Freight Claims Explained | Episode 347

A rejected load can quickly become a five-figure loss, and the outcome often comes down to documentation, evidence, and how the claim is handled from the start. We break down freight claims, OS&D, cargo insurance, reefer issues, USDA inspections, carrier cooperation, and the practical steps brokers can take to prevent small mistakes from turning into expensive disputes.

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Transcript

Claims Preview And Why It Matters

SPEAKER_00 0:00

Today we're talking claims. Ben, we uh we just wrapped up a great episode here, kind of talking the the 40,000 foot view on what a freight claim is, and we specifically kind of went down the rabbit hole of the the reefer and produce world because that is one of the most common um scenarios where you're gonna run into uh freight claims. So, what are your thoughts on this episode here?

SPEAKER_01 0:25

Yeah, it was a really good episode. We've gotten a lot of questions, comments, phone calls related to claims recently. So I think we did a pretty good summary, and you definitely want to stay through the end because the end I we kind of forgot at the beginning that like those are the most common things you're gonna need to be able to be aware of and to handle. So yeah, I thought it was a really good wrap-up.

SPEAKER_00 0:47

Absolutely. All right, let's hop into it. We

Sponsor And Where To Learn More

SPEAKER_00 0:51

are back with another episode of the Freight 360 podcast. Uh, this episode is brought to you by Ascend TMS. So if you're looking for a new TMS platform, check out Ascend. You can get 90 days absolutely free of their premium version. No card needed. You do need a referral code, so use the one down below in the description box. And if you're brand new, check out all of our other content. We've got the YouTube channel, the the Facebook group, we've got our uh website that's got our entire searchable library, including the Freight Broker Basics course.

Sports Talk And Catching Up

SPEAKER_00 1:28

Ben, what's going on in Florida, man? You you watching any World Cup? Ah, okay.

SPEAKER_01 1:34

All right. Um getting caught up. Everybody down here watches it. So every time I talk to somebody, I have a conversation about it. So I kind of have a general idea of how everyone's doing.

SPEAKER_00 1:45

Um to the next round, though, man.

SPEAKER_01 1:49

Yeah.

SPEAKER_00 1:49

So yeah, I did hear I was at my golf league this week. I was like talking to this one guy about it, and he's like, I don't think he was completely accurate. I think he was making some of the stuff up, but he's like, he did say he goes, he goes, I'm pretty sure they paired the US up in a in a group that they had a track to move on because they wanted the monetization out of it. And then he goes, This is where I think he was making shit up. He's like, he's like, they have all these like fake rules now. Like basically, if the match ends in a draw, they can just award a win to one of the teams because that team brings more fans in. And I was like, I don't think that's true.

SPEAKER_01 2:29

I don't think that's true.

SPEAKER_00 2:30

I don't believe that's an accurate thing, but um, but yeah, it is uh I don't know, it's cool. I it's it's been a fun year for a sport just because like the Olympics, right? Like you had the the golden goal with Team USA with with hockey, and now the World Cup, like, yeah, we're not historically like a good I wouldn't say we're not a good team, but we're not like a favorite, right? To go deep into the the World Cup. Soccer is just not a big sport in our country, considering we don't even call it by the name that everyone else calls it by, uh football. Uh but yeah, I don't know, it's cool. There's like matches like every day, multiple, so it's kind of cool right now. Fun.

SPEAKER_01 3:09

I agree. And well, I used to play soccer. I played soccer in high school. Um, and I used to watch a lot of World Cup when I had friends or people that watched it. It's a very fun sport and event to watch with a group of people, but kind of sitting by myself, not exactly. I can't really get into it as much anymore. Yeah. Did watch most of the US Open. Kind of disappointing that Clark won, but beyond that, it was a decent run, I guess.

SPEAKER_00 3:39

Who who uh Wyndham Clark, right? Is he the one that is he the one that had all the I didn't watch it, by the way, but is he the one that's dude and is the first time? The big I don't know, public was he drunk or something or got pissed off or threw something or what what was the big thing that happened?

SPEAKER_01 3:59

At the US Open last year, which was in Pittsburgh at Oakmont, he like kicked in the lockers and was like fined, penalized, and they told he could never play there again.

SPEAKER_00 4:09

So like if there's ever a major there, he won't be able to participate.

SPEAKER_01 4:12

So yeah, yeah. It was like a big issue. There were a few other things because like the big like whatever people were talking about were like uh it's kind of the first time anyone knows of that like a American was booed on the way to win the US Open.

SPEAKER_00 4:29

Yeah. But uh anyway, that's uh sports. Oh, I'm uh I this is not intentional, but I am wearing my Bills uh what do you call these? Like Hawaiian shirts or like summer shirts. But we uh we got training camp coming up next month and got some tickets to go see the uh the Bills out at training camp, so that'll be fun. Um dude, I don't know if you've seen they did the ribbon cutting this week of the new stadium. It is pretty cool. If you haven't, you know, I don't care if you're a football fan or not, or a Bills fan or not, check out that new stadium. I feel like every time a team gets a new stadium now, like they're just like the wildest looking, coolest um feats of engineering. So some cool stuff. Um what do we got in the uh the freight world news wise? Um

Industry News And Carrier Vetting

SPEAKER_00 5:22

I saw I think CH Robinson just bought a like they bought this uh brokerage that does high value, like they literally send people to escort, like armed guards to escort the shipments. I don't know if you saw that like to combat fraud. Shipments of what?

