Understanding Inventory Damage in Transit
When goods are shipped from a supplier, warehouse, or manufacturer, they can sometimes arrive damaged, broken, or compromised . This is a common issue in supply chain and logistics management.
The question “What happens when your inventory gets damaged in transit?” reflects a real-world problem that can affect business profitability, customer satisfaction, and operational efficiency .
This article will guide you through:
- Who is responsible for damaged goods
- How to file a claim
- What preventive steps to take
- And how to handle returns or replacements
Who Is Liable When Inventory Gets Damaged?
Determining liability is the first step in resolving a damaged inventory issue. Responsibility typically depends on:
1. Incoterms (International Commercial Terms)
If you’re importing or exporting goods, Incoterms define who is responsible at each stage of the shipping process. Common terms include
- FOB Shipping Point : Buyer assumes risk once goods leave the seller’s warehouse
- FOB Destination : Seller is responsible until goods reach the buyer
- CIF (Cost, Insurance, Freight) : Seller pays for insurance and freight
- DDP (Delivered Duty Paid) : Seller handles everything, including customs and delivery
2. Carrier Liability
If goods are damaged during transit, the shipping carrier (e.g., FedEx, UPS, DHL, USPS, or freight company) may be liable, depending on:
- Whether the shipment was insured
- Whether the damage was due to mishandling or negligence
- The declared value of the shipment
Steps to Take When Inventory Is Damaged
Here’s a step-by-step plan to handle damaged inventory effectively:
1. Inspect the Shipment Immediately
- Check for visible damage on the packaging before signing for the delivery
- If the package is damaged, note it on the delivery receipt or refuse the shipment if possible
2. Document the Damage
- Take clear photos of the damaged packaging and contents
- Keep packing slips, invoices, and shipping documents
- Record any notes from the delivery driver
3. Notify the Seller or Supplier
- If the item was shipped FOB Shipping Point, contact the seller immediately
- Provide photos and documentation to support your claim
4. File a Claim with the Carrier
- If the shipment was insured, contact the carrier to initiate a damage claim
- You’ll typically need:
- Proof of damage
- Invoice value
- Delivery receipt
- Insurance policy details
5. Contact Your Insurance Provider
- If you purchased freight or cargo insurance , notify your insurer as soon as possible
- They will guide you through the claims process and may require a formal inspection
6. Decide on Next Steps
- Return the damaged goods (if acceptable)
- Request a replacement or refund
- Negotiate a partial credit if only part of the shipment is damaged
Real-World Scenarios
Scenario 1: E-commerce Seller Receives Broken Products
Situation: An Amazon FBA seller receives a shipment of 100 units, but 10 arrive broken.
Solution:
- Contact the supplier and request a partial refund or replacement
- If shipped FOB Destination, the supplier is responsible
- If insured, file a claim with the carrier or insurance provider
Scenario 2: Retailer Receives Crushed Packaging
Situation: A retail store receives a pallet of goods with crushed boxes.
Solution:
- Document the damage before unpacking
- Contact the carrier for a claim
- If packaging is intact but contents damaged, contact the supplier
Natural Language Phrases
- “What to do if my shipment arrives damaged”
- “How to file a claim for damaged inventory”
- “Who is responsible for damaged goods in transit”
- “Can I get a refund for damaged inventory?”
- “What happens if my package is damaged during shipping?”
❓ FAQ: Common Questions About Damaged Inventory
Q: Who is responsible if inventory is damaged in transit?
A: It depends on the Incoterms agreed upon. Typically, the buyer assumes responsibility once the goods leave the seller’s warehouse under FOB Shipping Point. Under FOB Destination, the seller remains liable.
Q: Can I get a refund if my inventory is damaged during shipping?
A: Yes, if the damage is documented and the seller or carrier is liable. You may also file a claim with your insurance provider.
Q: How do I file a claim for damaged inventory?
A: Contact the carrier or your insurance provider, provide documentation (photos, receipts, delivery notes), and follow their claims process.
Q: Should I accept a damaged shipment?
A: Only if you’ve documented the damage. If the damage is severe, you may refuse the delivery or accept it “with exception” to preserve your right to file a claim.
Q: Can I return damaged inventory?
A: Yes, if the seller or supplier is responsible. Always communicate the issue and provide proof of damage before returning.
Final Thoughts
Damage during transit is an unfortunate but manageable part of supply chain operations. Knowing what happens when your inventory gets damaged in transit empowers you to act quickly, file claims effectively, and protect your business from unnecessary losses.
By understanding Incoterms, insurance options, and claim procedures , you can turn a potential setback into a controlled resolution.
