March 15, 2017

Minimize Potential Losses While Assessing Documentation for Responsibility for Claim Purposes

By: Tom Oliveri

No one relishes the idea of dealing with problem shipments or claims, however these situations must be addressed head on. Unfortunately, procrastination is not a good business strategy. For this reason I continue to address in my blogs the importance of taking quick action in order to minimize any loss; and then take the appropriate steps in reviewing all valid documents to assess liability, and if, any claim exits. So please let me apologize in advance if this all sounds familiar.

Whether the transaction was sold on an FOB or Delivered basis, the same process should be followed to assess responsibility as to who is liable for the claim, the buyer, the carrier or you the shipper. If you as the shipper believe a claim exists the first thing you need to do is immediately place the buyer or carrier on notice that you will be reserving the right to pursue a claim for any losses from the original contract price. The second thing you must also do immediately is mitigate your losses by making sure the product is sold in a prompt and proper fashion to reduce the amount of the claim. In most cases, this is known as selling the distressed produce for the account of whom it may concern. Once you have already put everyone on notice, you need to document (an account of sale is preferred) the salvage value from the distressed shipment and collect the proceeds to reduce the amount of any potential claim.

Throughout this process, always focus on collecting all relevant documentation and analyze all pertinent facts to help determine liability. You will need to review all portable temperature recorders placed on the shipment as well as the TRU download. Carefully review all elements of the USDA inspection or in-house report taken at destination. In addition, you want to check all shipping instructions and the pre-load check list, and finally review time in transit verse time of inspection.

You as the shipper want to make sure that you are always engaged  with constant communication with the buyer and/or the carrier and have written emails documenting conversations. As I have said repeatedly in pervious blogs “If it is not in writing, it never happened”.  

Once you have the proceeds from the salvage of the distressed product you can then determine your loss and if appropriate, file a claim against the buyer or carrier.  Finally, do not expect to finalize the claim on the day of the arrival problem, in most circumstances; it is prudent to wait a short period until you have obtained all the documents and evidence to allow you to make an informed decision.

If you are a regular member of Western Growers and have a claim or dispute that you are not exactly sure what your next step should be, please give me a call. It should only take a few minutes for us to go over the situation, whether it is to review an inspection, temperature chart or any situation that could be problematic. Please feel free to email me at or call me at (949) 885-2269.