Carrier Liability vs. Freight Insurance. What’s the Difference?

July 15, 2021 at 7:42 AMPartnerShip
Liability vs. Freight Insurance Blog PostFreight damage and loss is a reality of shipping. It’s not a matter of if it will happen to you; it’s a matter of when. When damage or loss occurs, your first thought is often, “how will I be compensated?” To answer the question, you need to understand the difference between carrier liability and freight insurance.


Carrier Liability

Every freight shipment is covered by some form of liability coverage, determined by the carrier. The amount of coverage is based on the commodity type or freight class of the goods being shipped and covers up to a certain dollar amount per pound of freight. 

In some cases, the carrier liability coverage may be less than the actual value of the freight. It’s common to see liability restricted to $0.25 per lb. or less for LTL or $100,000 for a full truckload. Also, if your goods are used, the liability value per pound will be significantly less than the liability value per pound of new goods. Liability policies can vary, so it’s very important to know the carrier’s liability for freight loss and how much is covered before you arrange your freight shipment.

Freight damage and loss is a headache. In order to receive compensation, a shipper must file a claim proving the carrier is at fault for the damaged or lost freight. Carrier liability limitations include instances where damage is due to acts of God (weather related causes) or acts of the shipper (the freight was packaged or loaded improperly). In these cases, the carrier is not at fault. Additionally, if damage is not noted on the delivery receipt, carriers will attempt to deny liability. 

If the carrier accepts the claim evidence provided by the shipping customer, then they will pay for the cost of repair (if applicable) or manufacturing cost, not the retail sell price. The carrier may also pay a partial claim with an explanation as to why they are not 100% liable. The carrier will try to decrease their cost for the claim as much as possible.   

Freight Insurance

Freight insurance (sometimes called cargo insurance or goods in transit insurance) does not require you to prove that the carrier was at fault for damage or loss, just that damage or loss occurred. Freight insurance is a good way to protect your customers and your business from loss or damage to your freight while in transit. There is an extra charge of course, and it is typically based on the declared value of the goods being shipped. Most freight insurance plans are provided by third-party insurers.

As mentioned earlier, your freight might have a higher value than what is covered by carrier liability, such as shipping used goods. Another example is very heavy items. Carrier liability may only pay $0.25 per pound for textbooks that have a much higher value. This is a great example of when freight insurance is extremely helpful in the event of damage or loss.

Carrier Liability vs. Freight Insurance in the Claims Process

If your freight is only covered by carrier liability coverage:

·         Your claim must be filed within 9 months of delivery

·         The delivery receipt must include notice of damage

·         Proof of value and proof of loss is required

·         The carrier has 30 days to acknowledge your claim and must respond within 120 days

·         Carrier negligence must be proven

If your shipment is covered by freight insurance:

·         Proof of value and proof of loss is required

·         Claims are typically paid within 30 days

·         You are not required to prove carrier negligence

Deciding which option is best for your shipment

Anything that comes at an added cost needs to be evaluated critically and freight insurance is no different. There are a few things to consider as you weigh the potential cost and risk of damage and loss versus the cost and benefit of insurance. You'll need to think about the commodities you're shipping, how time critical your shipment is, and if you'd be able to weather the financial burden that comes with a denied or delayed claim payout. 

Understanding your carrier's liability coverage and knowing the ins and outs of freight insurance can be tricky. If you have questions like “how much does freight insurance cost?” or “what does freight insurance cover?” the team at PartnerShip can help

If you want to learn more about the freight claims process, check out our comprehensive guide.

Claims White Paper

What is the Difference Between Cross-Docking and Transloading?

January 14, 2020 at 8:14 AMPartnerShip
What is the Difference Between Cross-Docking and Transloading?

They are common questions in logistics and warehousing: What is cross-docking? What is transloading? What is the difference between cross-docking and transloading?

First, a definition of each of these freight services.

