# Decision Frameworks — Logistics Exception Management

> This reference provides the detailed decision logic, scoring matrices, financial models, and mode-specific resolution workflows for logistics exception management.

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---

# Decision Frameworks — Logistics Exception Management

This reference provides the detailed decision logic, scoring matrices, financial models,
and mode-specific resolution workflows for logistics exception management. It is loaded
on demand when the agent needs to make or recommend nuanced exception-handling decisions.

All thresholds, timelines, and cost assumptions reflect US domestic and international
freight operations across LTL, FTL, parcel, intermodal, ocean, and air modes.

---

## 1. Exception Severity Matrix

### 1.1 Scoring Methodology

Every incoming exception is scored across four dimensions. Each dimension produces a
score from 1 to 5. The **composite severity** equals the **highest single-dimension
score**, not the average — a shipment that scores 2/2/2/5 is a Level 5 exception
because a single critical dimension governs urgency.

After computing the raw composite, apply the **elevation modifiers** in §1.3 to
arrive at the effective severity, which caps at Level 5.

### 1.2 Full Severity Matrix

#### Dimension A — Financial Impact

| Level | Product Value at Risk | Expedite / Re-Ship Cost | Penalty Exposure | Typical Scenarios |
|-------|----------------------|------------------------|-----------------|-------------------|
| 1 — Minimal | < $1,000 | None or < $200 | None | Minor LTL shortage, single damaged carton, residential parcel delay |
| 2 — Moderate | $1,000–$5,000 | $200–$1,500 | Informal customer credit request likely | Multi-carton LTL damage, regional FTL delay 1–2 days, parcel loss with declared value |
| 3 — Significant | $5,000–$25,000 | $1,500–$8,000 | Contractual penalty triggers within 48 hrs | Full pallet damage, FTL delay into customer delivery window, ocean container shortage affecting production schedule |
| 4 — Major | $25,000–$100,000 | $8,000–$35,000 | Active penalty clause or chargeback imminent | Multi-pallet loss, air freight failure on critical launch shipment, reefer failure on full trailer of produce |
| 5 — Critical | > $100,000 | > $35,000 or no expedite option exists | Regulatory fine, contract termination risk, or litigation exposure | Full trailer loss/theft, ocean container of pharma with temp excursion, hazmat incident with EPA/DOT reporting obligation |

#### Dimension B — Customer Impact

| Level | Customer Tier | SLA Status | Business Impact to Customer | Typical Scenarios |
|-------|-------------|-----------|---------------------------|-------------------|
| 1 — Minimal | Standard / spot customer | No SLA or well within SLA window | Inconvenience only; customer has inventory buffer | Delay to distributor who carries 30-day stock |
| 2 — Moderate | Regular account | SLA at risk but not yet breached | Customer will notice, may request credit | Delivery misses requested date but within contractual tolerance |
| 3 — Significant | Key account (top 20%) | SLA breach within 24 hrs | Customer's operations impacted; regional stockout possible | Late delivery to DC feeding retail replenishment |
| 4 — Major | Enterprise / strategic account | SLA already breached or will breach today | Customer's production line slowed, retail launch compromised, or their customer is impacted | Automotive JIT delivery failure, retail holiday launch delay |
| 5 — Critical | Tier 1 enterprise or regulated customer | SLA breach + penalty clause triggered | Customer production shutdown, patient safety concern, or regulatory impact to customer | Pharma shipment to hospital, auto assembly plant line-down, government contract with liquidated damages |

#### Dimension C — Time Sensitivity

| Level | Available Recovery Window | Alternative Sourcing | Perishability | Typical Scenarios |
|-------|--------------------------|---------------------|--------------|-------------------|
| 1 — Minimal | > 5 business days before customer need-by | Multiple alternatives available | Non-perishable | Stock replenishment with safety stock in place |
| 2 — Moderate | 2–5 business days | Alternatives available but at premium cost | Non-perishable, but inventory turn pressure | Promotional inventory needed before event window |
| 3 — Significant | 24–48 hours | Limited alternatives, ground expedite still viable | Perishable with > 48 hrs remaining shelf life | Fresh produce with 5-day shelf life at day 3 |
| 4 — Major | < 24 hours | Air expedite only option | Perishable with < 48 hrs remaining shelf life, or time-definite service commitment | Temperature-sensitive biotech, next-day surgical supplies |
| 5 — Critical | No window — needed now | No alternative exists or product is custom/irreplaceable | Perishable with < 24 hrs, or already expired in transit | Transplant organs, custom-manufactured parts for shutdown line, court-ordered evidence delivery |

