Inbound Freight: Are We Paying Close Attention?

Almost all inbound freight shipped to wholesalers is shipped FOB Origin Freight Prepaid. Shipping a product FOB Origin Freight Prepaid means once you load it on your truck, you own it!

Here are some key points you need to know, since it's costing all wholesalers a lot of money!

When receiving a damaged product from a freight company, you, and not the vendor, is responsible for filing a claim.

  1. Here is what can happen:
    • You reorder what you need from the vendor and wait several months for payment from the carrier.
    • The shipper lets you know that the product was not packaged properly from the vendor, and they will not pay the claim. (This is one of my favorites!)
    • The carrier will not pay the claim because they want a repair estimate on a destroyed piece. Then they will continue to debate the cost of repairing the piece. This process costs companies a lot of soft dollars to fight without getting resolution.
    • Many vendors' pricing agreements will have a cap on what they will pay for damaged goods. Example: An exhaust fan costs $800. The vendor's agreement with the carrier states they only have to pay 2 cents per pound. The exhaust fan weight 300 pounds. You lost $200.
    • If you find damage after signing the freight bill free and clear, good luck! Yes, you have 15 days to report concealed damage, but getting the money for this type of incident reporting is difficult.
  2. Once the vendor ships the freight, you own it, and they bill you for the product. Make certain you're watching how long it takes the carrier to get the product to your store or warehouse. Depending on the carrier, it could take a couple of extra days until you receive the product. If you're paying for it, you may as well get it.
  3. Become the squeaky wheel on damaged product. Make sure the vendor knows the issues that you are having. Is it the carrier or poor packaging that is causing the problem? Don't assume they're aware. Once they ship it, legally it falls on you to get the problem taken care of. Could you imagine doing that to one of your customers? Is that customer service?

The time has come for all wholesalers to voice their concerns to vendors on the issues of freight damage. Soft dollars, hard dollars and disappointed customers are what the present status of FOB Origin Freight Prepaid is costing us all!

Greg Toler is vice president of Distribution and Logistics, Gustave A. Larson Co. Contact him at 262/542-0200 or [email protected].

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