|
Transportation
& Logistics Council, Inc. |
Q&A – Archive II |
1) 3PL's - Broker or Freight
Forwarder?
4) 3PL's
- Motor Carrier, Broker or Freight Forwarder?
5) Air
Freight Forwarding - Legal Requirements
6) Air
Waybills - Declared Value
7) Bankrupt Broker - Payment to
Carriers
8) Bankrupt
Carrier - Missing Freight
9) Bills
of Lading - Alternate Forms
10) Bills
of Lading - Carrier v. Shipper
11) Bills
of Lading - False Information
12) Bills
of Lading - Import Shipments
13) Bills
of Lading - Proper Shipper's Name
14) Bills
of Lading:Rail v. Motor Carrier
15) Bills
of Lading - Required Content
16) Bills
of Lading - Seal Numbers
17) Bills
of Lading - Section 7 - "Non-recourse" Provision
18) Bills
of Lading - Shipper Load & Count
19) Bills
of Lading - Shipper's Signature
20) Bills
of Lading - Showing Number of Packages 12
21) Bills of
Lading - SL&C Notations
22) Bills
of Lading - Special Instructions
23) Bills
of Lading - Straight v. Order
24) Brokers
- Definition & Registration Requirements
25) Brokers
- Liability for Failure to Pick Up Shipment
26) Brokers
- Liability for Loss or Damage
27) Brokers
- Liability for Loss or Damage
28) Brokers
- Liability Under Carmack Amendment
29) Brokers
- Record Keeping Requirements - Confidentiality
30) Brokers
- Registration Requirements
31) Brokers
- Registration Requirements
32) Carmack
Amendment - Applicability
33) Carrier
Defenses - Act of God
34) Carrier
Liability - Damage Caused by Double Stacking
35) Carrier
Liability - Damage to SL&C Shipment
36) Carrier
Liability - Defenses - Improper Packaging
37) Carrier
Liability - Dropped Trailers
38) Carrier
Liability - Goods Refused by Customer 22
39) Carrier
Liability - Misdelivery
40) Carrier
Liability - Misdelivery
41) Carrier
Liability - Misdelivery - Impostor Theft
42) Carrier
Liability - Multiple Carriers
43) Carrier
Liability – Parcel and Express Carriers
44) Carrier
Liability - Protective Service - Ice Cream
45) Carrier
Liability - Successor Company
46) Carrier
Liability - Unreasonable Delay
47) Chargebacks
- Late Delivery to Job Sites
48) Claim
Rules and Regulations - Concealed Damage
49) Claims
- Federal Regulations
52) Classification
- National Motor Freight Classification
53) Classification
- NCC Density & Value Guidelines
54) College
Programs in Transportation
55) Contracts
- "Standard Contracts" for Brokers?
56) Contracts
- Confidentiality of Rate Information 33
57) Contracts
- CzarLite Rate Tariffs
58) Contracts
- Fuel Surcharges
59) Contracts
- ICC Termination Act - Waiver of Provisions
60) Contracts
- Incorporation of Uniform Straight Bill of Lading
61) Contracts
- Price Increases
62) Contracts
- Rate Increases and Fuel Surcharges
63) Contracts
- Termination of Oral Agreement
64) Contracts
- Waiver of Carmack Amendment Provisions
65) Contracts
- Waiver of IC Act and Regulations
66) Contracts
- Waiver of Statutory Provisions
68) Damages
- Cost of Shipping Replacement Shipment
69) Definitions
- "Shippers Load and Count" 38
70) Definitions
- Common v. Contract Carrier
71) Delay
- Penalties for Late Delivery
72) Deregulation
- Sources of Information
73) Detention
Charges - Liability
74) Detention
Charges - Who is Liable?
75) Dot.com
Entities - Federal Regulatory Requirements
76) Educational
Programs and Materials
77) Exemptions
- Fresh Fruits & Vegetables
78) For
Hire Trucking - Federal Regulations
79) Freight
Charges – “Pack & Ship” - Who is Liable for Charges?
80) Freight
Charges - Accessorial Charges in Tariffs
81) Freight
Charges - Bankrupt Carrier
82) Freight
Charges - Broker Liability When Shipper Fails to Pay
83) Freight
Charges - Delayed Shipment
84) Freight
Charges - Detention -Free Time for Loading
85) Freight
Charges - Disputes - Time Limits
86) Freight
Charges - Double Payment Liability
87) Freight
Charges - Federal Laws
88) Freight
Charges - Interline Shipments
89) Freight
Charges - Liability for Demurrage
90) Freight
Charges - Liability for Payment
91) Freight
Charges - Liability of Consignee
92) Freight
Charges - Liability to Carrier When Forwarder Fails to Pay
93) Freight
Charges - Misclassification
94) Freight
Charges - Multiple Carriers
95) Freight
Charges - Offsetting L&D Claims
96) Freight
Charges - Shipment Held Hostage
97) Freight
Charges - Shipper’s Liability
98) Freight
Charges - Statute of Limitations
99) Freight
Charges - Tariff Rules
100) Freight
Charges - The "Non-Recourse" Provision
101) Freight
Charges - The "Non-Recourse" Provision
102) Freight
Charges - The "Non-Recourse" Provision
103) Freight
Charges - Time Limits
104) Freight
Charges - Time Limits for Billing & Collection
105) Freight
Claims - Acceptance vs. Rejection of Damaged Shipments
106) Freight
Claims - Additional Installation Charges
107) Freight
Claims - Administrative Expenses
108) Freight
Claims - Administrative Expenses
109) Freight
Claims - Bill of Lading Not Signed by Driver
110) Freight
Claims - Burden of Proof
111) Freight
Claims - Carrier Inspection
112) Freight
Claims - Clear Delivery Receipt
113) Freight
Claims - Concealed Shortage
114) Freight
Claims - Damaged Cartons - Cost of Repackaging
115) Freight
Claims - Defenses - Insufficient Packaging
116) Freight
Claims - Delay - Special Damages
117) Freight
Claims - Detective Services to Find Missing Package
118) Freight
Claims - Dropped Trailers
119) Freight
Claims - Duty to Mitigate Damage
120) Freight
Claims - Is UPS a Common Carrier?
121) Freight
Claims - Liability Limitation - Used Machinery
122) Freight
Claims - Liability of Successor Company
123) Freight
Claims - Measure of Damage - Invoice Price vs. Manufacturing Cost
124) Freight
Claims - Measure of Damages - Invoice Price
125) Freight
Claims - Measure of Damages - Invoice Price
126) Freight
Claims - Measure of Damages - Replacement Cost
127) Freight
Claims - Mitigation of Damage
128) Freight
Claims - Multiple Claims on Same Shipment
129) Freight
Claims - Notations on Delivery Receipts
130) Freight
Claims - Palletized Shipments - Shortage
131) Freight
Claims - Parcel Carriers - Limitation of Liability
132) Freight
Claims - Recovery of Freight Charges
133) Freight
Claims - Requirement to Pay Freight Charges First
134) Freight
Claims - Risk of Loss in Transit
135) Freight
Claims - Salvage - “Safety item”
136) Freight
Claims - Salvage - Damaged Roll of Carpet
137) Freight
Claims - Shipment Lost for 3 Months - Mitigation of Loss
138) Freight
Claims - Shipment Missing for Two Months
139) Freight
Claims - Shipper Load and Count (SL&C)
140) Freight
Claims - Shortage - Pallets v. Carton Count
141) Freight
Claims - Shortage v. Overage
142) Freight
Claims - Shortage vs. Overage
143) Freight
Claims - Shortage vs. Overage
144) Freight
Claims - Shortages - SL&C Shipments with Stop-Offs
145) Freight
Claims - Shortages - Stretch Wrapped Shipments
146) Freight
Claims - Special Damages
147) Freight
Claims - Standard Salvage Amount
148) Freight
Claims - Statistics
149) Freight
Claims - UPS - Delivery Receipts
150) Freight
Claims - Who Should File
152) HazMat -
Liability for Clean-up Costs
153) HazMat
Shipments - Packaging/Labeling Requiremens
154) Hijacking
- Federal Crime - Hobbs Act
155) Household
Goods - Claims - Time Limits
156) Household
Goods - Claims Assistance
157) Household
Goods - Liability Limitations
158) Household
Goods - Liability Limitations
159) Household
Goods - Tariff Rates
160) ICC
Termination Act of 1995
161) International
Air Freight - Montreal Protocol #4
162) Internet
Logistics Companies
164) Invoices
- Billing Customers for Freight Charges
165) Liability
- Carrier v. Warehouse
166) Logistics
- Books and Educational Materials
167) Measure
of Damages - Invoice Value vs. Cost
168) Measure
of Damages – Refused Merchandise
169) Measure
of Damages - UPS Claims
170) Missed
Delivery Appointments - Liability for Fines
171) Motor
Carriers - Record Retention Regulations
172) Offsetting
Claims Against Old Unpaid Freight Charges
173) Overcharges
- Delay in Collecting
174) Owner
Operators - Federal Leasing Regulations
175) Rail -
Carrier Liability - Diverted Shipment 94
176) Rail -
Derailment - Special Damages
177) Receiving
Procedures - Opening Boxes for Inspection
178) Receiving
Procedures - Verification of Carton Count
179) Record
Retention – Shipping Documents
180) Refused
Freight - Purchasing Refused or Undelivered Freight
181) Refused
or Undeliverable Freight - Sale by Carrier
182) Refused
Shipments - Sale by Carrier
183) Released
Rates - National Motor Freight Classification
184) Return
Shipment - Risk of Loss
185) Sales
Tax on Transportation Services
186) Seals -
Truckload Shipments
187) Shipper
Liability - Injury to Third Parties
188) Shipper's
Domestic Truck Bill of Lading
189) Shortages
- SL&C v. SLDC Shipments
192) Tariffs
- Duty to Furnish on Request
193) Tariffs
- Limitations of Liability
194) Tariffs
- No Duty to Provide Changes or Revisions
195) Tariffs
- Rules Governing Claims
196) Time
Limits - Air Freight Carriers
197) Time
Limits - Claims Against Air Freight Forwarders
198) Time
Limits - Contract Carriers
199) Time
Limits - Freight Charges on Shipment to Canada
200) Time
Limits - Payment of Freight Charges
Q: We are
primarily a warehousing company, however, we have a transportation program
where we act, we believe, as a broker, in arranging the consolidation of LTL
orders from various shippers into TL routes via contract and commercial
carriers, on a published "sailing" schedule, in order to reduce the
cost of transportation for our customers.
