Smart Spacers®

Receiving Shipments: Essentials

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Critically Important: When Receiving Freight (e.g., pallets)

It is absolutely essential that you inspect all newly received shipments BEFORE signing.

If you’re receiving a shipment, you’ll be asked to sign proof of delivery (POD) paperwork upon delivery. While many carriers won’t stand idly by while you unpack every box, they will wait as you do a quick visual inspection to look for any obvious damage. As you inspect, keep an eye out for holes, water spots, and tears. If your shipment includes multiple boxes, move the boxes around and listen for any rattling or other noises that could indicate broken items.

As you unpack your shipment, count your items and record anything missing, damaged, or even excess product you find. If you find any damaged items, take photos for thorough documentation and report any issues to Smart Spacers® as soon as possible.

Inspection of product upon receipt from the carrier is a good practice for any facility, and can prevent questions, claim denial, and problems down the road. Here are a few tips to help everyone have a better experience:

Inspection of product upon receipt from the carrier is a good practice for any facility, and can prevent questions, claim denial, and problems down the road. Here are a few tips to help everyone have a better experience:

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Signing the Proof of Delivery

The Proof of Delivery is a legally binding contract, so if you sign it and then notice damage after the driver has departed, you will face an uphill battle trying to recoup the cost from the carrier.

When a consignee signs a proof of delivery, that signature denotes two things:

  • The goods arrived safely and without noticeable damage.
  • The cargo is now in the hands of the consignee and all responsibility shifts thereto.

So, if you tell a carrier that you found damage after the fact, they will point to the Proof of Delivery as their legal evidence that they upheld their bargain and that the damage must have occurred on your watch.

Inspecting Freight Deliveries

For the reasons discussed above, it is crucial that you thoroughly examine each item or pallet that gets delivered. Before you accept a shipment or inspect for damage, ask yourself the following questions:

  • Is this my shipment? Scan the delivery receipt and confirm that it is your name and information on the receipt. If your company has multiple locations, verify that they have been delivered to the correct one. Check the labels of every item to make sure that these goods were intended for you.
  • Is the piece count right? Count the pieces and make sure that they are all accounted for on the delivery receipt.

Once you have established these facts, it is time for you to inspect the cargo for damage or wear.

Freight Inspection Checklist

Take the following steps to ensure your company and goods are protected:

  • Document everything – We advise that you take photos of the freight as it is being offloaded. This can provide you with visual evidence in the case of legal or insurance issues. Ask the shipper if they would be willing to also take photos of the cargo prior to shipment. This allows you to compare and contrast if needed.
  • Check all sides of the shipment – Every item and package should be reviewed for external damage. Examine the pallet, the outside packaging, the shrink wrapping, the tags, and warning tape. Look for tears, holes, stains, water, or anything else that might indicate that the goods have been mishandled or tampered with. Look to see if packages have been opened, sealing tape altered, and that pallet’s wrap hasn’t been cut.
  • Is there damage? If you notice damage, take pictures of them and then make a careful note of each area where the cargo is affected. Even a small rip in the plastic should be mentioned. Meticulously write out in detail each and every piece of evidence of visible damage on the delivery receipt, and make sure that the delivery guy is there to witness. Once noted:
  • Open any package or pallet with visible loss or damage with the driver present.
  • Study the items with the driver, looking for further damage.
  • Record detailed descriptions of this inspection.
  • Are there exceptions? Exceptions are notes on possible damage, that do not necessarily lead to a claim. So, if a package is damaged, but the goods inside the container are unscathed, then you will not have to file a damage claim. However, if you do not note an exception and something does end up being broken, you will have a hard time winning that case.
  • Have the driver confirm – Once you have listed every issue on the delivery receipt, have the driver initial next to your damage footnotes.

Secondary Inspection

Once your initial inspection is finished, with all issues noted, carefully transport the cargo to your facility. Open up these packages and thoroughly re-inspect them for any damage that may have been concealed by the packaging. For concealed damages, it is necessary that you notify the carrier within five business days of these newfound issues.