SPEAKER_01 5:47

Sorry, like high value, like high value. Oh, you're good, you're good.

SPEAKER_00 5:54

Um yeah, they let's see if I can find it. Um they bought this company that let's see, yeah, here it is Despere Logistics, a specialized freight brokerage and transportation provider for high value, high-risk, and temperature controlled cargo. The all-cash transaction was valued at approximately $75 million. Mind you, this brokerage doesn't even do $75 million a year in revenue. So they bought them at like a multiple of their revenue. Um, but they they basically, yeah, so they did $62 million in revenue last year, and they were sold for a multiple of not their net profit or gross profit, but of their revenue, which is nuts. But it's basically their um they send like armed guards with like high value shipments so like just stuff doesn't get stolen. So it's just crazy.

SPEAKER_01 6:50

That's pretty wild. Um, what's the name of the brokerage?

SPEAKER_00 6:54

Uh it's Despier D E S P I R. So it's capital D, lowercase e capital S P I R logistics. Despier logistics. So that was that was kind of a wild one. I I mean the type of company and like their niche is in and of itself is pretty insane. But what blew my mind was you normally buy or sell a company based on a multiple of its net profit, right? Like, what does the business actually make? And then the buyers like, oh yeah, we'll buy it at like sometimes you'll see a three or five time multiple. Sometimes you'll see with like tech firms, like eight to ten time multiple. They bought this at a multiple of its revenue, which is top line dollar. So is it a multiple?

SPEAKER_01 7:41

I thought it was bought for 75 million and top line was 63 million, so it was more than revenue, but it wasn't.

SPEAKER_00 7:47

Yeah, it was like a 1.2 multiple. So more it was a got it. They bought it for more than the amount of revenue they they do in a year, which is not like you know, not a three or five X, but it was a between a one and two X multiple. But yeah, kind of crazy, man. Kind of crazy. That's very interesting. A lot of uh one of the like, I guess the the big kind of trend we've seen since this Supreme Court case, too, is like every lawyer and their brother seems to have an opinion on like uh carrier vetting now, and they're all trying to sell. Like I had a dude email me yesterday, and he's like I was clearly just like a you know, in his list of leads, right? And I got this like email, was not personalized, but it was like, hey, I created this playbook on how to have a defensible carrier vetting process. You can buy it here. I was like, okay. Um, I don't think buying someone's uh SOP if you don't actually implement it is gonna is gonna do anything. Like we had a really good, really good episode on that um last week. So check that one out if you haven't. But good stuff, man.

Freight Claims Basics And OS And D

SPEAKER_00 9:00

Um we're gonna talk claims today. Good talk about claims. Hey, how's your what's up with your roof though? I'm curious.

SPEAKER_01 9:08

They were supposed to deliver the tile today, and then I just got a voicemail that says they're backed up due to rain. So maybe tomorrow, maybe Friday, maybe start Monday. So I think almost a whole nother week. Wonderful.

SPEAKER_00 9:23

Fun stuff, fun stuff. Um well, we're gonna talk claims today. Claims is a wide range of things we could talk about, but depending on the commodity and all that, we'll try to keep it somewhat generalized and talk through specifics of it. But um, you got anything to lead off with here?

SPEAKER_01 9:45

No, but I think, well, maybe I guess because I was just about to lead off with something. Um, so yeah, I think we should just start with like the basics, right? Like what to do, because there are lots of exceptions to kind of everything, right? And I love like um Ed and Mike over Togo, where like they'll explain this, they're like, hey, like if 95% of them of whatever you do falls under this, like that's what the SOP is. You will always have exceptions, but you don't build a procedure based on the exceptions because then it's crazy, isn't implementable, and nobody can actually follow it, right? So, like what I wanted to kind of set the conversation off is like this is like basic steps for most claims. Now, there's a little bit of a difference that we'll talk about in like produce and some food and some like obscure things that you maybe do it a little different, but also most of them kind of fall into the same procedure. And we've just had a lot of people reach out recently that were like experienced brokers that were like, you know, the owner of the company was like, Hey, this guy's been with me for 10 years moving produce, didn't know what to do with a claim, had another one where literally the guy's been in the industry 15 years, reached out, was like, hey, like I kind of really don't remember. Or I worked at a company that had a department that did this, so I've never really had to do this. And I've had to walk through a few people recently, which is why we're having the conversation, because it's probably helpful for everybody out there to understand what is the standard steps and what do you do? They're pretty similar.

SPEAKER_00 11:21

Yeah, so I think it's real actually the irony. I just got an email of a uh we have a potential claim um at our brokerage, but the uh I we can dig into it in real time if you want. But

Documentation And The Adjuster Process

SPEAKER_00 11:33

I wanted to I wanted to kind of also give this analogy too. Like, think about if you get into a car accident and you have to file a claim, right? So if you're if you're like one-on-one trying to understand what a claim is and how does it work, the process is very simple, it's very similar with a couple different nuances. So when if two people get in a car accident, right, and clearly one person's at fault, or maybe we don't know who's at fault, right? And a claim is filed because we want the insurance company.