We want to be in the business of transportation, so we are looking
toward providing more complete services.
First, I need your confirmation that in the performance
of the services described above, we are legally acting as a freight
broker. We do have a brokerage license.
Second, if we are paying the carriers and billing our
customers (the shippers) for freight (at guaranteed, all‑inclusive
rates), can our customer withhold payment or deduct from future freight bills
for a loss or damage shipment? Can we
do the same to the carrier? I do not
believe either practice is legal, but I cannot find the code.
Assuming this is not legal, is it therefore our
responsibility to file the claim with the carrier since we arranged the
transportation? If we do not have to
file the claim, but if we do want to offer the service of handling the claims
for our customers, what is the "right and professional" way to handle
the customer's credit for loss or damage received?
A: Is sounds as
though you are providing services that fall into the category of a
"freight forwarder". The fact
that you are consolidating shipments for one or more shippers, and using the
services of a motor carrier, fits more within the definition of a freight
forwarder, see Section 13.0, Liability of Freight Forwarders and Intermediaries
in "Freight Claims in Plain English" (3rd Ed. 1995).
As a forwarder, you would be assuming liability for loss
or damage in the same way as if you were a carrier. In the freight forwarder relationship there are really two
contracts of carriage: between the shipper and the forwarder, and between the
forwarder and the carrier. Thus, you
would be liable to the shipper for the loss or damage, and would have to file
your own claim against the motor carrier.
As far as setting off freight charges against loss and
damage claims, this is a common practice and is not "illegal". If you want to avoid this problem, the best way
is to cover it in a written transportation agreement with your customers.
Q: I'm a 3PL who is using common carriers and household
goods carriers to deliver large items to residences. Do I need a broker’s license?
If I do, where can I get one?
A: The
definition of a "broker" is found in the FMCSA (formerly ICC or FHWA)
regulations at 49 CFR Part 371, and provides:
(a) "Broker" means a person who,
for compensation, arranges, or offers to arrange, the transportation of
property by an authorized motor carrier. Motor carriers, or persons who are
employees or bona fide agents of carriers, are not brokers within the meaning
of this section when they arrange or offer to arrange the transportation of
shipments which they are authorized to transport and which they have accepted
and legally bound themselves to transport.
* * *
(c) "Brokerage" or "brokerage
service" is the arranging of transportation or the physical movement of a
motor vehicle or of property. It can be performed on behalf of a motor carrier,
consignor or consignee.
If your activities fall within the definition of a
"broker", the Interstate Commerce Act requires that you must
"register" with the Department of Transportation (FMCSA), 49 U.S.C.
Sections 13901 and 13904. This registration requirement replaces the former
statutory requirement to obtain a "license" from the ICC. Brokers holding
licenses from the ICC as of December 31, 1995 were "grandfathered"
and deemed to be registered under the new law, 49 U.S.C. 13905.
The FMCSA has established regulations governing
applications for broker registration that are published at 49 CFR Part 365. Application forms (Form OP-1) are available from the
FMCSA, 400 Virginia Ave. SW, Washington, DC, 20590, phone (202) 358-7000, and
are now available through the FMCSA web site at www.fmcsa.dot.gov
(select “Licensing Forms”). I would
suggest, though, that you consult an experienced transportation attorney.
Q: We utilize a 3PL to manage the process of
getting our merchandise from our vendors into our DC's. From what I understand
the 3PL is merely acting as broker on these loads and typically is not liable
for loss and damage outside of their negligence or contractually assumed
liability. My question is, what if, on the Bill of Lading, the shipper shows
the 3PL as the carrier, when in reality the load is actually brokered to
another carrier, who signs the BOL with aforementioned noted. By allowing the
carriers to do this, has the 3PL held itself out as a motor carrier, and thus
liable as a motor carrier under the Carmack Amendment?
A: There is no black and white rule for
determining whether an intermediary is acting as a broker or a carrier. Each case turns on the individual facts: the
representations, which were made, the relationship of the parties, the course
of dealing, etc. ‑ as well as the documents. I am not aware of any case that says that a broker becomes liable
as a carrier merely because it was shown in the "carrier" space on a
bill of lading.
Your
question once again points out the importance of having carefully drawn,
written agreements between shippers, intermediaries and carriers.
Q: We are in the process of revisiting our
agreement with our 3rd party logistics provider. In referencing one of your
manuals, Protecting Shippers Interests,
am I to assume that the legal status of an asset based 3PL, could actually be
any of the following depending on the transportation arrangement:
1. Motor carrier‑ when they arrange for
their affiliated motor carrier to pickup a shipment
2. Broker‑ when they arrange for a
carrier not affiliated with them to pickup a full truckload
3. Freight Forwarder‑ when they arrange
for a LTL carrier, such as CF, to pickup and deliver a shipment
A: You are correct. Third party logistics providers may wear a number of different
"hats" and often do. That is
why it is so critical to make sure that you have well-drafted contractual
agreements with 3PL's and also that you check them out to make sure they are
properly licensed and registered as required by applicable laws and
regulations.
Q: We are trying
to build an airfreight company in Greece and we are looking for International
Law about establishing that company. We
would like to be informed about all the regulations are needed.
A: The basic
requirements for doing business will be governed by the local laws of the
country where your principal office is located.
As for international laws, transportation of passengers,
baggage and air freight is governed by international treaties, namely the
Warsaw Convention and the Montreal Protocol No. 4 (which amends the Warsaw
Convention, and has been ratified by most major trading nations).
Most air carriers participate in the International Air
Transport Association (IATA), which establishes various rules and regulations
governing transportation of air cargo.
Q: I have a
question about the air waybill. On the
international air waybill and international house air waybill, there is a space
called "Declared Value for Customs".
Is this a mandatory field that one must fill in with the value? Which FAA or IATA rules and/or regulations
refer to this subject?
A: The International Air Transport Association (IATA) air
waybill used in international air freight contains two boxes for entering a
value.
The "Declared Value of Carriage" is used when
the shipper wishes to declare a value of the goods which is in excess of the carrier's
limitation of liability ($9.07 per lb. under the Warsaw Convention, and
slightly higher under Montreal Protocol #4) and to obtain additional liability
coverage.
The "Declared Value for Customs" is used if
the goods are subject to duty (import taxes) by the destination country. The requirements for entering a value in the
"customs" box vary depending on the destination country.
IATA publishes the "Cargo Services Conference
Resolutions Manual" which contains the air waybill forms, explanations,
rules, etc. It is available from IATA,
800 Place Victoria, P.O. Box 119, Montreal, Quebec, Canada H4Z 1M1.
Q: We have a
situation where a truck broker that we use has gone out of business. I
understand from the previous Q&A's that you have published that the credit
for these services was extended by the trucker to the broker. As a result, we are not obligated to pay
twice for the same shipment. On shipments where we have not paid as yet, the
question has come up if it would be permissible to pay the trucker what he
negotiated with the broker. Then also
pay the broker for the difference between what we were originally charged to
cover his commission.
I'm worried that if we did that, the broker or their
bank could still come after us for the full price because the original contract
(Bill of Lading) was with them. Would
there be an appropriate document that could be created to relieve us from that
risk?
A: In the
situations where you have not yet paid the defunct broker, you may pay the
carrier directly, but you must be extremely careful to avoid having the broker
(or its assignee or trustee, etc.) come after you for the freight charges. I would not recommend that you pay the carrier
unless you get a written authorization from the broker to pay the carrier
directly or a "hold harmless" and indemnity agreement from the
carrier. It would also be advisable to
get a signed release from both parties.