Post Inspection – What to Do if the Shipment is Visibly Damaged

If upon your cargo inspection, you discover that certain goods have been damaged during their passage, it is essential you follow the mandated steps in order to reach a pleasing resolution. While such a discovery can be frustrating, it would be wise to remain even-keeled since losing your temper will do little to alleviate the situation. Remain calm, make notes in the proof of delivery and then follow these steps:

Do Not Turn Away the Driver

Whatever you do, never turn the driver away, unless the wrong cargo was mistakenly delivered to you. At the end of the day, refusing the shipment will likely cost you more, since the carrier could charge you for additional shipping costs if the driver has to come back. So, do not turn the driver away, make the notes of damage, sign for the delivery, and accept the damaged freight.

Accept the Freight

While it may feel counterintuitive, like you are the loser in a game of hot potato, accepting the freight is the crucial step towards compensation. A package can be damaged for a variety of reasons; a damage claim will seek to discover what went wrong and where it went wrong along the way. Damaged cargo could be the fault of the shipper packing the goods improperly or the carrier handling goods too roughly. Only after determining who is at fault can a consignee have their losses recouped.

Certain insurance policies require you to accept freight. If you refuse, it will nullify their responsibility to pay. The reason for this is, if you send the goods back, the carrier will be in control of them. This means that they could experience even worse damage while the claim is processed. By accepting, you remain in control of the damaged items and the situation.

Keep Documenting

Documenting the entire process is critical. It lays down a trail of breadcrumbs for insurance companies or carriers to follow during remediation. If it looks like your goods were improperly or wantonly packaged, write that down. Your notes should be extremely detailed; the more information, the better. Add dates and labels where necessary. On top of that, it is vital that you keep copies of:

  1. Photos showing the damage to the goods
  2. The Bill of Lading
  3. The Proof of Delivery
  4. The paid freight invoice
  5. An invoice highlighting the paid price of the goods that were damaged
  6. The packing slip
  7. The damaged freight claim

Ascertain if the Goods were Adequately Packaged

Typically a shipper will choose their packaging based on:

  • The degree of fragility – How much protection is required to keep the item safe and stable during transportation.
  • Edge Crust Test Rating (ECTR) – Single-walled boxes are ideal for small to medium-sized goods, while larger, heavier items require double or triple walled boxes.
  • Isolating liquids – Liquids are almost always advised to be shipped separately, especially those in breakable vessels.

If it appears the shipper made a mistake on how they packaged and protected the goods, take notes and pictures highlighting these shortcomings.

File the Claim Posthaste

Carriers rarely file damaged freight claims unprompted. This obligation falls on you. Therefore, it is essential you file a damaged freight claim within days, if not minutes following the inspection and signing of the Proof of Delivery.

The Carmack Amendment states that a claim must be filed within 14 days of delivery for damages and 21 days for shipping delays. To make a claim, the Carmack Amendment requires shippers to:

  • Use electronic or written communication.
  • Include satisfactory information to identify the shipment.
  • Proclaim that the carrier is liable for the damage.
  • Request a quantified sum of money.

If you attempt to submit a damage claim 15 days after the freight inspection, that claim will be automatically rejected.

Provide Carriers with the opportunity to mitigate their losses

Carriers have the legal right to attempt to recoup some of the value lost by either:

  • Returning the goods.
  • Re-delivering the goods.
  • Salvaging the goods.

If you refuse carriers the chance to mitigate their losses, they have the legal grounds to drop your damage claim. So, make sure to hold onto your damaged freight.

Take the Damaged Freight into Your Possession

As mentioned previously, it would be wise to hold onto the goods if you wish to have an opportunity to file a claim. Possessing these goods keeps you in control, prevents further damage, and then allows the carrier to salvage those goods in the name of loss mitigation.

