Definition of OS&D LTL Claims
OS&D is the abbreviation for over, short and damage, which is best described in detail below:
- Overage: Quantities received are in excess of that noted on the shipping documentation.
- Shortage: There are fewer quantities received than reported on the bill of lading (BOL).
- Damaged: The product received was damaged, which can either be obvious or concealed, with "concealed" meaning part or all of the shipment was not visible for inspection during the shipment or receiving process.
The problem with OS&D claims are they drive unexpected costs, delays, additional effort and unsatisfied customers.
Additionally, OS&D often becomes a contentious back-and-forth discussion between the shipper and the LTL service provider, which can lead down a rabbit hole that is hard to recover.
So, before jumping feet first into the fire on your next OS&D claim, we thought it might be helpful to share some details that we’ve learned over the years with our customers to limit claims and improve the odds of getting claims paid.
Additional Details on OS&D Claims
With the general description of OS&D behind us, let’s spend a little more time talking about OS&D claims.
Bill of Lading
The importance of the bill of lading (BOL) for any shipment cannot be overstated, but particularly when associated with an OS&D freight claim.
It is the one document both the carrier and shipper will look at first to see how the product was received into the warehouse or distribution center.
The signing of the BOL acknowledges the product arrived and in what condition. With that said, it is critical the receiver validates the count and inspects to ensure no damage to the freight is visible before signing off on the BOL.
Once the BOL is signed free and clear, otherwise known as a “Free BOL”, there is little to no recourse for filing a short ship or damage claim because title of the product is transferred at that time.
Time Period to File a Claim
A shipper typically has nine months to submit a claim for visibly damaged goods, assuming there is enough evidence to back-up the freight claim.
Keep in mind the success of the claim payment goes down the longer one waits because the evidence is harder to present.
Filing a Claim Does Not Relieve the Shipper of the Freight Bill
A shipper is required to pay their invoice upfront, whether there is a claim associated with the freight bill or not.
Reimbursement for the freight claim is considered a different and separate transaction.
In other words, the shipper cannot withhold payment on any invoice that has a claimed filed against it.
Shortage Claim
If a consignee notated a shortage on the BOL, a shortage claim can easily be filed.
Shortage claims occur when the freight arrives not intact and freight is clearly missing and not as described on the bill of lading (BOL).
Concealed Damage Claim
Concealed damage claims are more difficult to file and be reimbursed successfully because the nature of the damage is hidden and the shipment’s BOL therefore signed free and clear.
Unlike a typical damage claim time is of the essence, as the majority of carriers only allow concealed damages to be filed within five days.
Concealed Shortage Claim
Similar to a concealed damage claim, concealed shortage claims are not immediately recognized and therefore not noted on the BOL at the time of signing.
Concealed shortage claims are difficult to prove, so you’ll often find that carriers push back very hard on these claims.
As with other concealed claims, time is of the essence. You only have five business days to let your shipper know about the shortage. If you delay beyond five days, your carrier will deny your claim.
Refused Claim
Consignees have the right to refuse part or all of shipment if they are unhappy with the state of their freight. Examples for a refusal include: wrong product, freight is damaged or the shipment is late.
If your consignee refuses your shipment, it’s returned to your carrier’s delivery terminal. Your LTL company will contact you and give you the following options on the freight:
- Ship it back to the origin address.
- Send the freight to another address.
- Have product disposed of per your company’s policy.
In most (not all) cases, you will not have to pay the invoice.
If more than five days pass before you file, the carrier that handled your shipment will likely deny your claim.
Loss Claim
A loss claim is a worst-case scenario because it means your entire shipment was lost by the LTL motor carrier. The primary driver of such a claim occurs when the shipment paperwork is separated from the freight itself.
If this situation occurs, your carrier typically has a week to attempt to locate your freight. In the event the freight is not found you will not be charged for shipping and the claim will be reimbursed quickly.
The Carmack Amendment
The Carmack Amendment was enacted in 1935 to draw the lines of engagement on what constitutes a legal liability freight cargo damage and loss claim against a motor.
The Carmack Amendment details the duties, rights and liabilities of carrier parties in the event of cargo damage or loss claim. The amendment affects shippers and carriers participating in domestic and interstate shipments within the United States.
The Carmack Amendment places liability on the motor carrier in the event of a freight claim, unless it can prove otherwise through any one of the five exclusions for motor carriers under the Carmack Amendment.
Five Exclusions of the Carmack Amendment
Act of God
Defends the carrier when claim is associated with a natural disaster or physical anomaly.
Note: Not applicable in situations where the naturally occurring event, for example a severe thunderstorm, is foreseen and could be predicted.
The “Public Enemy” or the “Act of war”
This defense is applicable when military forces, that are enemies of the United States government, cause some sort of damage.
Act of Default of Shipper
A defends the carrier from a shipper that makes a mistake or shows negligence on their part.
Examples: Properly loading and securing a load, insufficient packaging or mislabeling contents of a shipment.
Public Authority
When a government action negatively impacts a shipment and causes cargo damage indirectly,
The Inherent Vice or Nature of Goods Transported
In regards to temp-controlled solutions, perishable products are susceptible to become soiled or ruined if not shipped property. If the carriers took the appropriate steps to prevent delays and the product still becomes damaged, this defense is pertinent.
Final Thoughts on Carmack Amendment
- The Carmack Amendment protects carriers from automatically taking responsibility for damage occurring outside their domain.
- It increases the importance of both parties, shippers and carriers, to understand who takes liability and when they take said liability.
- The Carmack Amendment ensures claims are filed under the correct grounds, saving multiple parties from wasted time and money.
- While freight brokers do not own the freight assets or physically touch shipments, there have been plenty of case law examples where they too are held responsible under the Carmack Amendment.
How-To Improve Your Odds on Being Reimbursed for a Freight Claim
The key to success for OS&D claims to be quickly processed and approved start-and-stop at the receiving dock. There are three steps in a
Keys to Have Within Product Receipt Process
- Inspect Freight Immediately
- Do Not Sign BOL without Inspecting the Freight
- Document Damages or Shortages
- If Damage or Shortage Exists
- Notate on the BOL
- Take Pictures of the Freight
- Segregate the Freight in an Area Until Claim is Approved by the Carrier for Payment
Requirements for Filing a Claim
- POD Must Notate Discrepancy to BOL
- Include Original BOL
- Copy of Freight Bill
- Merchandise Invoice Documenting Value of Goods
- Replacement or Repair Bill for the Product
- Pictures of Damaged Freight
- Save Damaged Freight Until the Claim is Approved
Additional Articles Related to OS&D
- Carmack Amendment Explained in Detail
- Logistics and the Law: Freight claims in plain English
- How-To Eliminate LTL Damage and OS&D Claims
- Freight Cargo Insurance Policy Types Explained
- Bill of Lading (BOL) Defined & Its Importance
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