Excess, shortage, and damage in shipments: how to handle them?
Not all shipments arrive in perfect condition. Disputes or discrepancies may arise between you and the carriers. In such cases, you need an OS&D report to clarify the actual status of your goods. Now, let's take a closer look.
Meaning of OS&D
5 types of OS&D claims
2 key points in OS&D claims
What is excess, deficiency, and damage (OS&D)?
OS&D is an abbreviation that stands for excess, shortage, and damage. These terms are used to describe discrepancies that can occur when shipping and receiving goods. All three refer to the quantity of goods shipped or their quality upon delivery. They primarily mean:
Excess: The quantity of goods received exceeds that specified in the bill of lading.
Shortage: The quantity of goods received is less than that specified in the bill of lading.
Damage: The quantity of goods is correct, but there is damage. The damage may be visible externally or hidden internally.
OS&D inspection helps ensure order accuracy. If a delivery error occurs, it can be detected immediately and a claim filed. Furthermore, in some cases, damaged or lost goods can raise compliance and legal liability issues. OS&D inspection can provide the evidence and records necessary to support legal requirements.
Common Types of OS&D Claims
Claim for visible damage
This occurs when there is obvious damage to the goods. For example, you purchase a batch of socks and upon opening the package, you find visible rips, tears, or stains. In this case, it's also necessary to take a large number of photographs to document the damage.
Claim for hidden damages
Damage to the goods is not obvious. It can only be discovered after unpacking the inner packaging. Let's say you buy a batch of televisions. They appear to be in perfect condition from the outside, but you only discover a cracked base after unpacking them all. In such a situation, if you've already signed the bill of lading, it may be even more difficult to obtain compensation than for visible damage.
Claim for habitual and hidden shortages
A common shortage refers to a shortage of quantity that is easily noticeable, such as when you order 500 sweatshirts but only receive 450.
Hidden deficiency refers to a product shortage that doesn't immediately catch the eye. For example, you purchase 1,000 screwdrivers and only discover a shortage of 5 when you're launching a product. Hidden deficiency is difficult to prove in claims due to the long lead time before discovery, and the compensation rate is also very low.
Claims for loss
This refers to the possibility of the entire shipment being lost due to theft or similar reasons during transit. Claims of this nature are usually easy to file. Carriers typically have a week to locate the lost goods, and if they can't, compensation can be obtained quickly. Many people also choose cargo insurance to prevent this loss.
Claims for rejected shipment
If the goods are damaged, incorrect, or delayed, they may be rejected. For international shipments, since refusal of acceptance may result in additional shipping costs and fees, it's important to discuss with your supplier where the rejected goods should be sent.
2 key points in OS&D claims
When filing a claim, it is worth keeping the following 2 points in mind.
Claim requirements
The BOL specifies all the detailed information about the goods, including item names, quantity, price, etc. If the BOL matches the actual condition of the goods during inspection, you can sign the BOL to ensure the goods are in good condition. If there are discrepancies, you can note them on the bill of lading and then issue an OS&D report to file a claim.
OS&D Report
This is a document completed by the recipient upon receiving the shipment. This report provides a complete account of any discrepancies in the goods received, such as damage or quantities different from what was stated on the BOL. Both the driver and the carrier receive a duplicate copy of the OS&D report for their records.
The report mainly includes the following information.
Basic product information, such as name, quantity, size, value, etc., must match the information on the bill of lading.
Shipment details, such as carrier name, vehicle number, driver information, and transportation route.
Delivery details. The report must include the date, time, and place of delivery of the goods, as well as the recipient's signature.
Description of the problem. The report should clearly describe any problems that arose, including whether the goods were surplus, missing, or damaged, as well as the nature and extent of the problems.
Supporting evidence. The report should include any evidence related to the issues, such as photos, videos, delivery receipts, photos of the packaging condition, etc.
Other relevant documents. Any documents related to the delivery of the goods and any issues, such as packing lists, bills of lading, or transport contracts, should also be included in the report.
Accuracy and detail are crucial when completing an OS&D report, as they can impact subsequent corrective actions and legal liabilities. Here's an example for your reference.
In addition, the Carmack Amendment regulates some cases in which the carrier may not be liable for compensation. These include natural disasters, war, government intervention, breach of contract by the carrier, or the nature of the goods themselves, such as when the carrier has taken certain protective measures for perishable goods.
Claim deadline
Filing a cargo claim is a process that requires swift action. In most cases, you can file most types of cargo claims within nine months of delivery. It's important not to delay, as the longer you wait, the more difficult it will be to provide evidence and the less likely you are to receive compensation.
Please note that the deadline for claims for concealed damage is 15 days after delivery, while claims for refused shipments must be filed within 5 days.
All of the above are post-processing procedures. Not only do they consume time and effort, but they can also affect your relationship with the supplier. Therefore, the best way to avoid this situation is to conduct a thorough inspection of the goods before they leave China.
Because, whether you're a large or small factory, quality issues can arise. By conducting quality inspections in China, you can quickly identify product issues, control defect rates, and ensure that the products you receive meet your quality requirements.
