there is a damage claim.

Speaker 2: 28:43

We developed an online freight claim form and then we're developing a link where people could submit claims into freightclaimscom that brokers could offer to their shippers. Because a lot of the things that I see in error is the communication back and forth what is your customer really expecting for compensation versus what you're filing for with the carrier? And then, from a broker's perspective, I would stress that you don't ever want to interpret what the carrier is saying. You want to share that specific communication with the carrier. You can guide the shipper in, but as soon as you try to interpret something that the carrier is saying, you're assuming some liability. So you got to be really, really careful with that.

Speaker 1: 29:17

Yeah, that's a really good point, and it kind of leads me to another point of discussion here is you know, you made a really good point before about how brokers were arranging for the transportation right.

Speaker 1: 29:31

Liability should not be falling on us as brokers. And the same thing with a freight claim, you know, we're not the beneficiary of the claim, we're not the one whose insurance covers the incident. Here we're simply facilitating it. In most cases where the parties involved is the shipper or receiver, whoever's good it is, and then on the other end is going to be the motor carrier's insurance company who would be potentially paying out that claim. And we're not even required as brokers to file a claim. A lot of times the shipper or receiver can file the claim themselves. It's a value add that a lot of brokers do, saying, hey, we understand claims happen, we understand this process, we're going to try to take this headache off of your plate and we'll handle it ourselves. Obviously, you guys have created a solution to make it even easier, but that's a really good point worth noting there that by no means should you use the phrase interpreting right, but we got to make sure that there's a fine line drawn between who plays what role in this process.

Speaker 4: 30:36

Can we go through? I'll just try to create an example that seems at least cut and dry. Carrier flatbed. They load a bunch of steel pipe that's supposed to be tarped. They don't correctly tarp it and 20 miles down the road the tarp blows off or is unsecure. All the cargo gets wet. It's rusted. By the time they get to delivery it's damaged and they say hey, so it's $50,000 worth of pipe. We want to claim $25,000 of it because we have some salvage value. But it is not the product and is not in the condition we arrived at. So clearly at least the carrier did and was visible to the shipper when they loaded it. They did secure the tarp, but they did not secure it well enough and they didn't stop to re-secure it once it was blown off or became unsecured. Right when they get to the consignee and they go hey look, this product is all wet, it's clearly rusted and it's been wet for at least some time. Where can you take us from there on? What should happen next? And let's assume a broker arranged that truck?

Speaker 2: 31:37

Yeah, so I mean their customer would obviously contact the broker. They would make a notation at the time of delivery on the delivery receipt or bill, letting access the delivery receipt and a lot of truckloads. But it's all about notations and you've got to be very specific on the notations that you're making. But what I'm hearing from you is they are willing to mitigate that loss. So maybe they found some pipe that was good, maybe all of it's not damaged. But if a carrier does pay a claim they have the right to salvage. So they will turn around and try to sell it in a salvage market to try to recoup some of that loss. But in that specific example it does sound like the carrier has some liability for failure to tarp, as long as that information is specific on the bill lading and what the expectations are for that carrier.

Speaker 4: 33:45

Okay, so let's go to right there. When you said we need to worry about notation and specifics, right. So as a broker, what do I need to make sure the consignee writes down or notates at the time that they're aware that this happens. They call me and they go. Hey, driver arrived. This is the situation. What should I be asking or making sure that they are documenting to make the process go smoother?

Speaker 2: 34:09

Documenting any sign of damage. So if the bill of lading did say that tarps are required and it arrives without a tarp, I would certainly make that notation in there. I would obviously write down how many pipes have rust on it versus how many were in the shipment. And you know documentation is everything in freight claims. So failure to document will not get a claim paid and that goes back to then. It's considered concealed damage, right. So document, document, document and be as specific as possible at time of delivery and work with the driver. So document, document, document and be as specific as possible at time of delivery and work with the driver I mean the driver. You know these drivers aren't out there intentionally trying to damage cargo or having tarps fly off. But the driver will usually be trained to work with you to make a proper notation and take as many pictures as you can. There's no such thing as too many pictures.