SPEAKER_01 12:01

What do you guys so in a car accident? This is relevant to this, and I want to point this out. This is why the police will tell you, or if you're in an accident and you call the police, they will say, Do not move your vehicle, leave everything the way it is, get off the road, will come to you because it is the evidence that is on the scene. And what happens is if people drive away from the scene and then try to file a police report, none of that information is available. Like I've had both of those things happen. Where like I've been hit by a car or been in a car accident where someone hit me, and on the phone, like I remember the one I was like literally on a highway. I'm like, like, I'm on like a I was in Pittsburgh. I'm like, I'm on the like parkway. I'm like, I'm just supposed to sit here. I was like, this seems very dangerous. They're like, no, you get away from the vehicle, but leave the vehicle there. I'm like, okay. Like, yeah.

SPEAKER_00 12:49

Yeah, but I mean, the the the long and short of it is that like we have insurance to cover different types of damage or loss. So, like in a in an auto accident, for example, if if me and you are both driving, and let's say I we'll make it very very straightforward. Let's say I run a red light and I hit you, right? It's very clearly my fault. Okay. We get the police report. Police report states that I ran a red light and I hit you. Um I have insurance that covers damage to my car. That's your collision policy. And then I also have a liability policy, which is usually required in most states. And that liability policy is what's going to cover damages to others uh then it's not your own car, right? So that would be like your car, injuries to you, et cetera. Okay. Um, collision is usually an optional coverage. So maybe I want to, if I have a cheap beater car, right, maybe I'm not gonna pay to insure damages to it, but I still need to cover if I damage somebody else, right? So now if you look at the, if you look at freight, the same thing applies. When we've had a carrier, we want to make sure that they have insurance that covers the freight, which is your cargo coverage, and also uh liability, your auto liability policy, which would cover like a, you know, if they get in a wreck and there's damage to damage or injuries to, you know, someone or someone else. So um what we're dealing with here typically is damage to the cargo is like the most common thing we tend to deal with, right? It could be, and actually the the claim that just popped up in my email is um an engine uh for an aircraft engine, right? And it looks like the carrier improperly strapped the engine to their trailer. So very likely going to be a claim against the uh the carrier for you know not properly securing the cargo. But then you get into like this whole when you when you go through the claim, like as brokers, right? We don't own the freight. It's not our insurance policy. We are an intermediary, and we are an intermediary for the claims process, too. So we, it's not our policy. We're not the one that's gonna get paid out for it, but we're going to facilitate the claim. It's not a legal requirement that we have to do, but most brokerages as a value add will be a claims facilitator for customers in the event of damage or total loss, or um, they call it OS and D. It's overshort damaged, which means you might have, you know, too much freight arrive, which is probably the least common version. Um, shortage is hey, we're short two pallets or two boxes or whatever. Or hey, damage, meaning some or all of this product is uh, you know, not in acceptable condition when it arrives at the receiver. So it could be that it, you know, a lot of times I would say the majority of times it's either because it wasn't secured properly or if it's a temperature-controlled shipment, um, the temperature wasn't maintained properly. We see that a lot in produce. Um the unsecured stuff, you see it a lot with um things that aren't you know strapped or they don't use the load bars properly inside of a van and stuff shifts, falls over, gets smushed, you know, you name it. Right. Um, so what do we do is we are going to, in this simplest, broadest terms, we're gonna contact the motor carrier's insurance company, and we know who that is because we have a copy of their certificate of insurance before we book that carrier because we want to make sure that they're insured. Um and we're going to begin the claims process. And if you're uh if you're brand new to that, you're gonna learn a lot the first time you do it. I don't personally handle claims at my company. I I've never been the guy that does claims, but I've been through enough of the scenarios to learn how the process works. And um, you know, basically you're gonna get the same thing with an auto accident, right? If you're gonna you're gonna have to have all the documentation, right? So you're gonna have a police report if it's a if it's a crash for uh you know two cars. Um, we're gonna have all this stuff that we have documented for a um a freight claim. So things like uh photos and testimonies and uh email correspondence and um the bill of lading, rate confirmation, all the things that would go into identifying who is liable and what the value and total loss is, that's what's gonna go in there. And then an adjuster will be assigned from the insurance company. An adjuster's job is to go and figure out. Uh, I've always wondered why they're called an adjuster. Um I don't know what they're adjusting, but uh it's their job to go figure out like ultimately who's liable and for how much and who's gonna get cut the check for how for what amount, right? And that's that's the the very basics of a uh freight claim. So and keep in mind too, that cargo policy is covering the cargo. Okay. If you're dealing with we actually have a question in our uh Q ⁇ A that will come out on Tuesday, but when you deal with like damage to property at a um shipper or receiver's facility, it's a different process than filing a cargo claim um with the insurance company. So and we'll if you want to hear about that, tune into the the final mile uh episode coming out on Tuesday. So um but yeah, that's that's step one. What's that?

