The New Dimensional Weight Pricing Mechanism and Its Implications on Freight Shipping Costs

5 Mar by ATA Cargo

The New Dimensional Weight Pricing Mechanism and Its Implications on Freight Shipping Costs

As the world becomes hyper-connected, the demand for rapid response for concealed freight damage, general freight damage or missing items from shipments has changed. On April 18, 2015, the National Motor Freight Traffic Assocation® has amended the NMFC rules regarding the required time frames for reporting concealed freight damage. Since third-party logistics providers (3PLs), especially those involved in order fulfillment and shipping processes, have a duty to ensure accuracy and delivery of merchandise, the NMTA®’s decision to reduce the reporting time frame will greatly impact the course of business. However, you must understand what causes damage, how it plays into this decision and how it will change business processes in transportation management services. Near the end of this post, you will see the full legalese of the changes made by the NMFTA.

What Causes Concealed Freight Damage or Loss During Transport?

Recall our previous conversation on how the Internet of Things (IoT) is transforming the transportation management services industry. This hyper connectivity and the use of more rapid communications through email and electronic data interchanges are partially responsible for the change in concealed freight damage reporting processes. Shippers have the ability to carefully track and monitor items throughout the shipping process, which reduces, if not eliminates, the possibility of environmental causes of damage. However, consumers are still faced with the uncertainty of how the transportation carrier handled the merchandise upon delivery. Some common causes of concealed freight damage beyond environmental problems include the following:

  • Did the item fall on the ground between the vehicle and the home?
  • Did the manufacturer provide all of the materials within the original shipment?
  • Did someone steal part of the shipment before the recipient opened the package?

Although the technology, such as RFID chips, has reduced missing merchandise from the manufacturer, it still could be incorrect if the Radio Frequency Detectors on the chip were incorrectly assigned to the item(s).

How Did Communication Affect the NMFTA® Decision for Reporting?

Since humanity has become more aware of their surroundings, and, therefore, the exact time of delivery of shipments, more people will notice if a delivery is damaged or incorrect sooner. Furthermore, the majority of manufacturers and 3PLs have taken advantage of the digital age for notification of damaged or missing items. Traditionally, people would have to send written notification through the USPS to the manufacturer and carrier. However, the advent of email enables this written notification to take place quickly and more efficiently. Furthermore, advanced forms of digital tracking and document generation by customer service departments enable a telephone call to serve as this written notification.

Previously, the required notification period had been set 15 days to allow for delays in processing of information and receiving mail. However, most claims have been filed within five days of receiving a shipment for concealed freight damage with these newer technologies. As a result, the NMFTA® has simply changed policy to meet typical occurrences in the transportation management services industry.

How Will the NMTA® Decision Affect Carrier Claims Processing?

Unless otherwise specified by the carrier, notice of loss or concealed freight damage should be provided to the carrier within five (5) business days from the date of delivery. However, the NMFTA® did not specify how carriers may choose to implement this rule. For example, if a transportation management services provider decides to extend this timeframe beyond the NMFTA® ruling, the consumer may follow the carrier specified policy. However, if carriers do not have an existing policy, they must begin to follow the new NMFTA® regulations.

Fortunately, consumers who file a freight claim after the five day period have an additional option for ensuring customer satisfaction. When a customer has not reported such a claim as specified, he or she becomes responsible for providing the habeas corpus, or body of proof, that the damaged or missing items were the result of poor actions on behalf of the carrier. For consumers unable to provide such documentation, the claim will be considered invalid.

Consumers have up to nine months to provide such documentation. If the carrier does not approve the claim upon receipt and review of supporting documentation, the consumer has the option of filing a civil suit against the carrier within two years of the date of claim’s denial.  After this two-year period, any such claims are considered invalid and unjustified regardless of consumer’s supporting documentation.

Full Concealed Freight Damage Legalese Below

Item 300135-A Reporting Concealed Freight Damage

concealed freight damage reporting NMFC(a) When damage to, or loss of, contents of a shipping container is discovered by the consignee that could not have been determined at time of delivery it must be reported by the consignee to the delivering carrier upon discovery. (b) Reports must include a request for inspection by the carrier’s representative. (c) Notice of loss or damage and request for inspection may be given by telephone or in person, but in either event must be confirmed by a written or electronic communication. (d) While awaiting inspection by carrier, the consignee must hold the shipping container and its contents in the same condition they were in when damage was discovered, insofar as it is possible to do so. (e) Unless otherwise specified by the carrier, notice of loss or damage should be provided to the carrier within five (5) business days from the date of delivery. (f) If five (5) business days, or such other period as specified by the carrier, pass between the date of delivery of the shipment by carrier and date of report of loss or damage and request for inspection by consignee, it is incumbent upon the consignee to offer reasonable evidence to the carrier’s representative when inspection is made that loss or damage was not incurred by the consignee after delivery of shipment by carrier.

Supplement 1 To NMF 100-Ao Procedures Governing The Investigation And Disposition Of Freight Claims For Loss Or Damage

Only participants in the NMFC® at the time the transportation occurs may use the provisions herein. 14 For explanation of abbreviations and reference marks, see last page of this Supplement. ©NMFTA 2015 ITEM 300135-A-Continued (g) Reasonable evidence includes, but is not limited to: 1. Identifying the party(ies) responsible for unloading, 2. Identifying the chain of custody of the article, including prior transportation by any mode, 3. Location(s) of the article(s) once the shipment was received until the damage was noted, 4. Any mechanical or physical handling by the consignee subsequent to delivery by the carrier. (h) If a clear delivery receipt is available on the shipment, e.g. no damage or shortage is noted, the claimant must provide documentation showing that damage or loss occurred prior to delivery

Ultimately, 3PLs will have an increased duty to maintain documentation of a shipment’s progress as this rule takes effect. Sound process and the use of digital communications will provide an extensive paper trail for providing proof that any damaged or missing items are not the fault of the claimant. Receivers will have a duty to ensure all shipped items are accounted for upon delivery. Although receivers do not necessarily have to file a claim within the five day period, they do need to if they are unable to provide proof of fault on behalf of the carrier. To further ensure the rapid processing of claims, consumers, who may be business owners, merchants, or others, should opt for a delivery confirmation signature for any and all packages. Additionally, the NMFC® advises consumers to open a package immediately before signing for the given package as part of the new rule.

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