Speaker 1: 34:58

Yeah, I was going to add that in. That's. One of the best practices that I always tell folks at our company is you can never have too many pictures, right. It's in a driver's best interest to get a picture of the, especially if it's an open deck shipment and it's very easy to get a clean picture, like get a picture at pickup, get a picture in transit if you want as well, get a picture at pickup. Get a picture in transit if you want as well, get a picture at delivery.

Speaker 1: 35:20

And if there's any kind of claim or inkling that there might be a claim, take a ton of pictures. Get you know, and we're not talking like from 50 feet away, like get up close, show wherever it's been nicked or scratched or rusted or you know, uh, forklift time got pushed through something. Um, and absolutely that bill of lading right, when the receiver signs that they need to be annotating if there's damage, if there's anything short, if they're like you know, as in they're missing a box or a powder or something of that nature, I, I, I, full heartedly believe that you cannot have too much documentation when it comes to that.

Speaker 2: 35:57

You know one. One other piece piece of advice at time of pickup a lot of carriers are now notating handling units versus pieces on a pallet. So if you fill out a bill of lading that says three skids of 400 pieces and the driver just writes three handling units and then delivers three handling units, then they're going to decline that claim even if you find a shortage amongst those pallets. So it's important that the carrier notates the piece count on the number of pallets, not handling units. So you want to say 400 cartons on three pallets and have the driver sign it that way at time of pickup.

Speaker 1: 36:35

Now, how about like shipper loading count versus driver assist? Should anything like that be annotated on a bill of lading saying who actually physically loaded the product?

Speaker 2: 36:45

Absolutely, yeah, absolutely. Shipper loading count. I mean carriers wouldn't really have liability with that unless there was an accident or something of that nature. But then if it is shipper loading count, I would demand a seal and then making sure that seal number matches. So notate that seal number on the bill of lading and then verify that seal number at time of delivery.

Speaker 4: 37:06

So when you said a claim is like refuse, so let's just give into the other example. So let's just say that driver in the steel with a flatbed, like if the BOL didn't say tarps on it but the rate con did right, if the BOL didn't say tarps on it but the RACON did right. Or in a situation where neither of them had tarps written on the BOL or the RACON but the shipper, when they're loading, is like hey, this deal needs to be tarped, I need to make sure it's tarped, and they verbally confirm that it's tarped. Does that absolve the carrier of claim risk?

Speaker 2: 37:38

I would say yes, I mean the bill of lading is the contract of carriage, so that is a written agreement between the shipper and the carrier and the consignee to make sure you deliver the goods as exactly specified on the bill of lading. And if it's not, if it's not on the bill of lading, I mean it becomes down to. He said, she said and that's a war that you know, rarely you fight or win. I should say Gotcha.

Speaker 1: 38:03

So the whole, I mean I want to talk a little bit about disputes in this process, right, because I feel talk us through what the, I guess, briefly, or very high level, what is the actual filing process look like? Is there adjusters involved? What is the insurance company's role in trying to facilitate their end versus mitigate what they're paying out? What is the insurance company's role?

Speaker 2: 38:44

Well, that's such a loaded question it is. I know I apologize. No, it's all good. I mentioned duty to mitigate. I mean it really does come down to taking the emotion out of it and then try to mitigate that loss as much as possible.

Speaker 2: 38:59

But to your point about insurance, if I'm a claimant and I arrange with the broker or the broker's filing, the broker is seeking compensation from the carrier. It's not necessarily the broker's responsibility to file with the carrier's insurance company. I understand why they do that, just to try to speed up the process, especially with owner operators or one guy, one truck, or one guy and a few trucks. They don't have a claims department per se and they guide you to the insurance. But from a broker's perspective or a claimant's perspective, you're seeking compensation against the carrier. It's really the carrier's obligation to file against their insurance company because you'll get some insurance companies that'll pay you.

