What it means
When a shipment arrives damaged, the first hours matter. Packaging may be discarded, goods may be moved or a delivery receipt may be signed without a note, which makes it harder later to show where damage happened and which items were affected.
A practical evidence process starts at receipt. Record the shipment reference, time of delivery and visible condition of the outer packaging.
Photograph the label, seals, carton, pallet and contents before unpacking further when safe and practical, and make a clear exception note on the delivery record for visible damage. For concealed damage, document discovery promptly and follow the carrier's notice process.
Match the goods to the transaction. A sales invoice can support value, while a packing list identifies items and quantities, and serial numbers, weights, inspection records and repair estimates can distinguish transit damage from pre-existing defects.
Keep the original packaging when a carrier may need to inspect it, and for damaged parcels capture photos of the outer packaging, inner packing and affected goods before repacking or disposal, recording the tracking number so each photo connects to the shipment. Check the contract or airway bill for claim deadlines, liability limits, exclusions and which party has standing to file.
Insurance may follow a separate process, and the amount recoverable does not necessarily equal the sale price, because the carrier's liability may be capped or measured on another basis. A delay claim needs different proof from a breakage claim: show the promised service, the actual handover and delivery times, and the documented financial impact if the terms permit recovery.
A customer complaint alone does not establish carrier liability. Managers should track both claim outcomes and underlying failures, because even a successful reimbursement does not restore a disappointed customer or recover time spent reworking the order.
In practice
Real-world examples.
Example
A receiver photographs a crushed corner before opening a delivered carton and notes the visible damage on the carrier's handover record. The photos include the label and tracking number so they link to the shipment.
Example
A seller matches a missing box to the packing list, shipment weight and tracking scan, then files through the party named in its carrier contract. It keeps the invoice and the delivery record together in one claim folder.
Example
A fragile machine arrives with internal damage. The team retains packaging, photographs serial numbers and obtains a repair estimate before submitting a claim, so the carrier can inspect the impact point.
Formula
Calculation
Potential claim value = Supported loss in value + Contractually recoverable costs - Salvage value or offsets
Worked example. A fictional shipment contains two units beyond repair with a supported loss in value of $5,000. Contractually recoverable disposal costs are $300, and salvage is worth $800.
- Indicative claim = $5,000 + $300 - $800 = $4,500.
- If the carrier's contract caps liability at $3,000 for the shipment, the most the claim could recover is $3,000, however well the loss is documented.
Actual recovery can be lower because of a liability cap, exclusions, proof gaps or the contract's valuation basis. For repairable goods, use the supported repair cost or residual loss rather than adding a full goods value and repair costs for the same damage.Case study
Seen in the real world.
This illustrative and entirely fictional example follows Cedar Displays, an invented maker of shop fixtures. A pallet of display panels reached a customer with torn wrapping and two chipped panels, and the driver asked for a quick signature. The customer noted the damage, photographed the pallet before unpacking and saved the wrapping, and Cedar matched the two panels to the packing list, order and production photos. Cedar obtained a repair quote, checked its freight terms and filed within the carrier's stated claim window.
The carrier asked for an inspection, and the saved packaging helped clarify the impact point. Cedar did not promise the customer that the carrier would pay; it arranged a replacement on its own service timetable and treated the claim as a separate recovery process. Afterwards the company changed pallet corner protection for future shipments and added a one-page evidence checklist to its receiving instructions. It also began logging claim outcomes by carrier and lane, so that repeated damage on one route would show up as a pattern rather than a series of unrelated complaints.
Watch out
Common mistakes.
- Discarding packaging and delaying photographs until no one can show the delivered condition.
- Filing the sales invoice total for an entire shipment when only identified items were affected or a contract limit applies.
- Assuming a customer service replacement and a carrier claim are the same decision. Protect the customer while documenting the separate recovery.
Questions
People also ask.
Can I claim for concealed damage found after delivery?
Often there is a process, but notice periods and proof requirements may be short. Check the actual carrier terms and document when and how it was discovered.
Is a photo enough on its own?
Usually not. Link it to shipment identity, timing, affected items, value and the relevant terms.
Who files the claim: seller or buyer?
The freight contract and delivery terms decide who has the right and responsibility. Agree the filing route quickly to avoid missing a deadline.
From the founder's library
Take it further with the book.
Build your financial confidence beyond this definition. Shihan's full-length guide, Accounting Fundamentals, takes the same plain-English approach and turns it into a complete, practical playbook for non-finance managers, business owners and students - with chapter-end quiz answers and presentation slides included.
25% off with code MMHQ25, applied at checkout. Priced in USD - checkout may show the equivalent in your local currency.
View the book and save 25%