Avoid Costly Mistakes: The Importance of Automation in Freight Claims

In the U.S., freight claims are a significant issue, with more than $1 billion worth of goods damaged or lost in transit annually, and approximately 0.5% to 1% of all freight shipments result in a claim. Despite this, many claims are denied due to improper documentation or missed deadlines, with industry data suggesting that as much as 50-60% of claims are rejected for these reasons. Even legitimate claims can be denied if the necessary paperwork isn’t completed, or deadlines aren’t met.

Accurate documentation, strict adherence to deadlines and the power of automated technology are critical for ensuring freight claims are managed successfully. Without automation, the risk of costly errors and denials skyrockets, making it essential to implement software solutions that streamline claims and protect your business from avoidable losses.

Why Freight Claims Documentation is Critical

Freight claims hinge on thorough and accurate documentation. Shippers must adhere to National Motor Freight Classification (NMFC) standards for claim documentation. The most common reason claims are denied is because of incomplete or inadequate documentation, such as missing bills of lading, proof of delivery or damage reports. Without proper documentation, carriers can easily dispute or outright reject claims.

In LTL shipping, this risk is even greater. With multiple hand-offs between carriers, ensuring each stage is well-documented is crucial. A lack of documentation increases the chances of denied claims, leaving Shippers responsible for the financial loss​.

Consequences of Missed Freight Claims Deadlines

Freight claims must be filed within specific timeframes, which can vary depending on the carrier and the type of claim (e.g., damage, loss, or delay). Missing these deadlines, even by a single day, typically results in automatic denial, regardless of the claim’s legitimacy.

For instance, loss or damage claims may need to be filed within nine months, while concealed damage claims often require submission within 15 days. Missing these windows can leave Shippers with no recourse to recover losses, even in cases of clear carrier fault​.

The combination of improper documentation and missed deadlines often results in denied freight claims. For example, if a claim is filed late or lacks essential documentation such as inspection reports, it will likely be denied. Shippers must ensure claims are submitted with complete documentation and within the carrier’s specified time frame to avoid costly denials.

Why Automated Technology is the Best Way to Manage Freight Claims

Manually tracking and processing claims for numerous shipments, especially in complex logistics environments like Less-Than-Truckload (LTL), can quickly become overwhelming. Each shipment may involve multiple carriers, different deadlines and varied documentation requirements, creating a mountain of administrative work that’s prone to human error.

Here’s how automation simplifies and optimizes the process:

1. Centralized Claim Management

Automation platforms allow you to manage all your claims in one centralized system. Instead of juggling multiple spreadsheets, emails, or systems for each carrier, an automated platform consolidates everything into a single interface. This centralization enables you to handle a large volume of claims efficiently, with real-time visibility into each claim's status across your entire shipment network.

2. Streamlined Documentation

Automated claims systems store and organize all necessary documentation, ensuring that every claim has the required files — such as bills of lading, inspection reports, and proof of delivery—attached and ready for submission. This eliminates the risk of incomplete documentation, one of the most common reasons claims are denied, and reduces the time spent searching for or organizing paperwork.

3. Automated Deadline Tracking

Each claim has a specific deadline depending on the carrier and the type of shipment. With dozens or even hundreds of claims to manage at once, keeping track of these deadlines manually is nearly impossible. Automated systems track these deadlines for you, sending reminders and alerts well before filing windows close. This ensures that no claim is missed due to late submissions, a critical factor in increasing your claim success rate.

4. Scalability for High-Volume Shipping

As your shipping volume grows, so does the potential for claims. Managing claims manually becomes more challenging as the number of shipments increases. Automation scales effortlessly with your business, allowing you to process a larger volume of claims without adding administrative overhead or increasing the risk of human error. This is particularly valuable for businesses handling LTL shipments, where frequent handling and transfers increase the likelihood of claims.

5. Improved Accuracy and Reduced Errors

With automation, the chance of human error is greatly reduced. Automated systems ensure that every claim follows the proper steps, meets carrier requirements, and is filed on time. This precision is especially important when managing a large number of claims simultaneously, where even a small mistake could result in costly denials across multiple shipments.

6. Real-Time Insights and Analytics

Automation tools provide real-time reporting and analytics, allowing you to track trends and performance across all claims. These insights enable you to identify patterns, such as frequent damage with a particular carrier or route, helping you make data-driven decisions to improve operations. Managing multiple claims becomes not only easier but also more strategic, as you gain visibility into the entire claims landscape.

In summary, automation is essential for managing a large volume of claims efficiently, reducing the risk of denials due to missed deadlines or incomplete documentation, and ensuring your business can scale without being bogged down by administrative bottlenecks. Automated technology helps businesses regain control over the freight claims process, ensuring that claims are resolved quickly and accurately, and ultimately protecting the bottom line.

Banyan Technology’s New Claims Management Feature

Banyan Technology has recently announced a powerful partnership with FreightClaims.com to automate and streamline the freight claims process. By integrating this feature into Banyan’s LIVE Connect® platform, clients can now manage and track claims more efficiently, reducing administrative burdens and improving overall success rates.

This partnership allows Banyan’s clients to:

• Manage claims in real-time from anywhere, without complex setup.
• Leverage built-in analytics to identify claim trends, improving decision-making.
• Ensure regulatory compliance through automated documentation and tracking​​.

In freight shipping, improper documentation and missed deadlines are the leading reasons freight claims are denied. For Shippers, especially in LTL shipping, meeting NMFC documentation requirements and adhering to carrier deadlines are essential to successfully recovering damages. Automating this process with advanced technology, such as Banyan’s integration with FreightClaims.com, can significantly improve accuracy, efficiency and claim success rates, protecting your bottom line.

Contact Banyan Technology today to learn how we're reshaping the freight claims landscape through automation.