Speaker 2: 39:41

I saw an example recently that it was a partial load with two different broker shipments on it. The insurance company, the broker A, filed before broker B. The policy had limits on it, so broker A got the majority of those limits and broker B was. They were out of the insurance coverage, like whatever's left, if anything right, correct. And so the insurance was like, hey, we paid out max policy. And the carrier was like, well, sorry, the policy is paid out. Well then they sued the carrier because the carrier is ultimately responsible for that amount of coverage. For that I think it's $100,000. But that doesn't necessarily alleviate the carrier, especially if you are notating on that bill of lading or your contract stipulates an amount above and beyond the limits or the the which I say the minimum cargo liability amount. But you know, and then we've seen insurance companies that will pay less the deductible amount but you do have to ask about that next how that plays in.

Speaker 2: 40:39

Yeah, you do have the right to get it compensated from the from the carrier for that deductible amount, because the carrier knows they have a deductible and just like we do, right? I mean, if you've got a $500 deductible on your home insurance policy, that 500 bucks is coming out of your pocket and the carrier is obligated to compensate you that deductible amount.

Speaker 1: 40:58

So I've seen I got a quick question on that I've seen instances where the amount of the freight claim, like the value of the actual amount being claimed, was less than that deductible. Does that ever affect the like? Would I not want to go through the hassle of filing a claim if the deductible is higher than the actual claimed amount, or does it not make any difference?

Speaker 2: 41:23

I mean I wouldn't. I mean, you know, if you can get out of it for less your deductible amount, the carrier would most likely just pay it, I would guess, because any you know any claim against their insurance policy is going to cause their insurance costs to go up. So and I've seen that too so our software, we have the ability for you to accept payments from carriers and track those payments. So we've had some brokers that gave us that feedback that maybe an owner operator it's a $10,000 claim he doesn't want his insurance to go up but he doesn't have 10 grand to give you and he goes. I'll give you a thousand bucks a month for 10 months and in freightclaimscom you have the ability to manage that money coming in and then ultimately get compensated.

Speaker 1: 42:04

You made a comment about how some policies might pay out minus the deductible correct. Most all of them will. Okay, so that's a scenario that I've run into before. Is that and I'll just make these numbers up because I don't have the exact ones but let's say the carrier's deductible is $2,500 and the damage was $1,000. And we know if we try to file it we're going to get zero money from the insurance policy because the deductible is higher than that. The carrier's ghosting us. We pretty much just end up losing. We end up paying the customer to keep them happy just to do it out of the goodness of business relationship. Is there any recourse that a broker can take on a carrier to go after them for failing to settle that up?

Speaker 2: 42:48

I mean you could, but it would come down to a lawsuit in that case.

Speaker 1: 42:52

It's probably not worth the legal fees, right yeah?

Speaker 2: 42:54

Yeah. So I mean that's kind of a pickle. You know what I mean and hopefully you've got a relationship with that carrier. But I have seen some carriers, especially owner-operators one guy, one truck that has a million-dollar freight claim filed against them and they just filed bankruptcy and got a new MC number in two weeks and they're back on the road.

Speaker 1: 43:13

That's what I always tell people too. If you have the ability to easily look at when you're vetting a carrier's cargo insurance policy, knowing if they have a high deductible is I would always try to avoid a carrier if they have a high deductible is like I would always try to avoid a carrier If they have a $10,000 deductible versus, you know, 2,500, um, that higher deductible adds adds some level of risk or, you know, potential headache to you in the event of a freight claim. So, um, that's something I've always pointed out to folks as well.

Speaker 2: 43:40

Yeah, you got to do your due diligence, you know. And the last point I'll make about broker and we saw this a lot when I was running the brokerage is we're in the business of arranging transportation. So the example I give is you use Priceline to book a flight for Delta and Delta loses your luggage. You don't file a claim against Priceline, you go directly to Delta. So a broker kind of works much the same way.