SPEAKER_01 18:29

So step

Load Rejections And Who Owns Freight

SPEAKER_01 18:30

one, I just got an email just like you did from my receiver that says uh I'm not gonna receive this. We'll go with produce. I'm not gonna take this load of watermelons. Okay. That's all you get. So now I got an email from my receiver. Driver just called me and said, they don't want to take the product. Okay. What do you do from there?

SPEAKER_00 18:56

So this is I want to go back to who owns the freight at the time of the incident, right? So in most cases, this would be a vendor-routed shipment, meaning the shipper is our customer, they own the goods until their customer, who's the buyer or and receiver of the goods, um, actually accepts and receives physical custody of those goods. That's the normal and most common scenario we deal with. And when that happens, think about it. If I'm a, if I ordered uh food, like if I ordered a pizza, right, and I bought it from I don't know, what's a big Papa John's or I don't know, what's a big pizza place, right? Papa John's will go with, right? And if the delivery guy shows up and the pizza is the wrong kind or it's cold or whatever, right? I'm gonna say, like, I'm not, I'm not taking this, like I'm not paying for this, right? I don't own that pizza yet. Um, I'm going to reject it, right? And the same thing will happen. You mentioned produce in this case. So we'll say a uh, we'll call it like a grocery chain bought a bunch of produce from a produce vendor. Okay. And when it gets there and they're gonna maybe they see that it's rotten or the temperature isn't right because they they pulped it with the thermometer and they see that it it wasn't maintained at the right temperature, or it's frozen and it wasn't supposed to be frozen because the reefer got all jacked up. Um, they can reject that product, and in which case, most, you know, a lot of companies are gonna handle things differently. Um, produce specifically, you're gonna get involved with the USDA with inspections. Um, that's the US Department of Agriculture. So you'll have an actual third-party professional that can audit that shipment at the receiver, and there's like regional offices you can contact, and they'll come out and do their thing. Um, but they'll tell you like the exact percentage of the product that is um, you know, destroyed, damaged, or compromised, whatever the case might be. But then there's what you actually do next depends on the situation. So um some in some cases they might say, and it depends on the commodity, they might say, take it back, we're not going to accept it at all. Just reject the shipment. It's got to go back to the shipper for them to deal with. All right. And that could be for produce, probably not very common. But if it's like a faulty, you know, if you're selling widgets, right? And they're like they look broken or damaged or whatever, they might just say, I'm not taking these. Um, another option is to accept them under duress, which means I'm going

USDA Inspections And Disposal Options

SPEAKER_00 21:34

to receive them, but I'm annotating here that by receiving them, I am also stating that there's something wrong with them. And I intend to file a claim to get um, you know, money back for whatever the damages are. And I've seen them say, um, hey, and this is like an approach example, they might say, These are fit for consumption, but they don't meet our standards. So we're going to reject them. Um, but you can go donate them to a local food bank around the corner because they can still be eaten by somebody. Or if it's just totally rotten, go scrap it. Throw it out. It needs to go get disposed of somewhere. And these these companies that deal with a high volume of produce, it's not the first time they've ever dealt with a claim. So they're gonna have, you know, a regular procedure for how to get a USDA inspection and where to donate potential product or where to, you know, dispose of certain product. It's not like it's gonna be the first time. I have seen the rare scenarios where it's not produce and it's a small company and they're like, what do we do? What do we do? And like everyone's going back and forth trying to figure it out. And yeah, there's like there's no like right or you know, necessarily one right way to handle it. It comes down to like good communication and everyone's gotta kind of get together and sync up on how are we gonna handle this. But again, it really comes down to who owns the product, and um at you know, so if the if the product is owned by the shipper and it's you know, that's who is it, they're it's getting rejected, and you know, they're like, well, my customer's not gonna pay for these widgets that I just sold and shipped to them. Um, they're gonna want reimbursement. So the claim would be filed on their behalf, right? Or if the receiver receives it but under duress and they've paid for the product, they're gonna want to be the one that is going to get paid um out by the claim for whatever the issue might be. So there's like a whole wide range because sometimes you have a the shipper and their receiver might not be the one who's your customer. Your customer might be a third party that's just a middleman between a buyer and uh a buyer and seller of certain goods.

SPEAKER_01 23:42

So there's a whole couple that have come up recently, right? One, this was two weeks ago. Receiver says take the product back to the shipper. Okay, it was watermelons. And the carrier's like, I'm not, it was it went from like Florida to like Cali. It was a very long load, right? And the carrier's like, I've got another load in Texas, I can't drive this back to Florida. Yeah, I'm just not going to. That's that's common.

SPEAKER_00 24:07

Yeah, like you can't expect because again, you gotta remember too, like the receiver, just because they tell you one thing doesn't mean that like their word is gold and whatever they say is going to happen. Because that driver, and I've seen this happen. Like, I've seen drivers just be like, dude, I'm not I'm not taking it. Like, I'll go dump this around the corner if I have to. Yes. Yeah. That's where the broker has to get involved and go talk talk to both parties and figure out something, right? And every scenario is two weeks ago, a little bit different.