Cross-docking is unloading inbound freight from one truck, holding it in a warehouse or terminal for a very short period of time, and loading it onto another truck for outbound shipping.

Transloading is when inbound freight is unloaded, the pallets are broken down, and their contents sorted and re-palletized for outbound shipping.  

Here is an example of cross-docking: A manufacturer needs to ship 20 pallets of products from the east coast to destinations in Texas, Florida and California. The 20 pallets are first shipped to a third-party warehouse in Cleveland, Ohio. A day later, 5 pallets are sent to Florida, 10 to Texas, and 5 to California on trucks bound for those destinations. Since the pallets were never unpacked and were only in the warehouse long enough to move them from one truck to another truck (and from one dock to another dock), they have been cross-docked.

Using the same Cleveland, Ohio third-party warehouse, here is an example of transloading: 5 suppliers of a manufacturer ship a year’s supply of components to the warehouse. The components are stored until they are needed, at which time the warehouse picks them, assembles them into a single shipment, and ships it to the manufacturing facility.

To recap, cross-docking is the movement of an intact pallet (or pallets) from one truck to another, and transloading is the sorting and re-palletizing of items.

Both cross-docking and transloading services are specific logistics activities that can create benefits for businesses; especially ones that utilize a third-party warehouse.

Benefits of cross-docking

  • Transportation costs can be reduced by consolidating multiple, smaller LTL shipments into larger, full truckload shipments.
  • Inventory management is simplified because cross-docking decreases the need to keep large amounts of goods in stock.
  • Damage and theft risks are reduced with lower inventory levels.
  • With a decreased need for storage and handling of goods, businesses can focus their resources on what they do best instead of tying them up in building and maintaining a warehouse.

Benefits of transloading

  • Businesses can store goods and products near customers or production facilities and have them shipped out with other goods and products, decreasing shipping costs.
  • Businesses can ship full truckloads to a third-party warehouse instead of many smaller LTL shipments.
  • With storage and logistics managed by others, the need for building and maintaining a warehouse is eliminated.
The bottom line is that these benefits translate directly into cost savings. To learn more about the full range of third-party logistics (3PL) services that PartnerShip has provided for three decades, and how cross-docking and transloading in our conveniently located 200,000+ square foot Ohio warehouse can benefit your business, call us at 800-599-2902 or send an email to warehouse@PartnerShip.com.

Beyond Boxes and Pallets: 10 Other Ways to Move Freight

January 3, 2020 at 8:15 AMPartnerShip
Beyond Boxes and Pallets: 10 Other Ways to Move Freight

When most people think of freight, it’s usually an image of the ubiquitous 40” x 48” wood pallet that comes to mind. But there are many other ways to move freight, including these lesser known, but still important, methods.

Pallets. They are so important to freight shipping that even though we’ve covered pallets in depth before, we can’t not mention them here.

In addition to wood, pallets can be made of plastic or metal. Plastic pallets are popular for export shipments because they don’t have to be heat treated to be used for international shipping, like wood pallets do. Aluminum and stainless steel pallets are strong and lightweight, and since they can be cleaned and sanitized, they can be used in food processing and pharmaceutical plants, where cleanliness is essential.

Gaylords. Named after the company that first introduced them, Gaylords are pallet-sized corrugated boxes used for storage and shipping. Sometimes called pallet boxes, bulk boxes, skid boxes and pallet containers, Gaylords can have between 2 and 5 walls and are meant to be single-use containers. Frequently used as in-store displays as well as shipping containers, Gaylords can be used to ship items as diverse as watermelons, stuffed animals, and pillows. Depending on configuration and how many walls they have, Gaylords can hold from 500 to 5000 pounds each.

Metal bins. Metal bins are typically made of steel and are mainly used in industrial applications where strong-sided containers are required to hold and move heavy and irregularly shaped items, like metal castings and forgings, stampings and scrap metal. Metal bins can be found in many different sizes and are essential in safely shipping heavy and potentially sharp objects.