Q: A
furniture company gave a carrier a sofa which was to be shipped to a receiving
warehouse in my town for me. I
requested that they use this carrier on my purchase order to the furniture
company. The carrier filed bankruptcy
and it is unknown where my sofa is. If
this sofa is lost who is responsible for it?
A: I
have the following suggestions:
1. Try
to contact the attorney for the bankrupt carrier (either the debtor in
possession or for the trustee) and explain the problem to them. See if they can
direct you to someone who can help trace your shipment.
2.
File a claim with the bankruptcy court as soon as possible (you can
usually get forms from either the attorney or from the court clerk).
3. If you can't find your shipment, and your
claim is not paid within some reasonable time, you may be able to collect from
the carrier's "BMC 32" cargo insurance, which covers shipments up to
$5,000. This is a federal cargo
insurance coverage requirement for motor common carriers, and you can get
information from the Federal Motor Carrier Safety Administration (formerly
the Federal Highway Administration) in
Washington, D.C. [See "Freight
Claims in Plain English" (3rd Ed. 1995) at Section 12.1.]
Q1: Would
current law support a different bill of lading form layout than described in the
National Motor Freight Classification? This BOL will have the same information
with an area for Bar Coding and a supplemental page or continuation page.
Q2: Could
someone describe the Voluntary Interindustry Commerce Standards (VICS) bill of
lading?
A: At one time, most motor carriers were participants in
the National Motor Freight Classification and thus were required to use the
Uniform Straight Bill of Lading published in the NMFC. With deregulation, the
abolition of the "filed rate doctrine", and the elimination of the
ICC, there really is no law or regulation that mandates any particular form of
the bill of lading. Today, many
shippers have adopted their own forms, and there are many different versions of
the "bill of lading" in current use. Carriers generally favor use of
the Uniform Straight Bill of Lading as set forth in the NMFC. However, the NMFC bill of lading contains
"incorporation by reference" language that makes the Classification
and the carrier's (unfiled) tariffs part of the contract of carriage. These tariffs usually contain liability
limitations, accessorial charges, late payment penalties and other rules that
are unfavorable to the shipper.
One shipper‑friendly bill of lading is the
"Shipper's Domestic Truck Bill of Lading" which was developed by the
Transportation Consumer Protection Council.
This is available in a "kit" from the Council, which includes
an explanatory booklet, and a form that can be modified or tailored to the
needs of the shipper. For further
information, contact the Council at (631) 549-8984.
The VICS bill of lading has been adopted by some of the
large retailers and is principally intended to establish a uniform format and
to facilitate EDI transmittal of the BOL data.
However, the authors of this BOL adopted what they call the "legal
statements" from the Uniform Straight Bill of Lading in the National Motor
Freight Classification. Thus the VICS
BOL incorporates the NMFC and the carrier's (unfiled) tariffs - an unfavorable
result from the shipper's standpoint. Obviously, if all of your shipments move
under a properly drafted transportation contract, the form and language of the
bill of lading is not critical, because the contract provisions will
prevail. On the other hand, there may
be situations where some shipments are not covered by your contract, so the
VICS BOL language would govern. Also,
use of the VICS form could create ambiguity and/or disputes, which you don't
need.
If your customers should require you to use the VICS
format, my suggestion is to delete the "legal statements" on the face
of the BOL. You may also want to
replace the language with your own text such as: "RECEIVED, SUBJECT TO THE TERMS AND CONDITIONS OF THE
SHIPPER'S TRANSPORTATION CONTRACT IN EFFECT ON THE DATE OF SHIPMENT, WHICH IS
AVAILABLE TO THE CARRIER ON REQUEST.
THIS SHIPMENT IS NOT SUBJECT TO ANY CLASSIFICATIONS OR TARIFFS WHICH MAY
BE ESTABLISHED BY THE CARRIER."
Q: When our drivers
pick up back-hauls, we have them put a sticker on the shippers paperwork
(BOL). Sticker: "Receipt subject
to inspection, correction, and tariffs or note agreements. Driver is not authorized to waive rules or
adjust charges"
We are additionally sending a quote to the
broker/shipper that states $2.50 / lb. limit of liability, dentention
information, shipper, consignor, consignee, rate information and wording
"subject to terms and condition of the Uniform Straight Bill of Lading on
file in carriers office".
If the shippers BOL has terms that we do not
agree with are we bound by any of these rules?
Since we formally did not issue a BOL can we
enforce the $2.50 / lb. limit of liability?
If we do issue a BOL and the shipper will not
sign it or accept it, what is the governing contract or document?
A:
Before I can properly answer your questions, please give me some more
information:
1. Are you an authorized common or contract
carrier (with ICC/FMCSA operating authority), or a private carrier, or what?
2. Are you a participating carrier in the
National Motor Freight Classification?
3. Do you have published tariffs?
4. Are you dealing with shippers or with
brokers?
5. Are these LTL or truckload shipments?
Response:
1. We
are a common and contract carrier.
2. We do
not participate in the NMFC
3. We
have published tariffs. Most of the
shipments we are talking about are loads received via brokers. The tariffs we have published are not sent
to the brokers or shippers. We use the
quotes to settle on a price.
4. We
deal with both shippers and brokers.
Majority are loads from brokers.
5. Most
of the shipments are LTL.
My boss is saying that even if you have a signed
contract with a shipper the judge will not look at the contract if you did not
issue a BOL. In my mind, the contracts
or quotes as we call them, have most of the same information as the BOL. The shipper or broker by signing this quote
is creating a contract for transportation.
When we apply the sticker to the shippers BOL we are alerting them to
our contract and to apply the standard terms and conditions of the Uniform
straight bill of lading. We are only
using their paperwork as a pickup receipt.
I see no problems.
Hopefully this will fill in the missing pieces.
A: The
question of "which bill of lading governs" is a controversial
subject. Shippers generally don't want
to use a carrier bill of lading or the Uniform Straight Bill of Lading from the
National Motor Freight Classification because it incorporates provisions of
carrier's unfiled tariffs which usually contain liability limitations,
accessorial charges, late payment penalties, etc. Unless the shipper demands (and the carrier provides) a complete
copy of its tariffs, the shipper has no way to determine what is in the tariffs
and the carrier can unilaterally modify its tariffs without any obligation to
notify the shipper. Conversely, most carriers want to use a bill of lading that
incorporates their tariff rates, rules, terms and conditions, etc. and don't
want their drivers to accept shipper versions.
A bill of lading can be merely a receipt for the
goods, or it can be a contract - IF it contains contractual language governing
the obligations of the parties.
Regardless of who prepares the bill of lading, if it has the typical
language from the Uniform Straight Bill of Lading, the carrier's tariffs are
usually "incorporated by reference" and would be binding on the
parties.
If the shipper prepares a bill of lading and it
does not incorporate any tariffs, and the carrier accepts the shipment, I would
say that the carrier cannot rely on its tariff provisions. And, I don't think that any stickers or
subsequent notations placed on the bill of lading "after the fact"
would be enforceable.
If the carrier gives a written rate quotation
which contains all of the important terms and conditions, and the shipper
accepts and signs the quotation, it should be an enforceable contract
(regardless of what bill of lading form is used). Note that the provisions of the Interstate Commerce Act, such as
the "Carmack Amendment", time limits and statutes of limitation would
still govern the transportation unless the contract contains an express waiver.
My suggestion would be to use a formal written
transportation contract whenever possible.
You may want to have different contracts when dealing with a shipper vs.
a broker. A properly drafted contract
is the best way to avoid problems and disputes. I suggest that you consult with a qualified transportation
attorney.
Q: Is
it illegal for a shipper to falsify the weight on a bill of lading?
A: Yes, if
it is done "knowingly or with intent to defraud". The statutory provision is found in the Bills of Lading
Act, 49 U.S.C. Section 80116, which applies to bills of lading in interstate
commerce and provides:
§ 80116. Criminal
penalty
A person shall be fined
under title 18, imprisoned for not more than 5 years, or both, if the person...
(2) knowingly or with intent to defraud
(A) falsely makes, alters, or copies a bill
of lading subject to this chapter;
(B)
utters, publishes, or issues a falsely made, altered, or copied bill subject to
this chapter; or
(C) negotiates or transfers for value a bill
containing a false statement.
Q: We are
consolidating products from Singapore to US port‑of‑entry via a
single flight. Once the goods have reached the port, the forwarder will break
bulk and truck to various parts of the States.
Some of the trucking destinations will be shipped in truckload
quantities. Is there legislation in the US that states a requirement to have
individual bill of lading for EACH truckload? Can we use 1 BOL for multiple
truckloads?
A: If the goods
are moving from origin (Singapore) to their ultimate destination(s) in the U.S.
under a through air waybill issued by a foreign air freight forwarder, they
would be covered by the forwarder's air waybill for the entire movement. If the forwarder contracts with one or more
motor carriers for completion of the delivery, the motor carriers would
normally issue bills of lading to the forwarder. However, this is not the shipper's concern, since it contracts
only with the forwarder for the entire door‑to‑door movement.