#### Dimension D — Regulatory / Safety

| Level | Regulatory Exposure | Safety Concern | Reporting Obligation | Typical Scenarios |
|-------|-------------------|---------------|---------------------|-------------------|
| 1 — None | No regulatory dimension | No safety concern | None | Standard dry freight, consumer goods |
| 2 — Low | Regulatory dimension exists but no violation | Potential quality concern, no safety risk | Internal documentation only | Cosmetics with minor packaging damage, electronics with cosmetic dents |
| 3 — Moderate | Potential regulatory inquiry if not documented properly | Quality compromise that could reach end consumer | Proactive notification to QA team; may require regulatory hold | Food products with cold chain deviation within acceptable range |
| 4 — High | Regulatory violation likely if product reaches market | Potential safety risk to end consumer or handler | Mandatory internal reporting to quality/regulatory within 4 hrs; potential voluntary recall | Pharma with temp excursion beyond validated range, dietary supplements with contamination exposure |
| 5 — Critical | Active regulatory violation; agency notification required | Immediate safety hazard | Mandatory external reporting (FDA, DOT, EPA, FMCSA) within hours; potential mandatory recall | Hazmat spill, pharma temp failure on life-saving medication, foodborne illness risk, leaking chemical container |

### 1.3 Elevation Modifiers

Apply these modifiers after computing the raw composite score. Elevation is additive
but caps at Level 5.

| Condition | Elevation |
|-----------|-----------|
| Customer is under active QBR (quarterly business review) period | +1 level |
| This is the 3rd+ exception on the same lane in 30 days | +1 level |
| Exception occurred on a shipment booked at premium/guaranteed service | +1 level |
| Carrier involved is under corrective action plan | +1 level |
| Shipment is for a new customer (first 90 days of relationship) | +1 level |
| Media or public visibility risk (e.g., branded trailer, viral social media) | +2 levels |
| Exception involves a shipment already recovering from a prior exception | +2 levels |

### 1.4 Severity-to-Action Mapping

| Effective Severity | Assigned To | Initial Response SLA | Customer Notification | Internal Notification | Review Cadence |
|-------------------|-------------|---------------------|----------------------|----------------------|---------------|
| Level 1 | Analyst (auto-assign) | 8 business hours | Only if customer inquires | None required | Daily batch review |
| Level 2 | Analyst (auto-assign) | 4 business hours | Proactive if delivery date affected | Team lead dashboard | Daily batch review |
| Level 3 | Senior analyst (manual assign) | 2 hours | Proactive with resolution timeline | Manager notification | Every 4 hours |
| Level 4 | Senior analyst + team lead | 1 hour | Immediate proactive call, then written follow-up | Director notification; account team briefed | Every 2 hours |
| Level 5 | Dedicated handler + manager direct oversight | 30 minutes | VP-to-VP or C-level communication path | VP notification within 1 hour; war-room if multiple Level 5s concurrent | Continuous until stabilized |

---

## 2. Financial Impact Calculation Model

### 2.1 Total Exception Cost Formula

```
Total Exception Cost (TEC) = Product Loss (PL)
                           + Expedite / Re-Ship Cost (ERC)
                           + Customer Penalties (CP)
                           + Administrative Processing Cost (APC)
                           + Relationship Damage Estimate (RDE)
                           + Downstream Ripple Cost (DRC)
```

### 2.2 Component Definitions and Assumptions

#### Product Loss (PL)

PL equals the lesser of (a) replacement cost at current wholesale or (b) original
invoice value, unless the customer contract specifies retail/resale valuation for
chargeback purposes.

- Damaged but salvageable: PL = invoice value × damage percentage. Use 25% for
  cosmetic-only damage, 50% for functional-but-impaired, 100% for unsalvageable.
- Shortage: PL = unit cost × units short.
- Full loss: PL = full invoice value including freight-in if FOB Origin.
- Temperature excursion: PL = full invoice value if excursion exceeds validated range.
  No partial credit on regulated products — it is all or nothing.

#### Expedite / Re-Ship Cost (ERC)

Standard cost multipliers against base freight cost:

| Expedite Method | Multiplier vs. Base Rate | Typical Lead Time | When to Use |
|----------------|------------------------|------------------|-------------|
| Ground re-ship (same mode) | 1.0–1.3× | Original transit time | Recovery window > 5 business days |
| Ground expedite (team driver / exclusive-use) | 2.5–4.0× | 40–60% of standard transit | Recovery window 2–5 business days, shipment > 150 lbs |
| LTL guaranteed (volume or guaranteed overnight) | 1.8–2.5× | Next-day to 2-day | Recovery window 1–3 days, shipment < 10,000 lbs |
| Domestic air (next-flight-out, NFO) | 6–12× | Same day or next morning | Recovery window < 24 hrs, shipment < 2,000 lbs |
| Domestic air charter | 15–30× | 4–8 hours | No commercial option fits; production shutdown imminent |
| International air (ex. ocean recovery) | 8–15× ocean base rate | 2–5 days vs. 25–40 days ocean | Recovery window < 2 weeks on ocean lane |
| Hotshot / sprinter van | Flat $2.50–$4.50 per mile | Depends on distance; ~500 mi/day | Small, urgent shipment (< 3,000 lbs); regional recovery |