SPEAKER_01 24:37

And then another one, Carrie said, like, I'm gonna go dump it, but I need 500 bucks to go dump this product. It wasn't my fault. They loaded it and it wasn't good when they put it in my truck. So that's on you, and I want

Real World Produce Claim Scenarios

SPEAKER_01 24:48

money to go dump this somewhere, right? Because that's gonna take me time, right? Or like the other one, too. That's why like the USDA inspection is really important for produce because you're not taking the receiver's word. You got a third party coming in and documenting and verifying it. Now you have paperwork that says what is good, what isn't good, it is no longer like debatable or disputable, which is super helpful in produce.

SPEAKER_00 25:12

Agreed. And if you look at any other commodity, if if you have a receiver that's saying, I'm not taking this product, and they own the pro, like if it's if it gets to their dock and they start to unload it, right? And now it's their product, and now they're like, Well, I'm not I'm not taking this, right? If if they're like just go dump it, whatever, it's not in anyone's best interest for that to happen because for a claim to be paid out, the insurance company and the adjuster need to have like tangible evidence to understand what went wrong, who was at fault, and what the total value of the loss is. And if you just go dump a bunch of stuff in a, you know, in the trash, like how's an insurance company gonna be like, oh yeah, we can unequivocally tell that the driver did this wrong? It's like, no, it isn't if you're the receiver, you're better off to unless you have a standard process of rejecting it and it goes right back to the shipper normally. Um, it's in your best interest to accept it and you know, mark it as damaged. That is that BOL is a legal document, right? And like since day one when I got into this industry, it was always taught to me that if it's not on the BOL, it doesn't count. So like we would always make sure that we had like when it was loaded, you would have details like the number of pallets or pieces or whatever um verified at the loading and signed off, and the same thing at the receiver. And if there was any damages or you know issues with it, they would write that on the bill of lading at the time that they received and signed that BOL at the at the unloading. So um, but yeah, like to your point, the the produce example, right? That it is the I would say probably one of the most common commodities that we'll see claims with. It's just anything that's gonna be temperature controlled or um that has a shelf life to it for that matter, right? And we we have a lot of good content that we did with Blue Book, Produce Blue Book, um, in past years where we talk through um, you know, situations where it could be the fault of multiple parties, right? You could have a shipper who's at fault because they did not properly allow the product to cool before it was loaded. Go ahead.

SPEAKER_01 27:38

I'll literally give an example of one where like kind of almost everybody was responsible. So um carrier, this happened twice, maybe on the same day or definitely the same week. Carrier was loading um truckload of lettuce that was being literally harvested out of the field the same day. What is supposed to happen is a flatbed literally will on the farm take the big boxes of lettuce, they drive back to the freezer or reefer, it's not frozen like it's cooled, right? But they drive back and then it has to be pre-cooled for a certain amount of time before it goes into a truck. Why? Because it was literally alive in the sun in July when they harvested it. It needs to go sit in a refrigerator for a period of time before you put it in a truck because it's literally giving off heat, right? Now, what they did was it was late in the day, and they wanted to get one more half a truckload of lettuce out of the field and

The Hot Lettuce Disaster And Denied Coverage

SPEAKER_01 28:40

onto the driver's truck. So half of the truckload was loaded with pre-cooled lettuce correctly. The other half literally was loaded directly onto the reefer off the flatbed that came right out of the field late in the day. Okay.

SPEAKER_00 28:54

80 degrees, 85 degrees.

SPEAKER_01 28:57

Right. Driver calls brokerage and says, like, tell us what tells us what happened. Like, they're making me take this product. They are literally loading hot product next to pre-cooled product, like this will be a claim. Okay. Then the person loading the truck, I don't know how he forced him to do this, but he basically got the driver to initial that the product was good at loading, and the driver didn't speak really good English, and he was translating through his own.

SPEAKER_00 29:26

What you have it happen is when there's a language barrier. Very, very common situation, yeah.

SPEAKER_01 29:30

But the dispatcher sent an email literally explaining this, and they had pictures, and the driver took pictures, sent it to the dispatcher who was like, hey, like they definitely loaded this hot. So we knew like at loading that this occurred. Then the there's a claim, obviously. So when it gets to the delivery, they go like, hey, all of this product is basically trash because half of the hot lettuce screwed up the whole temp in the whole reefer. So even the good pre-cooled lettuce was shot when they got to the delivery. It was like Colorado to Texas. Now we had the documentation, sent this because the customer was the farm. Okay. So we knew this was the case and sent this, like, hey, like this is definitely what happened. They requested the reefer download. Well, when you got the reefer download, you could see the temp spike exactly the way it should when you load hot product because the reefer was pre-cooled, then the temp jumps up because the reefer's trying to cool the very hot lettuce back to the normal temperature. So it all looks like exactly what you would expect to documentation shows. However, the carrier had like an oil check light, like an oil filter or something, come on on the way to pickup, like that morning. The driver stops at a maintenance shop, gets the oil light turned off, and it was like a filter or something like menial. Had nothing to do with the trailer, had everything to do with the power unit, right? However, that's that part of the insurance part of the insurance? Yeah, that maintenance facility did not happen to be approved by the insurance company. There's like a certain like I don't know if it was they were like named, but there were like certain approved maintenance that you had to go to anytime there was a light or you know something was not working on your truck. Okay. Which is why brokers should be asking drivers, like, hey, is your reefer and equipment in good working order? Why you ask that is because if it isn't, the insurance a lot of time will just deny the claim outright. And the insurance company did in this kind of scenario. They were like, hey, we know this wasn't, we know they loaded it hot. It definitely seems to be related to them loading it. However, the driver had a warning light, come on due to a maintenance issue, did not get it resolved by an approved vendor. Therefore, insurance invalid. We cover none of this claim. And then it was basically $20,000, of which the customer said, We're not paying that. And what they did, even though it wasn't in their broker shipper agreement, said, We're just not going to pay like $20,000 of the other bills we owe you until you give us the $20,000 for this. Yeah. Of which they never paid.