Q: Company A has a tolling arrangement with
Company B. Once the product is made and drummed. Company A sells the made
product to a customer. The product will be shipped from Company B's warehouse
to a customer using Company A's bill of lading.
My question is: What company needs to show on
the Bill of Lading as the shipper? (My
belief is that Company A is the shipper.)
A: I would assume from the arrangement you
describe that "Company A" is the actual owner of the goods which are
being shipped, and that "Company B" is essentially acting as its
agent as far as shipping to the customer.
Under such circumstances, I think it would be proper to show
"Company A" as the shipper on the bill of lading. Thus, "Company A" would be
responsible for payment of the freight charges, and would be the proper party
to file a claim in the event of loss or damage to the goods, etc.
Q: I am updating a
BOL form (printed by the shipper) that currently uses the Uniform Straight Bill
of Lading - Short Form, which references both the uniform freight
classifications if it is a rail or rail-water shipment and the applicable motor
carrier classification if it is a motor carrier shipment.
I understand that with deregulation, tariffs are
no longer filed and motor carriers (for domestic shipments of commercial goods)
are no longer regulated, at least with respect to BOLs and rates. I also understand that if a carrier uses the
NMFC, the uniform BOL published by the American Trucking Association governs,
absent a written contract.
My questions:
a. Can a
short form uniform bill of lading that references both rail and motor carrier
still be used?
b. With
all of the changes to the motor carrier uniform bill of lading, would one form
for both rail and motor carrier be problematic? (no longer file tariffs,
changes in prepaid/collect, etc.?)
c. Is
there any reason to use the Uniform Bill of Lading for motor carriers as
opposed to having a shipper-friendly BOL?
d. There
is a Uniform BOL for rail and water shipments, at 49 CFR § 1035, that
apparently must be used for shipments subject to the Interstate Commerce
Act. Only a long form is referenced.
Could a short-form be used? Also, when
would an interstate rail shipment not be subject to the Interstate Commerce Act
and thus not require this BOL?
e. The
CFR for the Uniform BOL referenced in number 4 above also indicates that
modifications to the front of the form are permitted so long as they conform to
"national standards for the electronic data interchange or other
commercial requirements for bill of lading information." How does one know if changes made to the
front of the Uniform BOL conform to these national standards?
1. Motor carriers:
The use of the Uniform Straight Bill of Lading
(either the "short" or "long" forms) in the NMFC is
becoming a controversial subject.
Clearly, it is not in the best interests of the shipper to use the NMFC
bill of lading. However, many carriers are very tenacious about requiring the
NMFC form and incorporating the provisions of the Classification and their
unfiled tariffs, and resist the use of other bills of lading.
The best advice to a shipper is to enter into a
well-drafted formal transportation contract with each of its carriers. Rates, terms and conditions are all covered
by the contract, so you don't have to be concerned about the form of the bill
of lading or incorporation of the carrier's unfiled tariffs.
If you must ship via common-carrier and use
bills of lading, we recommend the Shipper's
Domestic Truck Bill of Lading form which is available in "kit" form
(explanatory booklet plus floppy disk) from the Transportation Consumer Protection
Council. This is a "shipper
friendly" bill of lading and the form can be easily tailored for the
shipper's requirements.
2. Rail carriers:
You are correct
in noting that 49 CFR § 1035 does prescribe the terms and conditions for the
RAIL version of the uniform straight bill of lading. However, the great
majority of rail movements today are "exempt", either because of the
commodity, the equipment (boxcars, etc.) or the type of service (TOFC, COFC,
etc.).
"Exempt" rail traffic generally moves
under rail contracts or under rate quotations which refer to or incorporate by
reference the railroad's exempt rail
"circulars" (which are similar to tariffs). Thus, the form of the bill of lading is usually unimportant, and
any form which serves to transmit the
shipping information can be used.
3. EDI standards:
Most major motor carriers and railroads now have
the facility to transmit bill of lading and waybill information via EDI, and
many of the large retailers are now adopting the VICS bill of lading. My suggestion would be to contact the
carrier information systems group if you plan to transmit data via EDI.
Q: On the Bill of
Lading, is it legally essential to disclose the NMFC classification based on 1)
number of containers, 2) part numbers that apply, 3) weight, 4) all three, or
5) some combination?
We are trying to streamline our Bills of Lading
for a new system we are implementing and any advice (short summary) that you
might pass along on the current legal requirements of the Bill of Lading would
be a big help. I have not had a chance to keep up on the latest requirements,
so your advice would be appreciated.
A: If you are shipping with a motor carrier that
is a participant in the National Motor Freight Classification, and you do not
have a transportation contract, it would be the usual practice to use the
Uniform Straight Bill of Lading. The
Uniform Straight Bill of Lading has spaces for setting forth the number of
packages, the description of the goods, the weight and the NMFC class. Freight charges are usually determined by
the rate base (a function of the distance between origin and destination), the
weight and the class.
Part numbers, purchase order numbers, etc. are
often included in the description column on the bill of lading if useful to the
shipper or the consignee, but they don't affect the freight charges.
The NMFC class is determined by reference to the
Articles in the Classification, and determining what is the Article which most
closely describes the commodity being shipped.
Q: I have a question regarding your "Explanation of
Face of Bill of Lading" that we received with your Shippers Domestic Truck
Bill of Lading package. My question has
to do with your comments regarding the sealing of a trailer. You state "Seal numbers should not be
recorded on the bill of lading as it facilitates a consignee's copying those
numbers on delivery records instead of personally inspecting the condition of
the seals on delivery to determine whether or not they are intact or have been
tampered with."
My response to this is: If you do not note the seal
number on the bill of lading or somehow communicate this information to the
consignee, how is the consignee to know whether the seal he receives under is
the seal that was placed on the truck at the time of shipment? Someone with a little smarts could break the
original seal, help himself to whatever he desired, then put a new seal on the
trailer. It seems to me that if you
were going to seal a trailer and not note the number on the bill of lading,
that there would need to be some clear communication between shipper and consignee,
especially if the shipment came up short.
Maybe I'm thinking like the thief, but the trust I used
to place in my fellow man is eroding. I
would like to hear from you on this if you have the time.
A: I suppose
that there are two schools of thought on this subject, but I agree with you.
It does seem logical to put the shipper's seal number on
the bill of lading. This notifies the
consignee that the trailer or container was sealed at origin, and implies that
the seal should be inspected and the number checked upon delivery.
Q: I have
two questions: 1. If Section 7 is
signed, but bill of lading is marked "prepaid", who owes the freight?
2. If Section 7 is signed, but bill of lading is not marked "prepaid"
OR "collect", who owes the freight?
Can you share a legal authority for these responses?
A: In order to
answer your questions, we should first get all the facts straightened out. Let's start by looking at the current
version of the Uniform Straight Bill of Lading.
Section 7 ‑ "Non‑Recourse"
Provision The face of the current Uniform Straight Bill of Lading as set forth
in the National Motor Freight Classification, and which became effective
December 27, 1997, contains a box that states:
FOR FREIGHT COLLECT SHIPMENTS:
If this shipment is
to be delivered to the consignee, without recourse on the consignor, the consignor
shall sign the following statement:
The carrier may
decline to make delivery of this shipment without payment of freight and all
other lawful charges.
______________________________
(Signature of Consignor)
The reverse side (Terms and Conditions) contains the
following language:
Sec. 7. (a) The
consignor or consignee shall be liable for the freight and other lawful charges
accruing on the shipment, as billed or corrected, except that collect shipments
may move without recourse to the consignor when the consignor so stipulates by
signature or endorsement in the space provided on the face of the bill of
lading. Nevertheless, the consignor shall remain liable for transportation
charges where there has been an erroneous determination of the freight charges
assessed, based upon incomplete or incorrect information provided by the
consignor.
(b) Notwithstanding
the provisions of subsection (a) above, the consignee's liability for payment
of additional charges that may be found to be due after delivery shall be as
specified by 49 U.S.C. § 13706, except that the
consignee need not provide the specified written notice to the delivering
carrier if the consignee is a for‑hire carrier.
(c) Nothing in this
bill of lading shall limit the right of the carrier to require the prepayment
or guarantee of the charges at the time of shipment or prior to delivery. If
the description of articles or other information on this bill of lading is
found to be incorrect or incomplete, the freight charges must be paid based
upon the articles actually shipped.
It should be noted that the word "Freight
Collect" in the box on the face of the bill of lading, and the limitation
to "collect shipments" in the Terms and Conditions on the reverse
side, were not present in earlier versions of the Uniform Straight Bill of
Lading and were added in the version which became effective December 27, 1997.
Prepaid vs. Collect
It should also be observed
that the face of the current version of the Uniform Straight Bill of Lading,
effective December 27, 1997, contains another box that states:
Freight Charges are PREPAID
unless marked collect.