Example: Base FTL rate Chicago to Dallas = $2,800. Customer needs delivery in 18 hours
instead of standard 2-day transit. Team driver expedite = $2,800 × 3.0 = $8,400.
Air NFO for 800 lbs at $0.85/lb = $680 freight + $150 handling = $830. Air is cheaper
if weight allows; FTL expedite is cheaper above roughly 4,000–5,000 lbs depending on lane.

#### Customer Penalties (CP)

| Penalty Type | Typical Range | Calculation |
|-------------|--------------|-------------|
| Retail chargeback (late delivery to DC) | $500 flat + $50–$150 per carton | Per retailer's vendor compliance guide |
| Retail chargeback (ASN/labeling error from re-ship) | $200–$1,000 flat | Often triggered by rush re-ships that bypass EDI integration |
| OTIF (On-Time In-Full) penalty | 3–8% of invoice value per occurrence | Walmart = 3% of COGS; other retailers vary |
| Production downtime reimbursement | $5,000–$50,000 per hour of line stoppage | Per manufacturing customer contract; automotive lines often $25K+/hr |
| Contractual SLA penalty | 1–5% of monthly freight spend per SLA breach | Cumulative; multiple breaches compound |
| Ad-hoc customer credit / goodwill | 5–15% of invoice as credit memo | Discretionary; used to preserve relationship when no formal penalty exists |

#### Administrative Processing Cost (APC)

Internal labor cost to manage the exception from intake to closure:

| Complexity Tier | Activities | Estimated Hours | Cost at $45/hr Fully Loaded |
|----------------|-----------|----------------|---------------------------|
| Tier 1 — Simple | Log, one carrier call, update customer, close | 1.5–2.5 hrs | $68–$113 |
| Tier 2 — Standard | Log, multiple carrier contacts, file claim, gather docs, customer updates, close | 4–8 hrs | $180–$360 |
| Tier 3 — Complex | All of Tier 2 + inspection coordination, multi-party dispute, escalation, legal review potential | 12–25 hrs | $540–$1,125 |
| Tier 4 — Litigation track | All of Tier 3 + legal engagement, deposition prep, expert witnesses | 40–100+ hrs | $1,800–$4,500+ (plus external legal at $250–$450/hr) |

#### Relationship Damage Estimate (RDE)

This is the hardest component to quantify. Use these heuristics:

- **New customer (< 6 months):** Exception during onboarding carries 3× the
  relationship weight. A $2,000 failure can cost a $500K annual account. RDE = 10–20%
  of estimated first-year revenue at risk of churn.
- **Stable customer (> 2 years):** Single exception rarely causes churn. RDE = 0–2%
  of annual revenue unless it is a pattern (3+ exceptions in 90 days, in which case
  treat as new-customer risk).
- **Customer under competitive bid:** Any exception during RFP evaluation period
  from a competitor. RDE = 25–50% of annual revenue at risk.

#### Downstream Ripple Cost (DRC)

Costs that propagate beyond the immediate exception:

- Inventory reorder disruption: If exception causes safety-stock depletion, the
  replenishment order will be rushed. Estimate 1.5× standard inbound freight for
  the replenishment cycle.
- Warehouse receiving disruption: Unexpected returns, re-deliveries, or inspection
  holds consume dock door time. Estimate $150–$300 per unplanned dock appointment.
- Customer service call volume: Each exception generates 2–5 inbound customer
  inquiries. At $8–$12 per call (including agent time and overhead), that is
  $16–$60 per exception.
- Reporting and analytics overhead: Carrier scorecards, root cause analysis
  meetings, and corrective action documentation. Estimate 1–3 hours per qualifying
  exception at $45/hr.

### 2.3 Worked Examples

#### Example A — LTL Damage, Mid-Value

Shipment: 6 pallets of consumer electronics, Chicago to Atlanta.
Invoice value: $18,500. One pallet fork-punctured at origin terminal.

```
PL  = $18,500 × (1/6 pallets) × 100% (unsalvageable)         = $3,083
ERC = Re-ship 1 pallet via LTL guaranteed 2-day: $650          = $650
CP  = Retailer OTIF penalty: $18,500 × 3% = $555
      (only if re-ship misses must-arrive-by date)             = $555
APC = Tier 2 standard claim: ~6 hrs × $45                      = $270
RDE = Stable customer, isolated incident: ~0%                   = $0
DRC = 3 customer service calls × $10                            = $30
---
TEC = $3,083 + $650 + $555 + $270 + $0 + $30                  = $4,588
```

Decision: File claim for $3,083 product value + $650 re-ship cost = $3,733 carrier
liability claim under Carmack. Customer penalty is shipper's loss unless carrier
proximate cause can support consequential damages (unlikely under standard BOL terms).

