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Q&A – Archive III |
2) Air Freight Forwarders - Licensing Requirements
3) Arbitration of Freight Claims
4) Bills of Lading - Carrier PRO Stickers
5) Bills of Lading - Case or Piece Count
6) Bills of Lading - Description of Freight
9) Bills of Lading - Hazardous Materials
10) Bills of Lading - Inter-Company Transfers
11) Bills of Lading - Pallets vs. Cartons
12) Bills of Lading - Piece Count
13) Bills of Lading - Private or Contract Carriage 8
14) Bills of Lading - Required Information
15) Bills of Lading - Requirements
16) Bills of Lading - Retention by Shipper
17) Bills of Lading - Retention Period
18) Bills of Lading - Shipper's Signature
19) Bills of Lading - Stickers on Shipper's Forms
20) Bills of Lading - Terms & Conditions
21) Bills Of Lading - The VICS BOL
23) Brokers - Errors & Omissions Insurance
24) Brokers - Insurance Coverage
25) Brokers - Liability for Negligence
26) Brokers - Licensing Requirements
27) Brokers - Record Retention Requirements
29) Certified Claims Professional Accreditation Council (CCPAC)
30) Charge Backs for Late Deliveries
32) Contracts - Broker Liability
33) Contracts - Legal Requirements
34) Contracts - Liability Limitations
35) Contracts - Waiver of Interstate Commerce Act Provisions
36) Contracts - Waiver of Interstate Commerce Act Provisons
37) Detention Charges on Inbound Collect Shipments
38) Dropped Trailers - Liability
40) Federal Regulations - Claims Processing Rules 23
41) Freight Bills - Re-Classification & Reweighing
42) Freight Bills - Time Limits for Air Freight Carriers
43) Freight Bills - Time to Contest
44) Freight Charges - Setoff for Delay
45) Freight Charges - “Shipping and Handling” Charges
46) Freight Charges - Accessorial Charges
47) Freight Charges - Billing to Customers
48) Freight Charges - Broker Bankrupt
49) Freight Charges - Brokered Load
50) Freight Charges - Carrier Reweighs
51) Freight Charges - Carrier Reweighs
52) Freight Charges - Carrier Setoffs Against Overcharges
53) Freight Charges - Consignee Liability when “Prepaid”
54) Freight Charges - Consignee's Liability on Prepaid Freight
55) Freight Charges - Costs of Unloading
56) Freight Charges - Defunct Broker
57) Freight Charges - Factored Load
58) Freight Charges - Freight Held Hostage
60) Freight Charges - Late Pay Penalty by Railroad 34
61) Freight Charges - Liability
62) Freight Charges - Liability of Consignee
63) Freight Charges - Liability of Shipper
64) Freight Charges - Liability on Brokered Shipment
65) Freight Charges - Method of Discounting
66) Freight Charges - Ocean Freight Overcharges
67) Freight Charges - Off-Bill Discounting
68) Freight Charges - Overcharge Claims on Household Goods
69) Freight charges - Pallet Weight
70) Freight Charges - Parcel Express
71) Freight Charges - Payments to Bankrupt Carrier 40
72) Freight Charges - Prepaid vs. Collect
73) Freight Charges - Published Rates
74) Freight Charges - Re-Classification
75) Freight Charges - Refused Shipment Returned to Vendor
76) Freight Charges - Replacement Shipment
77) Freight Charges - Terms of Sale and Bill of Lading
78) Freight Charges - Third Parties & Offsets 44
79) Freight Charges - Time Limits on Corrected Freight Bills
80) Freight Charges - Time Limits on Railroad Freight Bills
81) Freight Claims - "Lost" Shipments
82) Freight Claims - “Used” Machinery
83) Freight Claims - Accepting Partial Payment
84) Freight Claims - Act of God
85) Freight Claims - Administrative Costs
86) Freight Claims - Administrative Costs
87) Freight Claims - Amending Claims
88) Freight Claims - BMC 32 and Contract Carriers 49
91) Freight Claims - Burdens of Proof
92) Freight Claims - Carrier Offset for Overages
93) Freight Claims - Carrier Out of Business
94) Freight Claims - Carrier Setoffs Against Open Freight Charges
95) Freight Claims - Carton Damage
96) Freight Claims - Clean Delivery Receipt