CHECK BOX IF COLLECT
|__|
This was also changed when the NMFC bill of
lading was revised in 1997. The previous language stated: "If charges are
to be prepaid, write or stamp here 'To Be Prepaid'". Thus, in the new bill of lading, if nothing
is done, the presumption is that the charges are "prepaid", instead
of "collect".
Question 1 - Section 7 Signed, Bill of Lading Marked
"Prepaid" If Section 7 is signed, but bill of lading
is marked "prepaid", who owes the freight?
Answer to Question 1
Bills of lading are not
marked "prepaid"; they are prepaid unless marked
"collect". The current NMFC
bill of lading does not permit the use of Section 7 for a prepaid shipment.
Under the court decisions interpreting the old (pre
1997) bill of lading, a shipper could sign Section 7 on a prepaid bill of
lading. Usually this meant that the
shipper would pay the freight charges agreed at the time of shipment, but would
not be liable for charges accruing afterwards, such as detention or redelivery
charges. There was some authority that
the shipper could avoid all liability, even for the agreed prepaid
charges. In other words, if the shipper
did not pay the agreed prepaid charges, the carrier could collect only from the
consignee.
Note: As of publication date there appear to be no
reported federal or state court decisions construing the subject language in
the current NMFC bill of lading.
Question 2 - Section 7 Signed, Bill of Lading Not Marked
Either "Prepaid" or "Collect" If Section 7
is signed, but bill of lading is not marked "prepaid" or
"collect", who owes the freight?
Answer to Question 2
As noted above, if the
bill of lading is not marked at all, the shipment will automatically be
considered prepaid, and the answer to Question 1 will apply.
Q: Can a shipment still be considered a true "shipper
load, & count" if the carrier has broken the shipper's seal to verify carton
count? Does a "shipper load &
count" shipment lose its integrity if a shipment is processed through a
consolidation hub where it is removed from the original trailer and reloaded
before delivery? Can the carrier be
held liable for a shortage if one occurs?
Where can we find more information on "shipper, load &
count" regulations?
A: A
"Shipper Load & Count" notation of a bill of lading means exactly
that: the shipper loads and counts (usually a full trailer load, and sealed
upon completion of loading). So long as
the trailer remains closed and the seal intact, there is a presumption that any
shortage found upon delivery did not occur in transit.
If the carrier opens the trailer at an intermediate
point for consolidation or transfer to another truck, it should count the
contents and report any discrepancy.
Unless a shortage is noted at this point, the carrier is no longer
entitled to any presumption arising out of the original "Shipper Load
& Count" notation on the bill of lading.
The subject of "Shipper Load & Count" is
covered in greater detail in "Freight Claims in Plain English" (3rd
Ed. 1995) at Sections
4.8.3 and 5.2.2.
Q: I've been asked
if our plants need to have their shipping clerk's(or anyone representing the
consignor) signature on the BOL. They
would like to have it replaced with a system generated printed name. Does the lack of a signature limit our legal
recourse if we were to end up in some sort of transportation related
litigation.
A: There is no legal requirement for a shipper
to sign the bill of lading, and I generally recommend that shippers do NOT sign
bills of lading, especially if they are provided by the carrier.
On the other hand, it is imperative that the
carrier's driver sign the bill of lading to confirm that the carrier has
received the goods, and that they were in good order and condition when
received by the carrier.
Q: My questions are in regard to putting the piece count on
bills of lading. Many of our locations
feel that there is no need to do this.
I disagree. I think that it is
important so that our carriers are aware in case there is a question regarding
the shipment. For our customer, it
enables them to know at time of delivery how many pieces they are signing for
short of having to find the packing slip.
One of my concerns is if there is no piece count on the Bill of Lading
then the carrier has reason to deny a claim based on a shortage. Please give me your views. Thanks!
A: You are
absolutely correct. It is always a good practice to show the number of packages
or cartons on the bill of lading, and to have the driver acknowledge receipt by
signing for the actual count.
The bill of lading (together with any classifications or
tariffs of the carrier that may be validly incorporated by reference therein)
is a legal document. Unless you have
some other formal transportation agreement, the bill of lading will be
considered the "contract of carriage" and will determine the rights
and liabilities of the parties in the event of loss, damage or delay to
shipments.
I suppose you could ship on a document such as a
"packing slip", but you would still want some language indicating
that the goods were received in good order and condition by the carrier, and a
signature of the driver.
Q: We have a
"Customer/Carrier Loading Requirements Policy" that requires drivers
to count on live loads. It also states: "Drivers who sign bills of lading
should not attempt to write in "SLSC when signing their bills. Our bills clearly read "SLDC" and
any attempts to change this by writing it on the bill of lading will be
nullified.”
However, drivers have written in "SLC"
on live loaded trailers and carriers are refusing to pay claims for
discprepancies.
We are currently reprinting bills and having the
drivers to sign them again without writing in "SLC" next to their
signature. Our bills are clearly marked
"SLDC" and should leave no room for doubt
What recourse do we have with those claims where
the driver has signed a "live loaded" trailer as "SLC", but
the bill is clearly marked "SLDC"?
The drivers have had access to the trailer, but the carriers are refusing
to accept responsibility for delivery discrepancies.
I'm rather new at this and thought the
"Customer/Carrier Loading Requirements" would help resolve claims for
shortages, but it's almost like some carriers act like they don't know what
we're talking about. Any help you could
give me in this area would be greatly appreciated.
A:
Whether a shipment is actually "SL&C" (shipper load and
count) is basically a simple factual question.
If the driver is present at the time of loading and has an opportunity
to count the cartons at that time, a "SL&C" notation has no legal
effect. This subject is discussed in
"Freight Claims in Plain English" (3rd Ed. 1995) at Sections 4.8.3 and 5.2.2.
It is quite
understandable that carriers would not want to accept responsibility for a
particular count if their driver does not have reasonable access and an
opportunity to verify the count during the actual loading by the shipper. Likewise, if the goods are palletized or
shrink-wrapped before the driver arrives, so that the individual cartons are
not visible or cannot be counted, the carrier cannot be expected to sign for a
carton count.
Preprinting your bills of lading "SLDC"
(shipper's load, driver's count) is probably a good procedure and should help
to minimise problems. However, the most
important thing is to request the driver to actually count the cartons as they
are being loaded, and have your shipping supervisor make a notation or record
of that fact so there can be no question later.
I would also note that we always recommend that
our clients enter into written transportation agreements with their
carriers. Liability provisions covering
this kind of problem can be included in a properly-drafted contract so they
become binding and enforceable.
Q: What is the carrier’s liability under the following
circumstances:
Shipper issues a bill of lading to Carrier for orders
going to various customer stores. On
the bill of lading is the following instruction: “SPECIAL INSTRUCTION TO CARRIER: Ensure that [Customer]
Receiving places Store Stamp on your delivery receipt. DO NOT DELIVER WITHOUT STORE STAMP.”
Carrier picks up shipment and puts the following
notation on their Freight Bill. "[CUSTOMER] STORE STAMP MUST BE ON
DR" The customer now claims they
never received the order and are requesting a POD with store stamp. Carrier cannot provide.
We file a claim with the carrier and they decline,
stating: Our investigation of the above referenced claim has revealed that this
shipment was delivered without exception.
We are enclosing a copy of our Clear Delivery Receipt. Carrier provides
a DR with a signature (but with no Store Stamp).
We have 27 shipments for over $46,000 worth of invoices
that fall into this category. Let me
know your thoughts.
A: I am not sure
whether your real problem is with the carrier or with your customer.
The first and most obvious question is: were the goods
delivered or not? Have you checked with your customer to see if the signatures
on the delivery receipts are genuine?
The lack of a store stamp on the delivery receipt is not conclusive one
way or another. In other words, do some
sleuthing and see if you can find out what really happened.
Your observation about notations on the bill of lading
is substantially correct. Notations are
not generally binding unless there is some tariff provision allowing or
requiring a specific notation, such as "protective service required",
etc. On the other hand, notations do
give the carrier information, and the carrier was obviously aware of the requirement
to obtain a store stamp because it carried the notation forward on its freight
bills. It seems that, under these
circumstances, you could argue that the carrier accepted this requirement as a
part of the contract of carriage.
The best way to avoid this type of problem is to enter
into a written transportation agreement with your carriers, and include
specific provisions in the contract as to your special requirements. Then there can be no dispute.
Q: I just read
Section 4.1 "Bills of Lading
" in your publication Freight Claims in Plain English. Since an "order" bill of lading is
negotiable does this mean that the "title" to the goods passes to the
consignee when the bill is signed and freight is picked up at the shippers
warehouse? Does this type of bill
legally have anything to do with title
to the goods and if so at what point is it passed to the consignee? Therefore, since the straight bill is not
negotiable I would suspect this kind of bill has nothing to do with title to
the goods. When shipping on FCA or FOB
origin terms it is not the "straight" bill that passes title or the
actual Incoterm but rather title is passed thru some other document such as a
Purchase Order clause or contract between buyer and seller. Is this correct?
