Are Third Party Logistics Companies Responsible for Damaged Loads?

Who is Responsible for a Damaged Truckload or Container Load?

Your cargo may travel from the production area to a storage facility. Later, forklifts and other conveyances transfer it to a staging area for shipment and onto the dock to be loaded into 3PL logistics company’s trucks or containers for transport to a delivery destination. Eventually, the products arrive at the destination and, lo and behold; the customer detects damage to the cargo.

Even with the most sophisticated equipment, packaging, and handling protocols, damage occurs. Who was responsible? While insurance companies may be involved in the reimbursement of any losses, determining fault is essential.

How do industry protocols assure that responsibility is properly assigned?

Areas of Responsibility and Documentation

In the most basic sense, shippers and third party logistics companies have specific responsibilities. These are:

• Shipper: Proper packaging, appropriate labeling, accurate documentation. Sturdy packaging which is deemed sufficient to protect the products during normal handling, stacking and transport. Weak boxes and flimsy crating can result in crushing, collapsing, and falling.
• Third Party Logistics Companies: Maintaining the integrity of each package and its contents from the shipper to the destination. In some cases, as with BR Williams, Alabama based logistics company, the material may pass into another warehouse and onto a further shipment phase that may include truck, rail, air, ocean or multimodal transport.

An additional layer of responsibility may also lie between the third party logistics company and any contracted carriers when used, that are employed to transport the goods.

Proper inspection and documentation throughout the process are essential for determining damaged load responsibilities.

Related: Looking for the best 3PL company for your needs? 

Claiming Responsibility for Damaged Loads

If damage appears at the end-user location during delivery, the shipper or seller of the products are notified of the arriving condition. The shipper may be required to issue a credit for damage and have the goods returned. In any case, the shipper is obligated for the loss of value since they retain ownership of the goods until accepted.

Legally, third party logistics companies are hired to transport goods and deliver them without damage to the end-user location. Agreements are made between the shipper and the logistics company that define these responsibilities. If the shipper believes the product departed their site in proper condition and arrived damaged at the destination, then the third party logistics company may have breached the contract.

For the shipper to have a legitimate claim, they must show that the product left their facilities in good shape, then arrived damaged, and must provide a cost estimate for the extent of the damage.

Third party logistics companies should carefully inspect and document the condition of all outer cases and crates before taking possession of the freight.

When cargo is damaged, the 3rd party logistics company either accepts responsibility or develops a case to defend their liability. If the damage occurred during transport by another contracted transportation company, the logistics company might need to extend the claim for damages to them.

Time restrictions apply to damage claims for truck, rail, air transport, and sea shipments.

If the third party logistics companies are storing, transporting, and delivering the products with their personnel and equipment, then the responsibility for proving or disproving responsibility for damage shifts to them.

Cargo Insurance Role

Cargo carriers are required to have carrier liability insurance to protect against certain occurrences such as accidents and natural disasters that may damage equipment and cargo. Similarly, shippers may have cargo insurance to protect goods during transport and warehousing.

Risk coverage may cover such occurrences as inappropriate packaging, infestation, employee dishonesty, abandonment, and more. Other policies may only cover particular events.

Additionally, shippers should discuss all scenarios beforehand with their third party logistics companies to prevent confusion later. Policies vary in coverage and price. No insurance policy protects against every possible situation, since:

• Some products may not be insurable for transport.
• Certain types of events may not be covered.
• Coverage may only be valid if the product is handled in a particular manner.
• Coverage may apply only to certain warehouses and equipment.

Domestic land cargo insurance will only apply to damage or theft within the United States.

The Solution

Collaboration and a positive partnership with quality third party logistics companies reduce damage.

Some shippers and their third party logistics companies rarely experience unresolved cargo damage issues. In these cases, a collaborative partnership between shippers and their third party logistics companies involves establishing protocols, responsibilities, and expectations early in the relationship. When partnering companies view moving goods unharmed from one point to another as a mutual benefit, mutual commitment to success arises.

Two-way communication is an essential element of a collaborative relationship. For example, the logistics company may offer a constructive packaging idea that could lower the supplier’s cost while improving the durability of the package. Similarly, the vendor may suggest an operational change that makes picking up and loading products far more efficient.