97) Freight Claims - Concealed Damage
98) Freight Claims - Concealed Damage
99) Freight Claims - Concealed Damage Notification 56
100) Freight Claims - Concealed Damage, Set-offs & Storage Charges
101) Freight Claims - Contaminated Food Packaging
102) Freight Claims - Contamination of Food Products
103) Freight Claims - Cost of Investigation
104) Freight Claims - Cost of Mitigating Damage
105) Freight Claims - Damage Notations
106) Freight Claims - Damage to Packaging
107) Freight Claims - Damages For Early Delivery
108) Freight Claims - Declared Value, Insufficient Packaging
109) Freight Claims - Delay & Reasonable Dispatch
110) Freight Claims - Delay Due to Strike
111) Freight Claims - Delay on International Air Shipment
112) Freight Claims - Delay, Replacement Shipment
113) Freight Claims - Duty to Mitigate
114) Freight Claims - Excessive Delay
115) Freight Claims - Excusable Delay in Filing
116) Freight Claims - Federal Regulations
117) Freight Claims - Forms and Procedures
118) Freight Claims - Freight Charges for Replacement
119) Freight Claims - Goods Damaged During Return
120) Freight Claims - Holding Goods Pending Resolution
121) Freight Claims - Improper Packaging
122) Freight Claims - Improper Packaging
123) Freight Claims - Inadequate Packaging Declination
124) Freight Claims - Inspection Reports
125) Freight Claims - Inspection Requirements
126) Freight Claims - Inspection Upon Delivery
127) Freight Claims - Insurance Coverage
128) Freight Claims - Insurance vs. Liability Limitations
129) Freight Claims - Intact Seals
130) Freight Claims - Interlined Shipments
131) Freight Claims - Late Delivery of Brokered Load
132) Freight Claims - Liability for Improper Loading
133) Freight Claims - Liability Limitations
134) Freight Claims - Limitation of Liability
135) Freight Claims - Measure of Damages
136) Freight Claims - Measure of Damages
137) Freight Claims - Measure of Damages
138) Freight Claims - Measure of Damages on Interplant Movement
139) Freight Claims - Measure of Damages on Refurbished Goods
140) Freight Claims - Mexico Shipments
141) Freight Claims - Misdelivery
142) Freight Claims - Missed Deliveries
143) Freight Claims - Mitigation of Loss
144) Freight Claims - Offsets and Payment of Freight Charges
145) Freight Claims - Package Express Carriers
146) Freight Claims - Packaging
147) Freight Claims - Palletized Shipments
148) Freight Claims - Partial Payment
149) Freight Claims - Payments to Lock Box
150) Freight Claims - Proof of Delivery
151) Freight Claims - Proper Party to File
152) Freight Claims - Protective Service
153) Freight Claims - Refrigerated Load
154) Freight Claims - Refused Shipment
155) Freight Claims - Replacement Cost
156) Freight Claims - Return Freight Charges as Mitigation
157) Freight Claims - Risk of Loss
158) Freight Claims - Salvage on Drugs
159) Freight Claims - Sealed Trailer
160) Freight Claims - Sealed Trailer
161) Freight Claims - Sealed Trailers
162) Freight Claims - Setoff of Claims vs. Detention Charges
163) Freight Claims - Shipper Load & Count
164) Freight Claims - Shipper Load & Count
165) Freight Claims - Shipper Load & Count
166) Freight Claims - Shipper’s Load and Count
167) Freight Claims - Shortage on Palletized Shipment
168) Freight Claims - Shortage on Shrink-Wrapped Pallet
169) Freight Claims - Shortages
170) Freight Claims - Shortages on Dropped Trailers 99
171) Freight Claims - Signing “Subject to Count”
172) Freight Claims - Special Damages
173) Freight Claims - Special Orders
174) Freight Claims - Tanker Contamination
175) Freight Claims - Terms of Sale
176) Freight Claims - Terms of Sale & Risk of Loss
177) Freight Claims - Terms of Sale & Risk of Loss
178) Freight Claims - Time Limit to File
179) Freight Claims - Time Limits for Concealed Damage
180) Freight Claims - Time Limits to Process
182) Freight Claims - Who Can File?