A: "Title"
to goods and risk of loss in transit are generally determined by the
"terms of sale", e.g., FOB Origin, FOB Destination, FCA, etc. Usually the terms of sale are set forth in
the purchase order or contract of sale.
For domestic shipments, terms of sale are defined in the Uniform
Commercial Code, and for most international shipments, the Incoterms are
used. The use of these terms in a
purchase order results in a legal presumption as to where "title"
(the right to possession) passes from the seller to the buyer. This is a presumption which the parties may
change by contract, i.e., agree to a different place or event for the passing
of title.
When an order bill of lading is used, the
original document itself is evidence of title or the right to possession. Order bills can be transferred (indorsed)
from one party to another, similar to a check.
Order bills of lading are frequently used in
international commerce as security for payment for the goods. The reason is that, with an order bill of
lading, the carrier may not lawfully deliver the goods unless the original order
bill of lading is presented. See 49
U.S.C. Section 80101, et. seq. (the Bills of Lading Act).
In a typical international transaction, the
original order bill of lading is sent to an agent or a bank at destination and
is released to the consignee only upon payment for the goods. The consignee then takes the original bill
of lading, indorses and presents it to the carrier, and receives the goods.
Q: What is the
definition of a licensed property broker, and how does one become licensed?
A: The definition of a
"broker" is found in the FMCSA regulations at 49 CFR § 371, and provides:
(a) "Broker" means a person who,
for compensation, arranges, or offers to arrange, the transportation of
property by an authorized motor carrier.
Motor carriers, or persons who are employees or bona fide agents of
carriers, are not brokers within the meaning of this section when they arrange
or offer to arrange the transportation of shipments which they are authorized
to transport and which they have accepted and legally bound themselves to
transport.
***
(c) "Brokerage" or "brokerage
service" is the arranging of transportation or the physical movement of a
motor vehicle or of property. It can be
performed on behalf of a motor carrier, consignor or consignee.
Registration: The Interstate Commerce Act
requires that brokers for the transportation of property must
"register" with the Department of Transportation (FMCSA), 49 U.S.C.
§§ 13901 and 13904. This registration
requirement replaces the former statutory requirement to obtain a
"license" from the ICC.
Brokers holding licenses from the ICC as of December 31, 1995 were
"grandfathered" and deemed to be registered under the new law, 49
U.S.C. 13905.
The FMCSA has
established regulations governing applications for broker registration which
are published at 49 CFR Part 365. Application forms (Form OP-1) are available
from the FMCSA, 400 Virginia Ave SW, Washington, DC, 20590, phone (202) 358
7000 or through the FMCSA web site at www.fmcsa.dot.gov (Select “Licensing
Forms”.
Q: Our company is a licensed transportation broker. We were arranging transportation for a
shipper to ship a perishable product from NC to NJ. The original truck we had schedule for the load was put out of
service by the DOT, at that time we immediately notified the shipper that we
would miss the pick up and would continue to look for a truck, but he should
look as well. Through the next day and
half we searched for a truck, still in communication with the shipper, and
finally found one. During that day and
half period we spoke with the shipper several times, so he was well aware of
the problem. When the shipment got to
NJ the next day it had spoiled, as a result of sitting in the shipper’s
cooler. The shipper is filing claim
with us because we did not pick it up on time.
What is our liability? The
shipper was well aware of the problem and had plenty of time to arrange other
transportation.
A: As a general
rule, a broker is not liable for loss or damage to shipments, since it does not
physically handle or transport the goods and merely makes arrangements for the
transportation. (This subject is
covered in detail in "Freight Claims in Plain English" (3rd Ed. 1995) at Section
13.2.) However, a broker may have
liability if it is negligent in some way, for example, if the broker selects a
"fly by night" carrier that has no operating authority or insurance,
or an unsatisfactory safety rating from the Federal Motor Carrier Safety Administration.
Unless you had given the shipper some affirmative
representation or guarantee that the shipment would be picked up and delivered
according to a particular schedule, and from the facts you have described, I
don't see how the shipper could establish that your company was liable for its
loss.
Q: We are a
transportation broker in Phoenix.
Recently we arranged for the shipment of a chair for a client. The client claimed a value of $1,200 for
the retail value of the item. We
utilized a company called Intercargo Insurance to insure the chair. The carrier we selected for this move
damaged the chair and the receiver refused the shipment resulting in the loss
of a sale for our client.
Intercargo Insurance claims that: A) the chair
is only worth what it cost to make it-not what it would have sold for, and B)
or if it can be repaired, the cost of the repairs. Our Client feels they should be reimbursed for the full amount of
the item at retail value or the full $1,200.00. My questions are:
1. Who is
right, our client, or the insurance company?
2. As a
broker of transportation services, what is our liablility? If our client is not reimubursed for the
full amount of their claim, are WE obligated to honor their claim?
A: I am
assuming that your client is a distributor or retail store that sold the chair
to a customer, and if the chair had been delivered to the customer the seller
would have been paid $1200. Under those
circumstances, the shipper-seller is entitled to his invoice price for the
goods.
As a broker you do not ordinarily have liability
for loss or damage since you are not a "carrier" and do not ever have
physical possession of the goods. You
could become liable if you assumed liability (represented to your shippers that
you are responsible or will pay claims), or if you were negligent in some way
which caused or contributed to the loss or damage.
Note: The subject of damages is extensively
covered in Section 7.0, and liability of freight forwarders and intermediaries
is covered in Section 13.0 of "Freight Claims in Plain English" (3rd
Ed. 1995). You might wish to purchase a copy from TCPC.
Q: The company I
work for is a transportation broker. A customer
of mine had some damage on a load that we handled for them. The customer did
not file a claim, but instead deducted the amount of the claim from our invoice
on the load. What are the laws
regarding this issue? Can the customer legally do this w/o a claim being filed?
A: First
of all, as a broker you should not get yourself caught in the middle on
claims. Brokers are not generally
liable for loss or damage (unless it is caused by their own negligence). You should make it clear to your shipper customers
that you are a broker and that you are NOT a motor carrier. If you want to assist your shippers in
filing or processing their claims against the carriers, that is o.k., but you
should not hold yourself out to be responsible for the payment of claims. We recommend to our broker clients that they
enter into written agreements with their shippers so that this kind of problem
is minimized.
Second, there is no law or regulation which
would prevent a shipper from offsetting claims against freight charges, and it
is done frequently.
I would note there are some risks to the
shipper. If the shipper fails to file a
written loss or damage claim within the 9-month time limit provided in the
uniform bill of lading, it could end up having to pay the freight charges and
not be able to collect its loss or damage claim because it is time-barred. In addition, the carrier might have a loss
of discount or late payment penalty which would be added on top of the freight
charges due.
Q: What is the
"Carmack Amendment" and where can I find the exact ruling
online? Does this protect brokers from
liability of loss/damage claims? If not, where can I find a ruling that does
protect brokers in this situation?
A: The
"Carmack Amendment" was an amendment in 1906 to the Interstate
Commerce Act. Over the years the
original language was changed a number of times and now appears at 49 U.S.C.
Section 14706 (for motor carriers).
The Carmack Amendment governs the liability of
motor carriers and freight forwarders for loss, damage or delay to shipments in
interstate and foreign commerce. It has
no application to brokers, see Custom Cartage, Inc. v. Motorola, Inc., No. 98 C
5182, 1999 WL 965686 (N.D. Ill. 1999).
As a general rule, brokers do not have liability
for loss, damage or delay to shipments.
This subject is discussed in detail in Chapter 13.0 of "Freight
Claims in Plain English" (3rd Ed. 1995), which is
available from TCPC.
Q: Title 49, chapter III, Sec. 371.3 indicates a broker’s
requirement to maintain records of each transaction and that "Each party
to a brokered transaction has the right review the record". I am considering a start‑up
"broker" service. My
intentions are to be completely honest with my clients on all subjects,
including this requirement. My question
is in regard to service providers I choose, and their potential to use this
information to my company's detriment.
Do I have any protections, or legal recourse in this event?
I don’t think many shippers are aware of this right, and
have never heard of carriers taking advantage of it either. Have you
A: You are
correct in observing that there are FMCSA (formerly ICC) regulations governing
the requirements for property brokers, which include record‑keeping
requirements.
If one of your concerns is "back solicitation"
by your carriers, the best way to deal with this is to include proper
restrictions in a written broker‑carrier agreement.
We generally recommend to broker clients that they have
written agreements with all of their shippers and carriers. You should consult an experienced
transportation attorney If you need assistance in this regard.
Q: We have recently
obtained our common carrier authority and are hauling for a man who says he is
a broker. When I went into the FMCSA
data bank I found that he has his Common authority and Contract authority, but
no broker authority. He pays with a check but there is no statement or anything
that goes with it. We have not signed any lease with this man of any kind. Is
he, as a carrier, authorized to broker freight to other trucks. And if he isn't
what are the legal aspects that we need to be aware of? Any information you can
provide would be greatly appreciated.