#### Example B — FTL Total Loss, High-Value

Shipment: Full truckload of medical devices, Memphis to Los Angeles.
Invoice value: $285,000. Shipment not delivered, no scans for 72 hours, presumed stolen.

```
PL  = $285,000 (full invoice)                                  = $285,000
ERC = Air charter for replacement: $48,000                      = $48,000
CP  = Hospital contract: 2 days production delay at $12,000/day = $24,000
APC = Tier 4 (theft investigation + legal): ~60 hrs × $45
      + external legal ~20 hrs × $350                           = $9,700
RDE = Strategic account in first year: 15% × $1.2M annual rev  = $180,000
DRC = Safety stock depletion replenishment, expedited inbound   = $8,500
---
TEC = $285,000 + $48,000 + $24,000 + $9,700 + $180,000 + $8,500 = $555,200
```

Decision: Level 5 severity. Immediate VP notification. Law enforcement report filed.
Carrier cargo insurance claim ($100K per occurrence typical — will not cover full
loss). Shipper's all-risk cargo policy for excess. Customer air-chartered at shipper
expense while claims are pursued. Consider consequential damages claim if carrier
was negligent in vetting driver or equipment.

#### Example C — Eat-the-Cost Decision

Shipment: 2 cartons of office supplies, parcel ground, value $380.
One carton crushed, contents destroyed.

```
PL  = $190 (one carton)                                        = $190
ERC = Re-ship via ground: $12                                   = $12
CP  = None (internal office supply order)                       = $0
APC = Tier 1 if filed: 2 hrs × $45                             = $90
RDE = N/A (internal)                                            = $0
DRC = None                                                      = $0
---
TEC = $190 + $12 + $0 + $90 + $0 + $0                         = $292

Potential claim recovery: $190 (carrier liability)
Filing cost: $90 (internal processing)
Net recovery: $190 - $90 = $100
```

Decision: Marginal. File only if parcel carrier has automated claims portal with < 15
minutes processing time. Otherwise absorb and log for quarterly carrier review.

---

## 3. Carrier Response Decision Tree

### 3.1 Path A — Cooperative Carrier

The carrier acknowledges the exception, provides updates, and works toward resolution.
This is the expected path with contracted carriers in good standing.

| Checkpoint | Action | Expected Carrier Response | If Response is Inadequate |
|-----------|--------|--------------------------|--------------------------|
| 0 hrs (intake) | Send initial exception notice via carrier portal or email with PRO#, BOL#, description of exception, requested action, and response deadline | Acknowledgment within 1 hour during business hours | Move to Path B at 2 hrs |
| 2 hrs | Verify carrier acknowledgment received; confirm they have assigned the exception internally | Carrier provides case/reference number and assigned handler name | Escalate to carrier's operations supervisor; send second notice with "Escalation" in subject |
| 4 hrs | Request status update — what has the carrier done so far, what is the plan, what is the revised ETA or inspection timeline | Specific plan with timeline: "Driver ETA 6pm" or "Inspector scheduled tomorrow AM" | Call carrier's account representative (not just dispatch). Document that operational channel is unresponsive |
| 8 hrs | Evaluate progress against carrier's stated plan. If delivery exception: is shipment moving? If damage: is inspection scheduled? | Tangible progress — updated tracking, inspection confirmed, driver checked in | Formal escalation email to carrier VP of Operations or regional director. CC your procurement/carrier management team |
| 24 hrs | Full status review. For delays: confirm revised delivery date. For damage/loss: confirm claim documentation in progress | Delivery completed, or inspection done and claim packet received, or clear revised timeline with daily updates committed | If still unresolved: initiate backup carrier for re-ship (do not wait longer). File formal carrier complaint in carrier management system |
| 48 hrs | Resolution or near-resolution expected for cooperative carriers | Claim acknowledged and in processing, or delivery completed with exception closed | Carrier performance review triggered. Procurement notified for quarterly scorecard impact |
| 72 hrs | Any open delay or loss should be fully resolved or in active claim processing | Claim payment timeline provided (30/60/90 day), or shipment delivered and exception closed | Consider carrier probation for new shipments on this lane |

### 3.2 Path B — Unresponsive Carrier

The carrier is not intentionally difficult but is not responding — dispatch is
overwhelmed, claims department is backed up, or the contact information is wrong.
Common with smaller asset carriers and during peak season.