SPEAKER_00 32:14

That's a mess, man. That's an absolute mess. Um, a couple, a couple things to point out here, too. I I this is one of the things about temperature controlled goods that um people are like, oh, it's you know, how hard could it be? And it's like, if you've never dealt with temp-controlled stuff, um, you should really, really have somebody give you a rundown on you know how how reefers work and understand what the actual reefer control looks like. I had a guy recently that we had there was let's see, there was the I think the temperature at which the product was received at was higher than it was supposed to be, but it was still frozen. I think it was supposed to be like negative 10, and it ended up being like eight degrees. So it was like 18 degrees higher, but still frozen. And they they allow for a certain amount of variance. Um but I think it was beyond that variance. And we had asked, like, hey, what was like the set point on the reefer? And he's like, What's what's the set point? And we were like, dude, like have you ever seen a reefer? Like, if you just Google like a picture of like a reefer setting, you'll see two things. It looks just like a thermostat, right? You're gonna have what is it set to and what is it actually reading right now, right?

SPEAKER_01 33:31

Those are your yeah, but there's also intermittent versus continuous as the other.

SPEAKER_00 33:37

So actually, you know what? I'll give you a great explanation of the reefer settings and how it can relate to an air conditioner or a heater for that matter. Because don't forget, a reefer can heat or cool. Um, so the same way that your thermostat can have an auto versus an always-on setting, that's the same way that a reefer unit can operate with a cycling versus continuous, right? And then also that set point versus the actual um air temperature is gonna tell you what is it currently, what is the temperature of the air in the house or in the reefer currently versus what is the AC unit set to or the you know the HVAC unit set to in your house. So why would I want to use continuous versus cycling? Well, continuous means it's always on, right? That's like if you set your air conditioning to 72 degrees Fahrenheit, for example, and it's just on always on, it's gonna always be blowing air to make sure that there's a constant level of 72 degree temperature inside of your house, right? Cycling would be like if you set it to auto. So maybe you have your temp set to auto in your house at 72 degrees. Well, it's gonna kick on until it gets down to 72, and then it'll turn off. And if it ticks back up a degree,

Reefer Settings That Trigger Claims

SPEAKER_00 34:50

it's gonna turn back on until it gets back down to that 72. And that's more energy efficient. So you're gonna use less if in the reever example, you're gonna use less gasoline in the or diesel in the reefer unit. Um, and you're gonna use less electricity in your house if you're using that setting. Um now, why would I use one over the other? So frozen stuff, I would say, is more common to use a cycling because you can have that variance of if it's gonna be frozen at, I'll go back to that negative 10, right? If it kicks up to negative eight or negative seven, maybe it kicks back on to get it back down to that negative 10. Um, if you're dealing with something that's above freezing, so think like uh produce or pharmaceuticals, things like that, those need to be kept at a very, very um distinct temperature at all times. Um and that's where you'll often see the continuous setting use. So that would be like you're always on when it comes to your AC unit. And it's very, very important if you're gonna do anything temperature controlled, that you understand how reefers work and that you communicate that clearly with your drivers when you're and put it on the BOL, right? If it's not on the BOL, it doesn't matter. And if you put one one thing on the rate confirmation and another one on the BOL and they're different, the BOL is gonna trump it. So um don't confuse Celsius and Fahrenheit. I've seen that happen before too.

SPEAKER_01 36:11

Um but yeah, those are kind of like your basics of a claim last week because they had the wrong setting and it was produce. Exactly what you said happened. Produce was shot, like half the truckload was ruined because they had the wrong setting on the on the reefer, and it was all communication breakdown. So when I went into the paperwork and looked at the communication, customer definitely said it, definitely on the BOL. Um, dispatcher confused it when he called the driver. That's what caused it. Um, another one that is important to understand with a reefer for sure in produce are the air chutes in your reefer trailer. Like there's chutes that go down the side, or there's a center chute. And a lot of customers require one versus the other because it definitely affects how the air circulates and definitely determines whether you're likely to or not likely to have a claim, right? So you want to understand the basics of how a reefer works. And again, back to air conditioning. All the air chute is is the ductwork in your house.

SPEAKER_00 37:15

Ductwork in your house. Yeah.

SPEAKER_01 37:16

It's just how it blows through your house, right?