Protect the Damaged Freight

Although the goods are damaged, now that they are in your possession it is your responsibility to do everything in your power to prevent further damage from occurring. Move them to somewhere safe and out of the way. Ideally, you want them to be handled once and only once until the carrier comes to inspect them or salvage them.

Pay Your Carrier

Damaged claims are filed alongside the paid freight bill. If you refuse to pay, you could wind up having your claim voided, even if the damage was clearly the fault of the carrier. Pay your bill as a sign of good faith that shows claim resolvers that you upheld your side of the bargain.

Know Your Freight Claim Maximum Liability Amounts

A carrier has different liability depending on where you are in North America.

  • The U.S. – If the carrier is liable, they are required to pay the real value of the damaged freight.
  • Canada – Has a fixed Canadian dollar per pound rate of $2/pound.
  • Mexico – Has a fixed rate of 2.8¢/pound.

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Check the driver’s delivery receipt.
Is this shipment yours?
Is all the required information/documentation present? I.e.: Purchase order, freight terms, number of pieces, cartons, or pallets, etc.
NOTE: If signing for pallets, a pallet may not contain ALL of your products/order. Likewise product contained within may have damage that is not visible.

When receiving freight, inspect for any kind of damage and note the damage on the delivery receipt. Rubber stamping or writing “SUBJECT TO INSPECTION”, “SUBJECT TO COUNT”, Or “RECEIVED”, has no legal bearing. Failure to note damage or shortage at time of receipt greatly reduces the chance of collecting on a freight claim.
Reviewing the packing list with the physical product will need to be done to determine if you are missing anything. If there is product missing or damaged and you have already signed for the pallet(s) – this is considered “Concealed” loss/damage.
This type of loss must be identified and reported immediately to carrier or shipper. As of April 2015, carriers must only give a maximum of 5 days for claimant to report damage after signature is obtained. Once this timeframe has expired, claims are denied immediately.

Be specific in your notation: crushed corner, broken arm, forklift damage through center of boxes, wetness stains, leaking, etc.
Don’t allow the driver to hurry or pressure you into signing their delivery receipt before you have inspected.
Don’t accept driver tallies or counts.
Don’t make notations that relate to your opinion of the cause of damage.

Look for torn or disturbed shrink wrap or boxes with the arrows pointing down instead of up. These could all be signs that your shipment sustained damage in transit and was restacked later.
If you suspect damage, open the carton or crate and inspect it in the driver’s presence.
Make notation of inspection including the specific items, damage sustained, and quantity of said items on the delivery receipt. Include driver’s name if possible.
Take a picture or several pictures of the damage. Be sure to include any signage on the pallet/product. I.e.: Do not double stack, Fragile, This Side Up, Etc. Take a picture of the signed Delivery Receipt or Bill of Lading document with the damage/loss noted. In the case of electronic signatures, Electronic signature software DOES allow for comments to be made regarding condition of product. Take a picture of the notation on the scanner.

Keep all packing materials in the condition upon arrival. DO NOT DISPOSE OF OR DESTROY THE PACKAGING.
This will be needed as often inspections are conducted by the carrier.
Without all the packaging, the carrier might determine the cause of damage was insufficient packaging and the claim will be denied.

If the item being received has been damaged to the point where it cannot be used, then refuse to accept the delivery from the carrier and contact the shipper immediately. Again, be sure to notate on the delivery receipt the reason for refusal. Be specific.damaged cardboard parcel on white background
These charges may be passed onto the customer without specific cause noted on the delivery receipt.
Before refusing, contact your shipper to identify any consequences of refusal.

If an inspector from the carrier arrives to assess the damage, be sure there is a representative from your company present for the inspection.
Generally inspection reports must have a signature of agreement from the recipient.
Be sure you agree with all the facts in the report before signing.

If an inspector wants to remove the damage product without an inspection report being filed or signed, you have the right to refuse, however carriers often give one chance to inspect and if denied, the claim is subsequently denied.
Ask the inspector for a copy of the report when finished and contact the shipper to determine your role and what has been arranged.

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