Speaker 1: 44:05

Yeah, no, absolutely. So let's weave in FreightClaimscom, right? So we've kind of broken down a lot of the basics of what the claim is, what that process looks like, who's responsible for what. Talk us through what your process looks like. And so the majority of our audience is freight brokers. We've got some motor carriers out there as well that listen. But how does FreightClaimscom come in and kind of augment this process?

Speaker 2: 44:33

Yeah. So we allow a dashboard. So you have a claim log that gives you actual statuses of each claim within it. So what we've designed is to your point. We talked about insurance and brokers and many different parties involved that you might have to file against. So in freightclaimscom you submit one claim and you can file against multiple parties and manage each leg of that party's claim settlement individually and manage the money coming in. So how much did I get from the insurance policy? So you might have the carrier, you might have the carrier's insurance policy. You might file against your contingent cargo. You might have transactional policy at the shipment level.

Speaker 2: 45:13

Freightclaimscom allows you to manage each leg of that claim by each party individually while you're collecting money. We even have the ability to AI and OCR documents into our system so your customers can have a. We can provide an email address for the broker's claims department where customers can submit those documents. Our AI and OCR will read those documents and start uploading that claim for you. More importantly, we start comparing the data against the documents to make sure there's no conflicts.

Speaker 2: 45:45

So did the address on the bill of lading match the delivery receipt and match the invoice? Do the PO numbers match? Is the pro number or tracking number matching. So do you have the right documentation in order to submit that to the carrier? And then we also give you some guidance on what documents are required to submit to the carrier. So we'll never prevent you from actually sending it to the carrier, but we give you some guidelines. Hey, you're missing the invoice for this or you're missing the bill of lading for this.

Speaker 2: 46:13

We recommend that you gather this information because we know the carrier is going to ask for it, but you can go ahead and submit it, but it's going to delay the timeline if you don't get this stuff up front. So we have specific information, carrier performance scorecards, like I mentioned previously, really drilling down to where those problems are occurring and then managing your customers. So, as a broker, you can give your customers access to freightclaimscom but really only provide them the information you want them to see. So we have the ability to hide some freight charges. We have the ability to hide specific documents that you might not want to share with your customer. It's just internal information that you want to keep private. But your customers could log into FreightClaimscom, see their claim log, see their insights and reports only specific to that customer. So it's a really, really slick system and if you want to see a demo, go to freightclaimscom and request a demo and be more than happy to dive deeper.

Speaker 1: 47:15

That's awesome. Yeah, I know, Ben, you and I have seen a little bit of it in action. It's pretty cool. The way that I have historically seen claims process is such a manual process right, People trying to take pictures and slap them into a blank PDF page and create some sort of presentation to send off to an insurance company. And human error can miss a lot of things or mistake certain things, and that's why I think it's pretty cool that you guys have the what do you call it? Ai and OCR.

Speaker 2: 47:49

Correct what does that stand for Optical character recognition?

Speaker 1: 47:53

Okay, so it's a scan in the documents to read it, right yeah.

Speaker 2: 47:56

Yeah, that's good. Yeah, A couple of examples I'll give. You know our current customers. They said they love our software because just in a few clicks they can see when a carrier comes in and says I want to take a 10% rate increase. They're like, hey, wait a minute, you haven't paid nine out of the last 10 claims we filed with you, or you're our largest claim carrier. We're going to negotiate that 10% down. One thing about freight claims is that it's usually not somebody's full-time job in a broker. It's somebody that's wearing multiple hats, when FreightClaimscom will keep you on task to keep you apprised of where you are with that claim, and we'll even alert you when claims go stagnant or haven't been touched over a period of time. So we really built a good mousetrap for Freight Claims and I would encourage everybody to come in and check it out.

Speaker 1: 48:47

So we've got the two of you on. What's the rest of the team look like how big are you guys? What's the you know?

Speaker 3: 48:56

what kind of volume are you guys putting through? So I mean, we're very product focused. So my first order business when I came on was I hired a UX developer or UX resource. I'm Really high on UX. I think it's the most important part of software is, like anything else. First impression ease of use Again, sort of going on our tagline simplifying freight claims and then, you know, stacking the devs.

