February 20, 2019

How to manage rejected product? Maximize your return and properly document your claim for damages

Rejections at destination are inevitable, and the issues surrounding them are never pleasant. So you need to be prepared to take the emotion out of the situation, have your product moved in a timely manner and have it sold for the account of whom it may concern to maximize the return and protect your rights for filing a future claim with complete documentation.

On a rather routine basis, some shippers incorrectly assume taking control of the rejected load for the purpose of moving the product means they have given up their claim rights, against either the original customer or the transportation company. The most important things to remember on a rejected load are to move quickly, minimize any losses and document. By promptly placing the load with a receiver, you can mitigate damages by salvaging the rejected load while all affected parties determine responsibility at a later date.

Keep Everyone Involved in the Loop

Remember, you must notify all parties of your actions. It is imperative that all parties are kept fully informed during the process, so as to eliminate confusion regarding the disposition of the shipment.

If the customer rejects a load without the benefit of the USDA inspection, place your customer on notice that:

  • you are not accepting the rejection,
  • you are moving the load to be sold for the account of whom it may concern and
  • if the load meets contract specifications you will be looking to your customer for any and all losses incurred from the original FOB or delivered contract.

What to Do Next?

Unless you are working with a trusted carrier with whom you have extensive experience, I strongly recommend that rather than rejecting the shipment to the carrier, you coordinate placement. As the shipper, you probably have better contacts with receivers. Further, instruct the receiver to return any proceeds, along with proper documentation which should include an account of sales, directly to you, in order to determine and document your actual loss.

In this situation, be sure the carrier is fully informed of your actions once the rejected load has been placed with the receiver. With the carrier fully informed, taking such action does not remove responsibility from either the carrier or the original customer.

Document and Communicate

I cannot over emphasize the importance of documenting your actions as they occur by emailing both the carrier and customer regarding your actions and that the load is being sold for the account of whom it may concern.

Also, get the shipment inspected in a timely manner to document any damage and secure all available documentation, including a temperature recording tape and/or a TRU download from the transportation refrigeration unit.

All this information will be vital in determining liability and adjudicating your claim whether it’s against the initial buyer/receiver or the carrier. Even if you don’t want to pursue a claim against your customer, when carrier liability is in question following these steps ensures you have the proper documentation supporting your potential transportation claim.

So what should you do when you are presented with a rejection?

  • immediately address the situation
  • act professionally by following the facts
  • minimize the loss by moving the load
  • place all parties on notice
  • make sure you receive the net proceeds with an accounting and
  • prepare a timely claim with all the documentation to finalize it.

Have any questions, comments or concerns that you would like guidance on? Please feel free to contact Western Growers Trade Practices Department’s Bryan Nickerson at [email protected], 949-885-2392, or Matt McInerney at [email protected] 949-885-2263.