Why Parcel Claims Get Denied (and How to Automate Them)

If you ship with UPS or FedEx, the carriers already owe you coverage. Every package includes $100 of declared value coverage at no extra charge. If it is lost or damaged, that is a check for $100 plus the transportation charges, waiting to be claimed. Most shippers never file.

In this episode of Logistics Remix, I talked with Anthony Robinson, Founder and CEO of ShipScience, about where parcel claims go wrong and how data and automation fix it. Here are the takeaways.

Reason 1: You missed the filing window

This is the most common denial reason Robinson sees, and the deadlines are unforgiving. UPS gives you 60 days from the ship date for both loss and damage claims. FedEx gives you 60 days for damage and nine months for loss.

His rule: file everything before the 60-day mark. FedEx will not penalize you for filing a loss claim early, and one calendar reminder beats tracking two different windows. Miss the deadline by a couple of days and the claim is dead, no matter how valid it was.

Most shippers miss windows because nobody is watching. Claims get filed when someone remembers, which means late or never.

Reason 2: Your proof of value is missing

The second most common denial reason is missing documentation, and nine times out of ten the missing document is proof of value. The carrier wants an invoice or order confirmation showing what the item was worth. Without it, the claim sits open or gets denied.

This is where manual processes quietly bleed money. One ShipScience customer, an aftermarket luxury accessories brand, had $120,000 in claims stalled with UPS because no invoice proof had been attached. Once the documents went in, the money followed within 30 days.

Two details worth knowing. With UPS you cannot attach proof of value during filing. You have to wait for the carrier to accept the claim, then log back in and attach it. Forget that second step and you never get paid. And if you are filing as a third party or as the receiver, the carrier may ask for a shipper waiver proving the original shipper authorized you to file.

Reason 3: Your packaging did not meet the carrier’s requirements

For damage claims, there is a denial reason no software can fix. If the carrier decides the item was not packed to its requirements, the claim gets denied. Robinson’s example: shipping a shower door in a big box and hoping for the best.

This is a business decision, not just a claims problem. Spend a little more on packaging, or accept the damage risk, the upset customers, and the denied claims. Shippers with damage rates climbing toward 20 percent should be looking at package engineering, not just filing more claims. FedEx even offers a free package engineering service that tells you exactly how to pack each product.

How automation changes the math

ShipScience connects to the carrier systems and the shipper’s business systems, creating what Robinson calls a single point of parcel truth. From there it watches every shipment as it goes out the door. If a package was supposed to arrive and shows no movement days later, that is a non-POD, no proof of delivery, and it is time to file.

Because the system is connected to the ecommerce platform, it knows what was in the box, pulls the value and description, generates the proof-of-value PDF, and files, usually within 24 hours. Every claim goes through a submission checklist, so nothing files half-finished. It even works behind manual processes, finding and cleaning up claims a person or a competing tool already filed.

The ROI stories are hard to ignore. A designer apparel brand that was missing roughly 90 percent of its non-POD claims recovered over half a million dollars in the first 14 days, and passed $1.25 million within about three months. All hands off on their side.

The number finance never sees

Robinson’s point for CFOs: finance sees the claims that got paid. It never sees the unpaid and denied ones. That gap is a hidden liability sitting on the books, and most companies have no idea how big it is. His suggested questions for ops: what is our single source of truth for parcel data, what KPIs drive our decisions, and what share of our shipping spend is actually addressable?

Where to start

Connect your UPS or FedEx billing data to a free analysis and let it tell you exactly what the opportunity looks like. That one exercise justifies, or rules out, any further investment.

Small shippers can do this by hand. At around 100 boxes a week, a shared Google Sheet that tracks every shipment against the filing deadlines will get you there. Once you are in the thousands of shipments a week, the sheet breaks and it is time to automate.

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This post is based on the Logistics Remix episode “Fixing Shipping with Data” with Anthony Robinson of ShipScience. The views are the guest’s and the host’s own.