SPEAKER_00 37:20

You have the one the reefer unit is on the front end of the trailer, right? And it's pushing cold air and it's got to go all the way back and all the way out the sides. That's why you see those shoots. That the intent is to push it back and outward so that you have a temperature that's similar throughout the entire trailer. Same way with your house that you'll notice if you have if like people who have a smaller AC unit or one that's not really big enough for their house, and they're like, Well, my upstairs is always a lot warmer than my downstairs. And it's like, yeah, because you don't have a strong enough or big enough or enough units to push the proper amount of air throughout your house. Like I know people that have that live in the south with big houses, they got four AC units at their house versus like up north. You might just need one big one.

SPEAKER_01 38:07

So I just I'm literally doing this in my house because we were joking like about my roof. Well, when the roof's not on, like there's different insulation. So my air conditioner isn't working right. So when I had them come look at it, that's literally this example I have in my house, right? My office that I sit in is on the ground floor. It's ductwork is connected to the air conditioner on the second floor, and all the rest of the first floor is connected to my second air conditioner that cools the rest of this. So this, my office, is the farthest away, and it makes zero sense why you would set the house up that way, except I have like huge cathedral ceilings in the living room behind me, so you can't duct connect it to the one it should be, right? So we're redoing this in a way that makes more sense for the same reason we're talking about reefers, but like all of these things kind of matter, right? Because also the insulation has to be right. Because if the insulation isn't right or you don't have a roof on your house, basically my attic is baking my ductwork, which means my air conditioner works twice as hard and can't cool my house, which is why I have a portable air conditioner in my office right now, because none of this stuff is working when it's not all put together correctly, right? So I do think it's helpful to think about it, like from a simple point of view first, but like you really should know the basics if you're going to move product that is TEM controlled. But we talk about this a lot, is like there's just like one thing you can do to make sure you don't ever screw any of these up, even if it's just your first load. You just ask this question to your shipper what are your equipment requirements? Do you have a document you send to your carriers? What is everything I need to know to confirm we have the right equipment with the right settings? Almost every produce company has this in writing, or will send this to you, or will definitely tell you over the phone, hey, we need a center shoot. We run everything on continuous, we want everything on intermittent. It's mostly almost always the same thing. Even like big produce companies that do lots of different produce, I rarely see like variations in equipment specs and temp settings. Like most of it is always kind of done the same way. Um, so when you just ask that like catch-all question, uh like you can kind of move anything. Because basically it was like, hey, what are all your requirements? Because this is how I like really learned tanker when I started doing this like a handful of years ago, was like, I don't know what like I can't like a safety data sheet is literally this like chemical spec for the tanker equipment.

SPEAKER_00 40:36

Material safety data sheet.

SPEAKER_01 40:38

Yeah, but it's I think they're literally called SDSs. Either way, like, yeah, every company has this document and has the requirements and the equipments because like in tanker, there's so many different things. Like, what is the tank lined with? What is it made out of? How is it loaded? How is it unloaded? What is the pressure? Is it like air fed? Is it you know gravity? Like there's a lot of these things, and it was just like it's super simple. Like every time I talk to a customer, hey, can you send me your equipment requirements and your SDS sheet? And every single thing in there, every time I had to talk to a new carrier, I just forwarded those two documents, read them all, made sure I confirmed that they had all the right things. And like in a week or two, like you start to learn it. Like, you don't need to reinvent the wheel. The shipper or your customer receiver, whoever it is, has this done, has to do this in order to hire a trucking company, let alone a brokerage. You just got to request the information and make sure you get this to the carrier and confirm

Preventing Claims With Better Hand Offs

SPEAKER_01 41:33

they have and are sending the right one. So you don't have to overcomplicate it, but I think you make a good point. Like you really should kind of know the basics because it just always reminds me of the game, like you're a kid, do you play the telephone game where like you're in first grade or kindergarten and you line up like 10 kids and you tell one a word and they whisper to the next kid and you see what the last kid says. It's always like a different thing. Like, that's our job. So, like, so much gets lost between the shipper telling you something over the phone, you telling a dispatcher, and the dispatcher telling a driver who might be unloading or at a different load and is trying to pay attention, but might be busy and might miss one of these things. This is why verbal check calls are so important before your truck gets to load is you confirm these things. Hey, I know your dispatcher said you have this equipment. Are you running this? Is it in good working order? Is it pre-cooled? What's it set at? What's your temp at? Long before they pick up. That reduces so many of these issues. Just like that very simple step of following up and confirming this. Well, avoid most claims. Because like when you work backwards from the claims, where like you and I see them most of the time now, because we're not like brokering freight, like as soon as you work backwards and you see that the paper trail and what happened, you could just see where it fell apart. Like, oh, they definitely told this guy, and that person definitely didn't tell him. And if you would have just called the driver, none of this would have happened, and almost every single one of them.