A: There
are a lot of companies today that are wearing multiple "hats", and
offering services as a common carrier, a contract carrier, a freight forwarder,
a broker, etc. and many of them ignore the legal requirements.
The Interstate Commerce Act defines carriers and
brokers differently (49 U.S.C. Section 13102) and imposes separate requirements
for registration (Sections 13902 and 13904).
The regulations of the Federal Motor Carrier Safety Administration (formerly
the FHWA and the ICC) establish different requirements for carriers and brokers
(see, e.g., 49 CFR Parts 365, 366, 371, 387).
The bottom line is, if a carrier also wants to
act as a broker, it needs to register as a broker, file a surety bond, and
comply with the regulations governing brokers.
One obvious problem, aside from operating
illegally, is that it may be difficult to tell who is the carrier and which
party is liable to the shipper in the event of loss or damage to the
shipment. Other potential problems
might involve disputes over the collection or payment of freight charges.
It is important to know who you are dealing
with, and in what capacity. I would advise
against doing business with someone who is operating illegally or without the
required operating authority.
Q: In general, would a person who provided leads or
contracts to freight forwarders or moving companies be considered a broker?
Would there be any federal/ state regulation regarding such activity?
A: The term
"broker" is defined in the Interstate Commerce Act as "a person,
other than a motor carrier or an employee or agent of a motor carrier, that as
a principal or agent sells, offers for sale, negotiates for, or holds itself
out by solicitation, advertisement or otherwise as selling, providing or
arranging for, transportation by motor carrier for compensation." 49 U.S.C. Section 13102(2).
If you are acting as an agent of a carrier or forwarder
and are paid a fee or commission by the carrier or forwarder, you would not be
considered a broker. If you arrange for
transportation as a middleman, and are compensated by the difference paid by
the shipper and the amount paid to the carrier or forwarder, you would be
considered a broker. Brokers are
required to be registered with the FMCSA (formerly the ICC and/or FHWA).
Q: Assuming the subject is either not addressed in and/or
there is no contract of carriage (only the carrier's rules and/or tariff) when
would or would not Carmack apply with regard to claims? Stated another way, would you briefly
clarify, list, identify when Carmack applies and when it doesn't.
A: The
"Carmack Amendment" applies to interstate transportation or service
provided by rail carriers (49 U.S.C. 11706, formerly 11707) and by motor
carriers and freight forwarders (49 U.S.C. 14706, formerly
11707). A thorough discussion of the
Carmack Amendment may be found in Section 1.1.1 of "Freight Claims in
Plain English" (3rd Ed. 1995).
Basically, Carmack applies to all interstate U.S.
surface transportation, and to transportation from the U.S. to contiguous
foreign countries (Canada and Mexico).
There are a number of statutory and administrative exemptions, the most
significant of which are: private carriage (Section 13505); transportation of
agricultural commodities, transportation incidental to an air movement, and
transportation within a commercial zone (Section 13506)
Q: What is the responsibility of the carrier in the event
of freight damage from a tornado or sudden violent weather conditions?
A: Both under
the common law and under the Uniform Straight Bill of Lading, which is in
common use, a carrier has a defense against liability if it can establish that
the cause of the loss or damage was an "Act of God", and that it was
free of any negligence.
The case law defines an "Act of God" as
"an occurrence without intervention of man or which could not have been
prevented by human prudence. It must be
such that reasonable skill or watchfulness could not have prevented the
loss..." Generally, only
extraordinary events such as tornadoes or hurricanes would qualify, and
ordinary bad weather, rain, snow, etc. would not be considered an "Act of
God".
This subject is discussed in detail in "Freight
Claims in Plain English" (3rd Ed. 1995) at Section 6.3,
Act of God.
Q: We received a
denial letter where a carrier has denied the claim because they allege
"the material was not properly packaged to withstand the normal rigors of
transportation." They go on to
state, "please keep in mind that double stacking freight unless specified
per the shipping instructions is a common procedure in the industry."
We are in possession of pictures of the
double-stacking that caused the damage.
Apparently after picking up our material the carrier picked-up, and
placed on our goods, large pallets weighing approximately 950-1100 lbs. each.
My question is this: Does the requirement for OUR packaging to withstand the normal
rigors of transportation also include the requirement to withstand the weight
of a 1000 lbs. pallet that is placed on top of it? Note: Our packages don't
have symbols which prohibit double-stacking.
A: As a
general rule, yes, the shipper is supposed to package goods in a manner
"to withstand the normal rigors of transportation..."
However, getting back to basics, a carrier can
only escape liability if he can prove two things: (1) that the "act or
default of the shipper" (improper packaging) caused the damage, AND (2)
that the carrier itself was free from negligence.
These principles are discussed in detail in
"Freight Claims in Plain English" (3rd Ed. 1995) at Section 5.0, Burdens of Proof.
I don't see how a carrier can refuse to pay a
claim if they placed some other heavy freight on top of your shipment, which
caused the damage.
Q: On a full
truckload shipment from our DC, the truck was sealed and the driver did not
have the opportunity to inspect the load.
When the truck arrives at our store for delivery, the driver breaks the
seal and opens the trailer door, and the load appears to be properly secured.
The driver then begins to back into the dock, and the load then shifts and
packages fall out of the back of the trailer and are damaged. Would the carrier
at this point be liable for the damage?
A: This
appears to be a Shippers Load & Count ("SL&C") situation,
where the trailer was loaded and sealed by the shipper, and the driver had no
opportunity to observe or participated in the loading. Under these circumstances, the shipper
assumes a greater responsibility than if the driver is present and can
supervise the loading.
The question is whether the carrier/driver was
negligent in any way. You say that the
driver broke the seal, opened the door, and then started to back up the
trailer. If the driver could not see
any obvious problem with the loading, and was careful in operating the truck
while backing up, I think it would be difficult to hold the carrier liable for
the damage. On the other hand, if he
backed up very rapidly, bumped the loading dock, etc., you could argue that the
driver's negligence was a contributing cause of the damage, in which case, the
carrier would be liable.
I would refer you to "Freight Claims in
Plain English" (3rd Ed. 1995), Section 5.0
Burdens of Proof, for a discussion of carrier liability.
Q: We had a shipment that was damaged in transit. The
freight company is refusing to pay the claim, quoting N.M.F.C. classification
100 series and referencing item 23320 – “such articles will be accepted for
transportation in any container or in any other form tendered to carrier which
will permit handling into or out of vehicles as units, providing such
containers or tendered forms will render the transportation of freight
reasonably safe and practicable."
If they accepted the freight for shipment are they responsible for any
damages which occur?
A: Common
carriers are liable for loss or damage unless they can prove that the loss was
due to one of the basic defenses such as act of God, act or default of the
shipper, etc. AND that they were free from negligence. See "Freight Claims in Plain
English" (3rd Ed. 1995) at Section 5.0
for a detailed discussion of carrier liability.
Item 23320 of the Classification refers to "belts
or belting, elevator, conveyor or transmission, etc...", but there is no
reference to "containers". I
don't see how it could affect your shipment.
I am assuming that this carrier is saying that you did
not properly prepare or package your goods for transportation ("act or
default of shipper"). If so, the
carrier still has to prove that the improper packaging is the sole and
proximate cause of the damage and that it was not negligent in handling your
goods. In other words, the answer to your question is "Yes".
Q: I have an issue
I would like you to review and give me your opinion. We currently employ the
use of drop trailers for our short haul dedicated fleet used to deliver from
our Distribution Centers to our stores.
Most stores within a 125 mile radius of a DC are delivered by the
dedicated fleet. The driver drops the
loaded and sealed trailer at the store dock
and takes yesterday's empty trailer back to the DC.
Each store has a storage box on the rear wall
near the dock containing three trailer kingpin locks. Once the driver unhooks
from the loaded trailer he is required to install a kingpin lock prior to
departing the store. The store takes
the kingpin lock off the trailer once the trailer is unloaded so the next day's
driver can pick up the empty trailer.
This has worked well for us in recent
years. We have experienced zero theft
of trailers from our locations. In the
past many of our stores have been in semi-rural markets or are in markets with
populations of from 50k to 200k people with generally less organized theft than
is seen in major population centers.
I am concerned with trailer/product theft as we
move into major metro markets such as New York City, Los Angeles, Chicago and
the like. I need your opinion regarding
trailer theft from our site. If a
dropped trailer with a kingpin lock installed is stolen from our dock who has
liability for the loss? Does the
liability for the loss change if the carrier does not install the pin lock as
our policy dictates? How clear is the
legal precedent on this topic? Do you
have any recommendations either within the language of our contract or
regarding the physical trailer that may help
us?
A: As a general rule, the carrier's liability
ends upon "delivery", and delivery has been defined by the courts to
mean physical delivery in a manner that nothing further needs to be done by the
carrier. (I can give you case citations
if needed, and you may wish to read Section 3.0 in Freight Claims in Plain
English.)