| Checkpoint | Action | Objective | Escalation |
|-----------|--------|-----------|-----------|
| 0–2 hrs | Standard notice sent, no response received | Establish contact | Try all available channels: portal, email, phone. If broker-arranged shipment, contact broker AND underlying carrier |
| 2 hrs | Call carrier dispatch directly. If no answer, leave voicemail with your callback number and shipment references. Send follow-up email with "URGENT — Response Required" subject | Get any human response | If broker-arranged: put broker on notice that their carrier is unresponsive. Broker has contractual obligation to manage their carrier |
| 4 hrs | Second call to dispatch. Try driver's cell if available (from BOL or load confirmation). Contact carrier's safety/compliance department (different phone tree) as alternative entry point | Any status information | Notify your team lead. Begin contingency planning for re-ship or alternative resolution |
| 8 hrs | Three-channel blitz: call dispatch, email operations manager (find on carrier's website or LinkedIn), send formal notice via certified email or fax referencing carrier's MC/DOT number | Formal documentation of non-response | Authorize re-ship or expedite without waiting for carrier. Send carrier a "Notice of Non-Response" documenting all contact attempts with timestamps |
| 24 hrs | Final notice: "You have 24 hours to respond before we process this as an uncontested claim and adjust payment on open invoices" | Force response through financial leverage | Place freight payment hold on carrier's open invoices (coordinate with AP). File claim based on available documentation. Report to carrier management for immediate lane review |
| 48 hrs | If still no response, treat as abandoned. Process claim against carrier's cargo insurance (contact their insurer directly if you have the policy info from onboarding). If shipment is still in transit/unknown: report to FMCSA for potential out-of-service carrier | Full recovery mode | Remove carrier from active routing guide. Escalate to your legal team if claim value > $10,000 |
| 72 hrs | Formal demand letter from legal or via registered mail citing specific claim amount and legal basis (Carmack for domestic). 30-day response deadline per 49 CFR § 370.9 | Legal posture established | Begin preparation for small claims (< $10K) or federal court filing if value warrants |

### 3.3 Path C — Adversarial Carrier

The carrier denies liability, provides false information, disputes documentation,
or acts in bad faith. This includes situations where the carrier's claims department
issues a blanket denial without investigating.

| Checkpoint | Action | Documentation Priority | Escalation |
|-----------|--------|----------------------|-----------|
| 0 hrs (denial received) | Review denial letter/email line by line. Identify the specific basis for denial (act of shipper, inherent vice, act of God, packaging, etc.) | Preserve all original documentation. Screenshot carrier portal status history before it can be altered | Assign to senior analyst or claims specialist, not junior staff |
| 2 hrs | Draft point-by-point rebuttal addressing each denial reason with documentary evidence. Under Carmack, once shipper proves three elements (good condition at tender, damaged at delivery, damages amount), burden shifts to carrier | Organize evidence package: clean BOL, exception-noted POD, photos, packing specs, weight certificates, temperature logs | Brief team lead on denial and planned rebuttal strategy |
| 4 hrs | Send formal rebuttal via email and carrier portal with all supporting evidence attached. Request "reconsideration of claim denial" and cite specific regulatory basis for carrier liability | Send via method that provides delivery confirmation. Keep copies of everything sent | If denial is clearly frivolous (e.g., "act of God" for a forklift puncture), notify carrier's account manager that denial is damaging the relationship |
| 8 hrs | If carrier reaffirms denial: request the carrier's specific evidence supporting their defense. Under 49 CFR § 370.7, carrier must conduct a reasonable investigation before denying | Log all communications with exact timestamps. Note any inconsistencies between carrier's stated reasons and available evidence | Notify your manager and procurement. Begin calculating whether litigation cost is justified vs. claim value |
| 24 hrs | Escalate to carrier's VP of Claims or General Counsel with a summary letter: claim facts, evidence, legal basis, prior communications timeline, and a settlement demand | Prepare a claim file that is litigation-ready even if you hope to settle: chronological narrative, evidence index, damages calculation, legal authority summary | Procurement to issue formal notice of dispute to carrier's sales team. Separate the business relationship discussion from the claims dispute |
| 48 hrs | If no movement: engage third-party claims service or freight claims attorney for demand letter on legal letterhead. Cost: typically $500–$1,500 for demand letter, contingency fee of 25–33% if litigation needed | Provide complete file to outside counsel. Flag any potential weaknesses in your case (late filing, incomplete POD, packaging shortfalls) | Consider whether the carrier's business overall is worth preserving. If annual spend < claim value, this may be the last shipment regardless |
| 72 hrs+ | Decision point: litigate, settle at a discount, or absorb. See §9 Eat-the-Cost Analysis for framework | Final evidence review and case assessment | VP-level decision on litigation vs. settlement vs. walk-away |

### 3.4 Special Situation — Carrier Goes Dark Mid-Shipment

When a carrier stops responding and the freight is in transit (not yet delivered):

1. **Hour 0–1:** Attempt all contact channels (dispatch, driver cell, broker if applicable, carrier safety department). Check last known GPS/ELD position if available through your TMS integration or load-tracking platform.