Speaker 3: 49:20

So we're, you know, I keep on telling the team we're not going to win the game by just having a placeholder to consolidate you, to consolidate Excel, outlook Calendar, all that stuff, but running automations behind it. So that's our OCR AI that we have sort of phase one of which is auto-indexing bill of ladings, product invoice, so forth, as well as scraping the data off of there and creating the claim form on their behalf. That's sort of our step one that we launched. Step two is that there's going to be now reading the emails that come back from the carriers, either on a declination or acknowledgement or mitigation. So our North North Star is like, basically, a user just clicking yes or no within the process of a freight claim. They're not doing a lot of that paper shuffling.

Speaker 3: 50:10

So one thing I also want to hit on is I think you mentioned it's freight claims. The importance to us is the data. I know everybody says that, but you know there's a lot of costs that happens with having a claim called a ripple effect. So everybody's worried about just getting that $5,000 back for a freight claim. But it's not just that, the $5,000 that you lose, it's all the time it takes to process a freight claim. So there's a statistic out there saying it takes about four hours all in to process a freight claim. We feel like we've brought that down to an hour. So just the pure time savings of our value add is there. And then things not falling through the cracks. Again, mike says it's not someone's primary job, so managing claims don't get paid in 30 days.

Speaker 3: 50:58

It's 90 days, nate, you said six months. It's very common that you're managing 50 or 60, 50 or 60 claims at once, and it matters how big you are. It could be possibly more than that. Just trying to manage that in just an Excel and multiple conversations you have to have to, you know, get that over the finish line. Again, I haven't seen any software do what we do out there, so it feels pretty good. It's fun. We're creating a standard for the industry, we're solving a problem, we believe, and it's been a fun ride so far. It's been really great.

Speaker 4: 51:33

So that's the thing that, honestly, I think is going to be really impactful to the industry as a whole is the reporting qualitatively or quantitatively into qualitative for the carrier side, like for carrier vetting, because there's no visibility into this whatsoever. Right, and I know it, like the larger brokerages, if you had like a higher value load, for instance, right, the one thing we would look at and they trained us to look at is how much money is on the books with our brokerage and that carrier, because that's what actually made the carriers do what you needed them to to fulfill the claim process, meaning like you would immediately hold this certain amount due to the claim and then, as they basically got us the information back to your point to make the process just move forward, right, a lot of them just wouldn't in a lot of cases and the only ability to do that was just the money that they had that the company owed them for the other lanes. So if you guys are able to collect all this information to be able to show who and how people are responding and how effective they are in working through this process, that's really valuable for us in choosing a carrier. We want carriers and again, things happen. It's not about a claim or no claim. It's did the carrier right work with whoever it was to process the claim in an effective manner, or did they go silent until someone had to file a lawsuit or a demand letter from an attorney to get somebody to do it?

Speaker 4: 52:58

To me, that's the thing that I care most about. Things happen. I'm not worried that a carrier has claims. What I care is is the carrier going to help work with me and the shipper or the consignee through the process to make sure that you get to a resolution right? And nobody wants to deal with them and certainly nobody wants to spend the time chasing people to get things done. And clearly smaller carriers have less resources and people in the office to do these things. So when you shorten that timeframe and you create, like you said, like a step-by-step roadmap that everybody can follow both the shippers, the consignee, the broker and the carrier like you know where that's at in the process and you know who needs to do what to get it to the end.

Speaker 4: 53:39

And to me, once you have that clear visibility in that process, you know what is and what isn't happening and why it isn't happening, which to me is the hardest part when you do it the traditional way, because everybody's just yelling and emails are flying everywhere and you're trying to go. Well, who emailed me last? Did this guy respond? Did the carrier get us the documents? When you have that defined path that your software walks you through, there's also a lot of trust too.