183) Freight Claims - Who Should File?
184) Freight Forwarders - Requirements
186) Hazardous Materials - Federal Regulations
187) Household Goods Complaints
189) INCOTERMS - Bills of Lading and Terms of Sale
190) INCOTERMS and Terms of Sale
191) Insurance - Sale by Motor Carrier or Broker
192) Insurance vs. Carrier Liability
193) Liability - Damage to Equipment
194) Liability - Import Shipments
195) Liability - Over Height Loads
196) Liability for Accidents - Improper Equipment
197) Liability of Shipper - Third Party Claims
198) Licensing - Air Freight Forwarders
199) Loading of Freight - Responsibility
200) Measure of Damages - Cost vs. Invoice Price
202) Motor Carriers - Duty to Serve
203) Motor Carriers - Safety Information
205) Operating Authority - Common vs. Contract
206) Operating Authority - Motor Carriers and Brokers 118
207) Overcharges - Household Goods Carriers
208) Proof of Delivery - ‘Subject to Recount’ Notation
209) Rates - Interline Shipments
210) Refusal of Damaged or Misdirected Shipments
211) Refusal of Non-Conforming Goods
214) Sales Tax on Freight Charges
215) Salvage Procedures & Regulations
216) Setoffs - Freight Claims vs. Freight Charges\
218) Shipper's Domestic Truck Bill of Lading
219) Shippers’ Associations and Agents
220) Shock and Impact Recorders
221) Terms of Sale - Liability and Risk of Loss
222) Terms of Sale - Presumptions
223) Terms of Sale and Risk of Loss
224) Third party Logistics Providers
225) Third Party Logistics Providers
226) Third Party Provider - What Are You?
227) Time Limits - Overcharge & Undercharge Claims 133
Question: We are a
manufacturer of disposable medical devices and ship all orders from one
Midwestern facility. Roughly 80% of
customer orders ship LTL, about 8% parcel and the remaining orders are
FTL. We do not have any long-term FTL
contracts; we use a few different carriers and current lane quotations from
each to determine who will get the load.
Early last
year, we made an agreement with one such carrier to include in their quoted
price the added unload/driver assist charges we were regularly getting on our
West Coast intermodal moves. From that
point on, those accessorial charges were rolled into the base rate and no
longer listed separately on their invoices.
Recently, the carrier rep indicated that they had a negative balance in
their accrual account and that we owed them nearly $10,000 as the result of
their underestimating the amount of accessorial charges for over 100 loads
dating from January of last year through May of this year. We have updated quotations for these lanes
throughout that time period and have paid each invoice on time without
dispute. Is there any possibility that
we could be liable for these back charges?
Any insight you can provide would help.
Answer: Do you
have any documentation of your agreement regarding theses charges? You indicate
that you do not have any formal transportation contracts, but have
"quotations" from various carriers.
The question is whether it can be determined from the
"quotation" whether the accessorial charges are included in the rate;
if so, then the "quotation" would be evidence of the contractual
agreement between the parties. On the
other hand, if the "quotation" is silent - or worse, if it
incorporates the carrier's rules tariff by reference - you may be liable for
the accessorial charges.
I should
note that some of the claims you refer to are time-barred under the "180
day rule" in 49 U.S.C. § 13710(3)(A) which provides: "A carrier must issue any bill for charges in
addition to those originally billed within 180 days of the receipt of the
original bill in order to have the right to collect such charges."
My best
advice to avoid this type of problem in the future is to enter into a properly
drafted transportation agreement with each of your carriers.
Question:
I am checking credit on a potential customer. This customer is an airfreight forwarder. My question is, are air freight forwarders
required to have surety bonds?
Answer:
Airfreight forwarders, unfortunately, are unregulated by the U.S
Department of Transportation or any other federal agency, so there is no
requirement for registration, insurance, surety bonds, etc.