2. **Hour 1–4:** Contact the carrier's insurance company to verify the policy is active. If brokered, demand the broker provide proof of last contact with the driver and GPS coordinates. If no GPS data available and shipment is high-value (> $50K), consider engaging a freight recovery service.

3. **Hour 4–8:** If high-value or theft indicators present (carrier is new, load was double-brokered, pickup was in a high-theft corridor like Los Angeles, Memphis, Dallas, or the I-10/I-95 corridors): file a report with local law enforcement in the jurisdiction of last known location. Notify CargoNet or FreightWatch if you have a subscription.

4. **Hour 8–24:** If the carrier is a broker's carrier: put the broker on formal notice that they are liable for the full shipment value. If the carrier is your contracted carrier: activate your contingency carrier for the lane and begin re-shipping replacement product.

5. **Hour 24+:** Treat as presumed theft/loss. File formal claim. Notify your cargo insurance underwriter. Do not wait for "certainty" — the claim clock starts ticking.

---

## 4. Claims Filing Decision Framework

### 4.1 File vs. Absorb vs. Negotiate Pre-Claim

The decision to file a formal claim is not automatic. Each path has costs and trade-offs.

#### Decision Matrix

| Scenario | Recommended Path | Rationale |
|----------|-----------------|-----------|
| Claim value < $250, carrier has self-service portal | File via portal (< 15 min effort) | Automated filing cost is near-zero; builds claims history for scorecard |
| Claim value < $500, no portal, good carrier relationship | Absorb, log for scorecard | APC exceeds likely net recovery. Mention informally to carrier rep at next review |
| Claim value $500–$2,500, clear carrier liability | Negotiate pre-claim: call carrier and propose a freight credit or invoice deduction | Faster resolution (days vs. months), preserves relationship, avoids formal claims overhead |
| Claim value $500–$2,500, disputed liability | File formal claim with documentation | Dispute needs formal record; informal negotiation without documentation weakens your position |
| Claim value $2,500–$10,000 | File formal claim regardless of circumstances | Value justifies APC and relationship friction. Negotiate settlement only above 75% of claimed amount |
| Claim value > $10,000 | File formal claim + involve senior management + legal awareness | Financial materiality threshold. Full documentation package. Independent inspection for damage claims. Accept settlement only above 85% or with strong business justification |
| Any amount, 3rd+ claim against same carrier in 90 days | File formal claim AND trigger carrier performance review | Pattern indicates systemic issue; formal filing creates the record needed for contract renegotiation or termination |
| Any amount, possible fraud indicators | File formal claim + notify compliance + preserve all evidence | Even small-dollar fraud must be documented. Patterns emerge only when individual incidents are formally recorded |

#### ROI Calculation for Filing

```
Net Claim ROI = (Claim Amount × Probability of Recovery) - APC

where:
  Claim Amount     = documented loss value (PL + ERC if carrier-caused)
  Probability of Recovery = see §4.2 below
  APC              = administrative processing cost from §2.2
```

File when Net Claim ROI > $0 and the ratio (Net Claim ROI / Claim Amount) > 15%.
Below 15% net margin on the claim, the organizational cost-of-attention often
exceeds the financial benefit unless the claim builds a needed pattern record.

### 4.2 Probability of Recovery by Carrier Type and Claim Type

These recovery rates reflect industry experience across hundreds of thousands of
claims. Adjust ±10% based on your specific carrier relationships and documentation
quality.

| Carrier Type | Damage (visible, noted on POD) | Damage (concealed) | Shortage (noted at delivery) | Full Loss | Delay (service failure) |
|-------------|-------------------------------|-------------------|----------------------------|----------|----------------------|
| National LTL (FedEx Freight, XPO, Estes, ODFL) | 80–90% | 40–55% | 70–80% | 85–95% | 15–25% (unless guaranteed service) |
| Regional LTL | 70–85% | 30–45% | 60–75% | 75–85% | 10–20% |
| Asset FTL carrier (large fleet) | 75–90% | 35–50% | 65–80% | 80–90% | 20–35% |
| Small FTL carrier (< 50 trucks) | 55–70% | 20–35% | 45–60% | 50–65% | 5–15% |
| Broker-arranged FTL | 60–75% | 25–40% | 50–65% | 60–75% | 10–20% |
| Parcel (UPS, FedEx, USPS) | 70–85% | 45–60% | 60–75% | 80–90% | 30–50% (guaranteed service) |
| Ocean (FCL) | 30–50% | 15–25% | 40–55% | 60–75% | < 5% |
| Ocean (LCL) | 25–40% | 10–20% | 30–45% | 50–65% | < 5% |
| Air freight (direct with airline) | 65–80% | 35–50% | 55–70% | 75–85% | 20–35% |
| Air freight (via forwarder) | 55–70% | 25–40% | 45–60% | 65–80% | 15–25% |