I am not aware of any cases dealing with the
specific situation where the consignee provides and/or requires the driver to
install a pin lock on the trailer. I
suppose we could write some specific language into your transportation contract
with this requirement, and stating that the carrier would remain liable for
loss or theft if the pin lock is not installed.
I would note that I am aware of some trailer
thefts even when there were pin locks installed, so it is not 100%
protection. Perhaps you should look at
your overall facility security measures: fences, lighting, guards, etc. if you
think this may be a serious potential problem.
Q: I recently shipped goods to my customer, and they have
chosen to refuse part of the shipment based upon our noncompliance with the
their packaging standards. Incidentally the issue at hand is loose on skids vs.
shipped in cartons, which their packaging standards do not stipulate either
way.
1. Is the carrier liable for damages/shortages
incurred as a result of breaking apart the shipment integrity?
2. Is the consignee liable for shortages or
storage charges incurred by the carrier resulting from this action (refusal of
goods)?
3. Is there a governing NMFC rule stipulating
that the carrier cannot deliver partials regardless of consignees concerns,
meaning take all of the cargo or none of it?
A: I'm not sure
whether your problems are with your customer or with your carrier.
Obviously, carriers are responsible if they damage your
freight, regardless of how it is packaged, unless they can establish that the
damage results solely from your improper packaging without any negligence on
their part.
However, the consignee should not refuse shipments to
the carrier because of some disagreement with the shipper as to packaging, but
only if the carrier has damaged the shipment so badly that it is
"practically worthless", see Section 10.9 of "Freight Claims in
Plain English" (3rd Ed. 1995). If they
abandon the freight to the carrier, the carrier becomes a
"warehouseman" and, although it does have a duty to protect the
freight, it has a lesser standard of care.
I am not aware of any provision of the NMFC that
prevents a carrier from delivering a partial shipment.
Q: Would a common
carrier have any liability under the following circumstances?
Carrier picks up 1 pallet of calendars going to
a bookstore in a shopping mall. Carrier
makes the delivery the next day.
Unknown to the shipper, the consignee moved three months earlier. A different company, which is also a
bookstore had moved into the location.
This new store accepted the order from the trucking company. The error was not discovered until 4 months
after the delivery was made. The new
store has since moved and no one can locate the merchandise. Sign on the delivery door at the mall still
reads the original consignee's name.
Carrier did the following: Delivered the goods
to the address on the B/L. Had delivered to this location in the past. The delivery door was marked with the name
that was on the B/L. The company that
accepted the freight was also a bookstore.
Original consignee claims that they notified
shipper of the fact they were moving, although shipper has no record of
it. Company that accepted the
merchandise has also not been cooperative.
Is the carrier liable for the merchandise?
A: The general rule is that the carrier has a
duty to ascertain the proper party
named as consignee in the bill of lading and to deliver only to that
party. Failure to do so is a
"misdelivery" for which the carrier is liable. See Section 11.3.3 in
"Freight Claims in Plain English" (3rd Ed. 1995) for a discussion of the court decisions.
The company that wrongfully accepted the
merchandise is, of course, also liable and should not have accepted goods that
were the property of someone else.
My recommendation would be to pursue your claim
against the carrier, and let them try to collect from the company that accepted
the merchandise.
Q: Our terms of sale are F. O. B. Shipping Point, but we
regularly file claim for loss and damage as a courtesy to our customers. We made a shipment of two skids of 303
wrapped boxes on November 10th with a certain regional carrier. 1 of the 2 skids delivered on November 16th
on a clearance bill, but the remaining skid was missing in action. Our customer (Customer A) notified us of the
shortage on December 2nd and we filed claim with the carrier on
December 6th for $6683.59. The carrier
notified us on January 5th that they misdelivered the skid to another one of
our customers (Customer B), who had taken it into their warehouse and put in
stock. Customer B confirms that he was
in possession of the merchandise and would pull the items from stock and return
them to us. However, this has never
happened. Now Customer B says he has
sold most of the merchandise and wants us to invoice him for the items he
regularly stocks. This would be
difficult due to the length of time that has elapsed. Carrier would also like for us to handle in this manner, but we
feel that Customer B and the carrier should settle between themselves. To add another little twist, we no longer do
business with the carrier. Should we
stick to our guns and insist that the carrier pay the claim in full?
A: Clearly, the
carrier failed to deliver the goods in accordance with the contract of carriage
(bill of lading), and is liable to you for the misdelivery. The carrier has a claim (possibly legal
action for conversion) against "Customer B", who wrongfully kept the
goods that it should have known belonged to someone else. You have no legal obligation to get involved
as between the carrier and "Customer B".
Q: I work for a
carrier that recently delivered a shipment for which a signed delivery receipt
was obtained. This is a repeating type
move that has occurred almost daily, for almost two years. The consignee claims this particular
shipment was never received. After
furnishing them with a P.O.D., the consignee claims the signature is a
forgery. All internal records indicate
there was nothing unusual about it (it was checked by different employees at
different cities along its route). The
P.O.D. includes a time of delivery (12:15 p.m.). The merchandise is job specific; hence, no "street
value". The claim was denied, and
the shipper accepted the declination without litigation. My employer is still handling this move
almost daily.
I would like your opinion on the potential results of
litigation had it been pursued.
Everyday millions of shipments are delivered to unknown employees. Drivers simply find someone at the
prescribed address willing to accept delivery.
I have worked for trucking companies over twenty years, and am surprised
I have not come across issue. Some
shippers require drivers to offer identification when tendering a
shipment. Should drivers require the
same of consignees? I would appreciate
your opinion on this subject.
PS. I suspect the time of delivery (lunch) may have
something to do with the shipments mystery.
Driver is a 22-year veteran with same employer and has a clean file.
A: As a general
rule, the carrier has a duty to ascertain the identity of the consignee before
giving up custody of the shipment.
Failure to do so would expose the carrier to liability for misdelivery
if the shipment should be stolen by an impostor.
In most situations it is pretty obvious that the person
signing for the freight is an employee or person authorized to do so, but if
there is any doubt, the driver should not release the freight until some
appropriate proof is received.
I should point out that in the "impostor
theft" cases there are often disputed questions of fact, and it may be
necessary to have a court determine the credibility of the witnesses.
Q: I have a
question concerning a claim on a shipment with multiple carriers. We are a 3PL and contracted with a long haul
contract carrier to move a consolidation shipment from California to several points
in the southeast. The shipment was
brought into Atlanta and received by a short haul carrier. We contracted with the local carrier to
cross dock the pallets for each customer, then deliver them.
When the
original carrier picked up in California it was the driver’s responsibility to
count the load on the pallets, and it was then shrink wrapped. The driver for
this company signed that the correct number of pieces were loaded on his truck.
When this carrier’s driver delivered the load to our short haul carrier in
Atlanta he allowed the short haul carrier to sign for the load so many pallets
"said to contain" so many pieces.
This carrier then delivered the pallets to our customers. The pallets
were not reworked in Atlanta; they remained shrink wrapped. When the pallets
were delivered they were broken down and the pieces were counted. At this time a shortage was discovered.
We take taken the position that the original
carrier would have to assume the responsibility for the shortage due to the
fact they signed for the load whole and did not require the short haul carrier
to sign for the pieces on each pallet. They have denied our claim because they
have a clear bill of lading and no shortage was noted. We feel by not getting
the short haul carrier to sign for the correct piece count, this is not
correct. Is this the correct assumption on our part? Do you feel with the facts
I have given you our position would be defensible if we pursued legal
proceedings against the original carrier.
A: Do
these shipments move under a through bill of lading issued by the origin
carrier, or did you enter into two separate arrangements?
It sounds to me as though there are two separate
movements and two separate contracts of carriage. This is not a situation where the origin carrier has issued a
through bill of lading and assumed liability for its connecting carriers
(Carmack Amendment).
Regardless of how the second carrier signs the
delivery receipt, you basically have a mystery on your hands - where did the
loss occur: in the first movement or the second movement. Note also the possibility that the shipment
was short when tendered to the first carrier, or that the shortage occurred
after delivery by the second carrier, ie., the shipper or consignee could be at
fault.
If you decide to pursue legal proceedings, I
would suggest bring suit against both carriers. If this is a recurring problem, you should change your receiving
procedures at the Atlanta "cross dock" facility. Require them to break down and count the
pallets at that point, so you can determine who is responsible. You may also consider recommending to the
shipper that they use a distinctive shrink wrap or color coded tape to signal
any tampering or pilferage from palletized shipments.
Q: How are
carriers such as UPS,RPS, and Federal Express able to get away with liablity
limitations of $100 per package, and have maximum liability limitations?
A: UPS,
RPS and Federal Express are common carriers and generally subject to the same
laws and regulations that govern all motor carriers. However, "express companies" and small package carriers
have traditionally had a different liability regime.
For rail and motor carriers we start with the
presumption that the carrier is liable for full actual loss unless there is an
agreement to limit liability, in consideration for a lower rate. Freight rates are usually based on the
classification which takes into account the nature of the commodity - its
weight, density, value, susceptibility to damage, etc.
With express compa