I would
note that many so-called “air freight forwarders” actually engage in surface
transportation by truck, where no portion of the movement is by air. In such circumstances they would be required
to register as a freight forwarder with the Federal Motor Carrier Safety
Administration.
Question: We have two old loss and damage freight claims
(each claim is about $1500) that we have been trying to collect from a carrier
for over 18 months. The carrier demanded that the claims go to arbitration. We
are not familiar with arbitration and would like to know what steps we should
follow.
Answer: If you agree to arbitrate these loss &
damage claims, I would recommend using TAB (the Transportation Arbitration
Board). You can get information by contacting John Harvey, the Administrator
for the program. His e-mail address is jharvey@stny.rr.com.
One note
of caution: The statute of limitations
is 2 years from the date of declination of the claim. The statute of limitations is not extended by arbitration, unless
the parties expressly agree to waive it.
If you haven't resolved these claims within that time period, they will
be time-barred, and the carrier will have no further obligation to pay.
Question: I have noticed that certain carriers, such
as Conway Central, Conway Southern, Land Air Express, American Freightways, and
Roadway are placing Pro stickers on my Shipper's Bill of Lading (BoL) that
indicate that the driver's signature only acknowledges receipt of freight, that
the carrier's liability may be limited, and that the terms and conditions of
their tariffs may apply.
After
questioning this with their local reps, the answer I received was that this has
become standard practice for carriers if they are moving freight under a
Shipper's BoL and not the carrier's BoL. One of the carrier's had faxed to me
an article which states that because of the decision made by the U.S. District
Court in Massachusetts, carriers are now being advised to add this language to
their Pro stickers. The case cited is "Norpin Manufacturing Co. Inv. v.
Con-Way Transportation Services, Inc."
If the
carriers are now placing these stickers on a Shipper's BoL, what effect is this
going to have on the terms the shipper has, and has agreed to with the carrier?
One of these carriers has told me that this does not apply to my shipments,
however, they are still placing the labels on my BoLs. Have you heard of any
similar situations from other shippers?
Answer: We have been giving some thought to the
questions you have raised. The only
statutory provision that even comes close to addressing the issue is 49
U.S.C. § 80108 (part of the Bills of Lading Act):
Section
80108 Alterations and additions
An
alteration or addition to a bill of lading after its issuance by a common
carrier, without authorization from the carrier in writing or noted on the
bill, is void. However, the original
terms of the bill are enforceable.
This
presumes that the carrier "issues" the bill of lading, and not that
it is a shipper-prepared bill of lading that is given to the carrier by the
shipper and altered by the carrier. It
does not address the problem you have described.
The
question would appear to be determined by basic principles of contract law -
offer and acceptance, counter-offer, performance, etc. There are no court decisions that we have
found that are directly on point, and we are doing further research and
analysis. It is not clear how a court
would decide if there were a conflict between the bill of lading as prepared by
the shipper and the carrier's unilateral attachment of a "Pro
Sticker".
As you
have previously observed, the best solution to the problem is to enter into a
well-drafted written transportation contract with your carriers. Then, the form of the bill of lading will be
irrelevant and the addition of the carrier’s PRO sticker would not alter the
terms of the underlying agreement.
Question: If a
driver signs the bill of lading with his carrier name, date of pick-up, and
trailer #, but omits the case or piece count, is the carrier liable for the
entire quantity indicated on the bill of lading if a shortage occurs?
Answer: Based on
the limited information you have provided, let me try to answer.
If you
have used a typical bill of lading, it would show the number of packages, a
description of the goods, the weight, etc. on the face of the bill of lading.
Assuming that your shipment is an "LTL" shipment, and not a full
truckload that is loaded and counted by the shipper without the driver present
or having an opportunity to count ("shippers load & count"), the
general rule is that the bill of lading is "prima facie evidence" of
what was shipped. In other words,
unless the driver makes some other notation at the time of pickup, it would be
presumed that the quantity shown on the face of the bill of lading was actually
received by the carrier.
I would
recommend reading Section 5.0 (particularly 5.2.1 and 5.2.2) of "Freight
Claims in Plain English" (3rd Ed. 1995) for a thorough discussion of these
principles.