### 4.3 Documentation Checklist by Claim Type

#### Damage Claim — All Modes

Required:
- [ ] Original BOL (signed, showing clean receipt by carrier at origin)
- [ ] Delivery receipt / POD (showing exception notation — "damaged," "crushed," specific description)
- [ ] Photographs: minimum 4 views (overview of shipment, close-up of damage, packaging condition, label/PRO visible)
- [ ] Commercial invoice showing product value
- [ ] Packing list showing piece count and descriptions
- [ ] Written description of damage (what is damaged, extent, whether repairable)
- [ ] Repair estimate or replacement quote from vendor
- [ ] Packaging specifications (demonstrates product was packaged appropriately for the mode)

Strongly recommended:
- [ ] Weight certificate at origin (proves correct weight tendered)
- [ ] Inspection report from independent surveyor (required for claims > $10,000 or disputed claims)
- [ ] Temperature recorder data (for any temperature-sensitive product)
- [ ] Photos from origin showing product in good condition at loading
- [ ] Carrier inspection report (request from carrier's OS&D department)

#### Shortage Claim

Required:
- [ ] Original BOL showing piece count tendered
- [ ] Delivery receipt showing piece count received (discrepancy noted)
- [ ] Commercial invoice for shorted product
- [ ] Packing list with serial numbers or lot numbers if available
- [ ] Written description: how many pieces short, which items, value per item

Strongly recommended:
- [ ] Loading photos/video showing correct count at origin
- [ ] Seal numbers (origin seal vs. delivery seal — different seal = carrier liability strong)
- [ ] Weight certificate at origin vs. weight at delivery (weight discrepancy corroborates shortage)
- [ ] Security camera footage from dock (if available and shipment is high-value)

#### Loss Claim (Full Shipment)

Required:
- [ ] Original BOL (proves tender to carrier)
- [ ] Carrier pickup confirmation / signed pickup receipt
- [ ] Commercial invoice (full shipment value)
- [ ] Packing list (complete contents)
- [ ] Formal tracer request filed with carrier (with carrier's response or non-response documented)
- [ ] Proof of non-delivery: customer confirmation that product was never received

Strongly recommended:
- [ ] GPS/tracking history showing last known position
- [ ] Law enforcement report (if theft suspected)
- [ ] Carrier's insurance certificate (to file directly against insurer if carrier is unresponsive)
- [ ] Evidence of carrier tender acceptance and load confirmation

#### Delay Claim (Service Failure)

Required:
- [ ] Original BOL showing agreed pickup and delivery dates
- [ ] Service level documentation (rate confirmation, routing guide showing guaranteed service)
- [ ] Tracking history showing actual delivery date/time
- [ ] Proof of financial loss caused by delay (penalty invoice, expedite receipt, lost sales documentation)

Strongly recommended:
- [ ] Customer correspondence showing delivery commitment that was based on carrier's service
- [ ] Evidence that delay was not caused by shipper or consignee (no appointment changes, dock available)
- [ ] Documentation of mitigation efforts (you tried to minimize the loss)

### 4.4 Mode-Specific Filing Requirements

#### US Domestic Surface — Carmack Amendment (49 USC § 14706)

- **Jurisdiction:** All domestic surface transportation by motor carriers and freight forwarders operating under FMCSA authority.
- **Filing deadline:** 9 months from date of delivery (or reasonable delivery date for non-delivery claims).
- **Statute of limitations for litigation:** 2 years from the date the carrier disallows the claim.
- **Carrier liability standard:** Carrier is strictly liable for actual loss, damage, or injury to goods. Carrier defenses: act of God, public enemy, act of shipper, public authority, inherent nature of goods.
- **Shipper's burden:** (1) Goods were in good condition when tendered. (2) Goods were damaged/lost/short at destination. (3) Amount of damages.
- **Limitation of liability:** Carriers may limit liability via released rates (lower rate in exchange for lower liability cap). Check your rate confirmation and BOL for released value clauses. If you did not agree to a released rate, full actual value applies.
- **Filing method:** Written claim in any reasonable form that (a) identifies the shipment, (b) asserts liability, and (c) demands payment of a specific amount. 49 CFR § 370.3.
- **Carrier response obligation:** Must acknowledge within 30 days. Must pay, decline, or make a firm settlement offer within 120 days. 49 CFR § 370.9.

