For Amazon FBA sellers, few scenarios are more frustrating than shipments going missing after UPS pickup. When this occurs, understanding liability determination, initiating claims, and recovering losses become critical operational skills. This comprehensive guide examines UPS lost shipment protocols, from responsibility assignment to compensation calculation, while offering practical risk mitigation strategies.
Determining Liability After UPS Pickup
When shipment tracking stalls at "Pickup Scan" status for over seven business days or Amazon fulfillment centers report non-receipt, sellers should immediately suspect UPS lost shipments. Liability depends entirely on the shipment's last verifiable location.
UPS assumes responsibility from pickup scan until Amazon's receiving scan. Pre-delivery disappearances fall under UPS jurisdiction, while post-delivery issues require Amazon's FBA shipment investigation process. Sellers must verify the last scan location before proceeding with claims.
Declared Value Protection for High-Value Inventory
UPS's standard compensation offers limited protection—$100 per shipment or $20 per pound, whichever is lower. For electronics, luxury goods, or other premium products, this often proves inadequate. The Declared Value for Carriage service provides enhanced coverage.
Premium rates typically range from 0.3% to 0.8% of declared value. Shipments exceeding $1,000 valuation require commercial invoices. For example, $5,000 worth of electronics with 0.5% coverage would incur $25 in fees but guarantee full valuation reimbursement if lost—a significant improvement over base compensation.
The Claims Process: Documentation and Timelines
Successful claims require meticulous documentation and strict deadline adherence:
- Shipping Evidence: UPS tracking numbers with pickup scans showing date/location
- Inventory Proof: Commercial invoices with FBA shipment IDs, SKUs, quantities, and unit prices plus packing lists
- Amazon Verification: Shipment Discrepancy Reports confirming non-receipt
- Communication Records: UPS support tickets and Amazon case responses
Claims must be filed within 120 days of pickup. Sellers can submit directly through UPS's online Claims Center or via freight forwarders (requiring additional authorization documentation). Standard processing takes 45-60 business days, though declared value claims may qualify for 20-30 day expedited review.
Compensation Calculations: Actual Loss vs. Declared Value
UPS applies a "lower of" principle when determining payouts. When actual costs fall below declared values, reimbursement reflects real losses. When actual costs exceed declarations, payments cap at insured amounts. For example:
- Declared value: $3,000 (with $24 premium)
- Actual cost: $2,800
- Payout: $2,800 + documented shipping fees
Without declared value protection, the same $2,800 loss would yield only $100. Experts recommend purchasing coverage for all shipments exceeding $500 in value.
Proactive Risk Mitigation Strategies
Beyond claims management, sellers should implement these preventive measures:
- Reinforce packaging with double-walled corrugated boxes and protective cushioning
- Verify FBA labels perfectly match UPS shipping manifests
- Consider supplemental insurance for high-risk shipments (1-1.5% of value)
While UPS's liability framework provides clear guidelines, its lengthy processing times and stringent evidence requirements present operational challenges. Savvy sellers balance declared value costs against potential losses, maintaining contingency funds to offset claim resolution delays.