Question: I know there is a requirement, in writing
somewhere, that states that a shipper is required to write a proper and
accurate description of the freight being tendered for shipment. Is it codified in U.S. law? Is it in the
National Motor Freight Classification (NMFC)? Is it on the back of the bill of
lading (BOL)?
Answer: There is no law or regulation that is
binding on a shipper.
49 C.F.R.
§ 373.101 requires a motor carrier to issue a "receipt or bill of
lading" and sets forth the minimum information required. This includes:
names of consignor and consignee
origin and destination points
number of packages
description of freight
weight, volume, or measurement of freight
(if applicable to the rating of the freight).
The
Uniform Straight Bill of Lading, of course, has a place on the face of the BOL
to enter a description of the articles, weight, etc., but there is nothing in
the terms and conditions other than the statement in Section 7, relating to
liability for freight charges when there is "incomplete or incorrect
information provided by the consignor".
Question: As a shipper, we have historically provided
a Bill of Lading/Packing List Form that is based on 49 C.F.R.
§ 1035. We are implementing a new form and would like to streamline it as much
as possible. What is required by law on our new form?
Answer: First of all, the bill of lading prescribed
in 49 C.F.R. (Code of Federal Regulations) 1035 is a RAIL bill of lading, not a motor carrier bill of lading. Although the ICC did prescribe the form of
the rail bill of lading many years ago, it never did so for motor carriers.
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.
Question: 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's a rail or rail-water shipment and the applicable motor
carrier classification if it's 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:
1.
Can a short form uniform bill of lading that references both rail and
motor carrier still be used?
2.
With all of the changes to the motor carrier uniform bill of lading,
would one form for both rail and motor carrier be problematic? (Tariffs no
longer filed, changes in prepaid/collect, etc.?)
3. Is
there any reason to use the Uniform Bill of Lading for motor carriers as
opposed to having a shipper-friendly BOL?
4.
There is a Uniform BOL for rail and water shipments, at 49 C.F.R. § 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?
5.
The C.F.R. 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?
Answer:
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 that 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 C.F.R. § 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 that
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 that 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.
Question:
49 C.F.R. Part 373 requires the carrier to prepare the Bill of Lading (“B/L”) (not
withstanding the fact that shippers commonly perform this task). How does this law apply to shipments
containing hazardous materials? There
are specific requirements pertaining to the description of hazardous materials
on “Shipping Papers”. 49 C.F.R. §
172.200 (a), and § 173.22 (a)(1) indicate that a shipper is responsible. It appears to me that these laws
conflict. Am I wrong? Who is responsible for preparing a Bill of
Lading for a shipment containing a hazardous material?
Answer:
It is true that both 49 U.S.C. § 14706 and 49 C.F.R. Part 373 require a motor carrier to “issue” a bill of lading or receipt.
There is a
distinction between “issuing” and “preparing” a bill of lading. As you are aware, many shippers actually
prepare bills of lading and the carrier's driver merely signs the bill of
lading at the time he picks up the goods.
As I read
it, the HazMat regulations place certain obligations on shippers of dangerous
goods to ensure that the bills of lading and shipping documents contain
specified information.
I really
don't think this is a problem.
Question: We have two locations in the same town in Massachusetts, located about
3 miles apart. Is it necessary to
produce a Bill of Lading when transferring materials between these two
locations or could we just issue a shipping manifest? The carrier that transports our materials is under contract and
we lease the equipment from them.
Answer: IF you have a properly drafted transportation contract
(which I have not seen) that fully covers the situation you have described, you
do not need a "bill of lading".
HOWEVER,
there is no question that there must be some kind of appropriate receipt that
adequately describes the shipment, signed and dated by the carrier's driver,
whenever goods are tendered for transportation. This could be a shipping manifest or similar document, provided
that it has a provision for the driver to acknowledge receipt, date and sign
the document.
Likewise,
the shipping document should provide for an acknowledgement of delivery by the
receiver of the goods, and any notations of shortage or damage that may be
observed at the time of delivery.
I would
note that for inter-plant movements there may be a question as to the measure
of damages (manufactured cost, inventory value, wholesale price, etc.) in the
event of loss or damage in transit.
This should be specifically addressed in your contract.