Speaker 4: 54:03

I feel I have a lot more confidence when I'm using a product like that, because when we go through this with like clients and stuff like we just get calls all the time Like what should I do? Did I do everything I was supposed to? Is there something I missed? Why didn't they respond? And all those phone calls take time and they accomplish nothing, right? So to your point, that four hours to one hour I think is valuable to not just brokers but also to the carriers, right, and also to the shippers, because now nobody's wasting time. And I love that analogy herding cats. I think Accenture had like a commercial on a Super Bowl a while back. It's literally a guy running through like a farm trying to herd cats into a pen, but like that's really what the process is like, and it's extremely difficult to even get to the end, let alone get to a resolution that worked for everybody, I think.

Speaker 2: 54:49

Yeah, and it's important to understand the shippers, and I mean we all love our customers and everything too, but we don't truly have some visibility on what what customers are bringing us the most freight claims. So you know what is my, my claim ratio against a customer from a broker? On that example, yeah, where you you've paid a portion. On that example you gave me yeah, where you you've paid a portion of that on behalf of your brokerage. And then it's typically, you know the customers, we and the brokers that I was at, we, we limited how much, or the lowest amount that we'd file a claim for was we wouldn't file a claim for anything $300 or less, because it's usually those shippers that want to pay you in 120 days that want to file every $20 claim.

Speaker 2: 55:29

I mean we have to make some limits there too. But it's important to understand that all parties are equally responsible in the freight claim process, so it's not just carrier. You owe me 20 grand. Well, what are you doing to mitigate that loss? How many claims are you filing against my brokerage versus the number of shipments, versus my GP, against the amount of money I'm paying out to keep you happy?

Speaker 4: 55:51

Right, and that doesn't even. That's just people doing, I would say, business above board. That doesn't even cover, like the whole section of shippers that are out there that are intentionally file you know, shipping product that they know to be damaged, that they know to be spoiled so that they can claim it on the broker that called them yesterday that they're like yeah, I got a load for you tomorrow. Sure, put it on this carrier. I don't know anything about Half of it's garbage anyway, we're not going to let anybody know. Hopefully they don't pulp the product and check it and then when it gets to delivery, we'll get an extra 30 grand for that stuff we were going to have to trash anyway and that happens and there's no way to see who that is. And even in produce it's like well, if they're going to give you a load and you talk to them for 30 seconds, maybe think twice, right?

Speaker 2: 56:42

Because there is no other way to see this information in the market as to who is bad actors, right? Basically yeah. And I've seen claims where a customer will say, yeah, it's repaired, and it's $400 an hour to repair it. I'm like 400 bucks an hour. Here's my resume. Hire me, I'll do it. I'll work for 250. You know what I mean? I mean, so you got to be reasonable with freight claim management for sure. Yeah.

Speaker 1: 57:01

Well, good discussion on the claims process. So you already mentioned freightclaimscom. That's where folks can reach out. Anything new and exciting coming up in the future for you guys.

Speaker 2: 57:13

We've got a couple events that we're attending. It's all about development. We're pushing some new updates. We've got a pretty lengthy roadmap that we're going to get through, so now's a great time to get started with us. You know, it's simple Just request that demo. We're easy to get you set up. I mean, we can get you set up pretty quickly, but we're building out some additional. I can't reveal too much, but we're building out some additional things that I think everybody would be excited about Awesome.

Speaker 1: 57:43

Well, Mike, it's great having you on and Brad same with you. We appreciate it. Maybe we can get you guys on again later this year in the future and talk some more claims stuff. I know it's not the sexiest topic, but it's part of our industry and I'm excited to see what's coming up for you guys. So, sexy again. There you go. I like it. That's perfect.

Speaker 2: 57:59

I didn't even know that.

Speaker 1: 58:08

I said it's like not the sexiest part of our industry. And now there you go, I got a sticker. I love it.

Speaker 2: 58:12

Yeah, so thank you very much for having us and again reach out to us at freightclaimscom. We're here to help.

Speaker 1: 58:19

Awesome. Thanks, guys, and any final thoughts.

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Freight 360
Freight 360

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