#### Ocean — Carriage of Goods by Sea Act (COGSA) / Hague-Visby Rules

- **Jurisdiction:** International ocean shipments to/from US ports (COGSA); most international ocean shipments (Hague-Visby).
- **Filing deadline:** Written notice of damage within 3 days of delivery (visible damage) or 3 days after delivery ends (concealed damage) under COGSA. Failure to give notice creates a presumption that goods were delivered in good condition — it does not bar the claim, but shifts the burden of proof.
- **Statute of limitations:** 1 year from delivery date (COGSA). This is a hard deadline — cannot be extended without carrier agreement.
- **Carrier liability standard:** Carrier is liable unless they prove one of 17 enumerated exceptions (perils of the sea, act of God, insufficiency of packing, etc.). Burden of proof is complex and shifting.
- **Liability limit:** $500 per package or customary freight unit (COGSA). SDR 666.67 per package or SDR 2 per kg gross weight, whichever is higher (Hague-Visby). Higher value must be declared on the bill of lading before shipment.
- **Critical documentation:** Ocean bill of lading, survey report at discharge port (hire a marine surveyor — typical cost $800–$2,500 depending on port), container inspection report, seal integrity evidence, reefer download data for temperature-controlled.

#### Air — Montreal Convention (International) / Air Cargo Act (Domestic US)

- **Jurisdiction:** International air carriage (Montreal Convention); domestic US air freight is governed by the air waybill terms and applicable contract law.
- **Notice deadline:** 14 days from receipt for damage claims. 21 days from delivery date for delay claims. These deadlines are strictly enforced — missing them is a complete bar to the claim.
- **Statute of limitations:** 2 years from date of arrival or from the date the aircraft ought to have arrived.
- **Liability limit:** 22 SDR per kilogram (~$30/kg, fluctuates with exchange rates). Higher value must be declared on the air waybill. Most airlines offer declared-value surcharges of 0.5–0.75% of excess value.
- **Filing method:** Written complaint to the airline or handling agent. Include air waybill number, flight numbers, claim details, and damage documentation.
- **Key nuance:** Ground handling agents (the companies that physically handle freight at airports) cause the majority of air freight damage, but the airline is liable to the shipper under Montreal Convention. The airline then has a subrogation claim against the handler.

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## 5. Mode-Specific Resolution Workflows

### 5.1 LTL Damage Resolution

#### 5.1.1 Terminal-Caused Damage

Damage occurring at carrier's terminal during cross-dock operations (forklift
damage, stacking failures, improperly loaded onto delivery trailer).

**Indicators:** Damage pattern consistent with handling (fork punctures, crush from
top-loading, stretch wrap torn with product exposed). Often discovered at delivery
terminal or by consignee.

**Resolution Workflow:**

1. **Consignee documents on POD** — specific notation: "2 of 6 pallets crushed,
   product visible through torn packaging." Generic "damaged" is insufficient for
   strong claims.
2. **Photograph at delivery** — minimum 6 photos: overall shipment, each damaged
   unit, packaging failure point, freight label/PRO visible in frame, floor of
   trailer showing debris.
3. **Request carrier terminal inspection** — call the delivering terminal directly
   (not the 800-number). Ask for the OS&D clerk or terminal manager. Request that
   damaged freight be held for inspection, not sent to salvage.
4. **File claim within 48 hours** — terminal damage claims have highest recovery
   rates (80–90%) because the carrier knows their terminal caused it. Do not delay.
5. **If partial damage** — request carrier's salvage bid. Carriers sometimes offer
   to sell damaged freight at auction and credit the difference. Evaluate whether the
   salvage value is fair; reject lowball salvage bids (common tactic to reduce claim
   payout).
6. **Settlement expectation** — terminal-caused damage should settle at 85–100%
   of invoice value within 60 days. If carrier offers less than 75%, escalate to
   carrier's claims manager with terminal inspection evidence.

#### 5.1.2 Transit Damage

Damage occurring during over-the-road transit (shifting loads, hard braking, trailer
accident, weather infiltration through damaged trailer roof/walls).

**Indicators:** Product shifted within packaging, load bars displaced, multiple
pallets damaged in the same direction (forward movement = hard stop).

**Resolution Workflow:**

1. **Determine if damage is from a known incident** — ask carrier dispatch: "Was
   there any reported incident involving this trailer in transit?" Carriers are
   required to log accidents, but minor incidents (hard braking, pothole impact)
   often go unreported.
2. **Document loading condition evidence** — if you have photos from

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