SPEAKER_00 42:58

Yeah. Agreed, agreed. So I to kind of summarize a lot of this, I would say kind of back to the beginning of our conversation, the ideal situation is to have the the freight um accepted and just document everything as to you know the photo, pictures of the condition of the freight. Um, and if you're a driver, this is why it's you know very good if you can get documentation at loading of the condition of the freight. So you can um prove to your, you know, to defend yourself that you did everything properly. Um, that would include like pictures of your reefer control unit at loading. Um here's the set point. Here's what it's actually reading right now. Now here's a picture of that, and now of our freight that's that's loaded and secured on there properly. Um, and then you know, if it gets to the receiver and it's damaged, you can this is where all the documentation comes in. So photos there, USDA inspection. If it's not produced, pictures, right? You're gonna have um the condition of The actual packaging. So, like if boxes fell over because they weren't shrink wrapped properly, um, or the boxes themselves, maybe they were wet when they were loaded, and you could see that they kind of broke down and stuff fell out. Um, and try to preserve the condition of that freight when it's received without, you know, you don't want an insurance person to be able to have any thought that the damage was caused after it was received, right? So kind of like you said, leave your car right where it is, right? Obviously, it's it's a bit different, right? But you don't want to start moving stuff and unassembling it and all that. You want to um preserve the condition of the claimed damaged uh cargo where it's at, um, and then you know, get that claim process started as soon as you can because there are restrictions. And then when you're dealing with different countries too, like obviously with USMCA, we we you know, we kind of have free reign between Canada, Mexico, United States. Carmac amendment only uh covers the United States, to my knowledge. So if you're dealing with Canadian customers or Mexican customers, um, understand

Preserve Evidence And Mind The Deadlines

SPEAKER_00 45:06

what the legal framework is for um filing claims. What did we we did the research before we recorded hit record on this, but what was it? Is it nine months is the the statute to get the claim done on a freight uh freight scenario? I've always like had best practice of 30 days, is kind of like what we've done internally, is like, hey, if so, and for before that, like upon delivery, we want to know immediately if there's even a chance that there's gonna be a claim filed on this. Because if there's a possibility of a claim being filed, we want to freeze everything. We're gonna we're gonna freeze pay on the carrier.

SPEAKER_01 45:43

We're gonna oh, that's the biggest thing. Walk through that because this one I catch all the time. Because here's what happens. Like you said this earlier, and this is something I definitely want everybody to be aware of is it's not our insurance policy as a broker, as Nate pointed out, right? It's the carriers. They are the customer of the insurance company, it's their policy. So actually, to file a claim, a brokerage can't do this. Now, you can facilitate it. I mean, you put all the information together, all the notes, all the pictures, all the documentation. I usually do like a memo that summarizes all of it, the reason for the claim, when it happened, what happened, all of those things. And then you send this to the insurance company, the adjuster. But the insurance company will say almost immediately, I've reached out to our client, we'll let you know when they get back to us. If that trucking company does not cooperate, you can't process a claim. How you actually easily just wouldn't respond. Right. So the only real way you can't do anything. So the only real way you can get the carrier in some cases to actually do this is you hold the pay for the load. So the factoring company will email you, usually, or the carrier, and you go, like, hey, like we're holding the pay and until we get the claim resolved per the customer. That is usually what allows or helps, I guess, like nudge the carrier to work with their insurance company to get it processed because they're not getting paid for their load. And if you let the money go out the door, they never respond most of the time. Like it's just crickets.

SPEAKER_00 47:19

And another part of it too is a lot of carriers will have a deductible on their policy. And that's why you'll see some TMSs or you know, vetting software will alert you if a carrier has like a $10,000 deductible or something like that. Because here's what you know, here's a scenario you run into is if there's a small claim, right? Maybe it's $5K in damages and they have a $10,000 deductible, insurance isn't gonna pay anything. Because the deduct the deductible

Hold Carrier Pay And Get True Load Cost

SPEAKER_00 47:47

is higher than what the amount of it being paid out is. So um if you have money to withhold from that carrier, it puts you in a and again, we're not in we're not doing it out of like any nefarious.

SPEAKER_01 47:59

Because the customer's not paying you.

SPEAKER_00 48:03

The reality is uh in most claims, um, if there's like a majority or full loss, the carrier is typically just not getting paid anything at all because of if they're the one at fault for it.

SPEAKER_01 48:14

So also that I want to add, this is the other very common thing that your customers will do, right? Is you need the value of the load, but very specifically, you need the cost of the goods sold.

SPEAKER_00 48:31

Yeah, not the market value, not the not with their profit built in. Yeah.

SPEAKER_01 48:35

Correct. And like almost every claim I've ever worked, the customer sends the sale price. And then I have to email back, hey, I need the cost of the product, not what you were going to sell it for. And they will argue, well, this is what we always use. And I think the easiest way to resolve this that I found is I go, that's great, but I sent this to the insurance company, and they're telling me that's not the cost of goods sold. So they won't process this until you give me that document. I do that sometimes six times before the customer will actually send me the cost of goods sold. They'll just keep sending the sales price. And I just am like, use the fact you're an intermediary to get it done. Meaning, like, hey, this isn't my request. This is the insurance requirement to actually process a claim, and I can't process it without this document because they always try to get the profit back.

SPEAKER_00 49:24

Yep. Good stuff, good discussion. Um, well, let us know what you guys think. If you have any uh claim stories or questions or anything to add in, leave a uh comment on YouTube or send us a message and uh we'll appreciate that. But good uh good episode, Ben. Final thoughts.

SPEAKER_01 49:43

Whether you believe you can or believe you can't, you're right. And until next time, go bills.