Question: Are carriers responsible for counting
individual cartons if the bill of lading lists the shipment as 3 skids under
number of pieces and 100 “STC” (said to contain) in the body of the bill of
lading? If a bill of lading lists a shipment as 100 cartons under piece count
and on 3 skids in body are carriers responsible for counting individual
pieces? If a shipment is only listed as
a piece count by shipper, and a driver is given an opportunity to count the
shipment, but does not do so and adds a notation under his signature stating
the shipment was on a certain number of pallets and STC a certain number of
pieces are the carriers liable for shortages?
Answer: If a driver is present at the time
of loading and has an opportunity to count the freight as it is being loaded,
or if he is able to count the number of packages that are being put on a skid
or pallet, he should sign for the actual carton count.
In many
cases though, the freight has already been palletized and stretch-wrapped when
the driver arrives, and it is not possible to visually determine the number of
packages or cartons. Many carriers
instruct their drivers to sign only for the number of pallets and not the
number of cartons in such situations, or to indicate "STC" (said to
contain) on the bill of lading.
If this is
true, you have the additional burden of proving what was actually loaded on the
pallet and you will probably need a written statement or affidavit of the
shipping person or supervisor who had actual knowledge of what was shipped. See
Section 5.0 of "Freight Claims in Plain English" (3rd Ed. 1995) for a
discussion of "Burdens of Proof".
If you
have shortage from a palletized, stretch-wrapped pallet, you should investigate
whether there was any sign of tampering with the stretch wrap (cuts, tape,
etc.) or if it had been removed and replaced during transit.
Question: What is the proper procedure regarding
putting the piece count on Bills Of Lading?
Many of our locations feel that there is no need to do this but I
disagree. I think that it is important so that our carriers are on notice 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 without
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 advise.
Answer; 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 which
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.
Question: 49 C.F.R. § 373.101 states that the bill of lading is to contain the “weight, volume,
or measurement of freight (if applicable to the rating of that freight)” – what
does the ‘if applicable’ part mean? We run a closed distribution system, from
our warehouses, where we deliver products on our own equipment or equipment
exclusively contracted to our company.
Our payment to these contract carriers is not dependent on a weight or
volume measurement – so does the shipment weight need to be on our invoices or
bills?
Answer: The C.F.R. provision that you refer to sets
forth minimum requirements for a bill of lading or receipt issued by a motor
carrier subject to the jurisdiction of the D.O.T. The reference to measurement of freight usually refers to weight,
because most LTL carriers have established rates based on weight (cents per
hundredweight). It could also refer to
volume or some other measure, if that is how the freight charge is determined.
In your case,
it sounds as though you are shipping on your own trucks (private carriage) or
are using a for-hire motor carrier under a transportation contract or
agreement. For private carriage
movements, the regulations don't apply and there is no requirement to have any
particular form of bill of lading or receipt.
For your contract carriage movements, I don't know what your contract
says or how you compensate the carriers.
But, in any event, your contract governs and you can specify in your
contract as to what kind of shipping document is used. In other words, I don't think you have a
problem.
Question:
Historically, the carrier was legally obligated to "issue" the
bill of lading even though many shippers do so for their own convenience. Is
this legal obligation still in force? What information is legally necessary to
be listed on a bill of lading? We would
like to generate a simple bill of lading in spreadsheet form for our off-site
warehouse, but are curious if all the typical “fine print mumbo jumbo” is
really necessary.
Answer:
The Interstate Commerce Act (ICA) requires motor carriers to "issue
a receipt or bill of lading" for property received for transportation, 49
U.S.C. § 14706. (In practice, the shipper
usually prepares a bill of lading on its own form and presents it to the driver
for signature.) Theoretically, this requirement can be waived, if the parties
expressly agree in writing, 49 U.S.C. § 14101, but it is always a good
practice to have a written receipt for shipments.
The ICA
does not specify any particular form of the receipt or bill of lading, but the
Federal Motor Carrier Safety Admininstration (formerly ICC) regulations
prescribe the minimum requirements, 49 C.F.R. Part 373.
373.101 Motor Carrier bills of lading.
Every
motor common carrier shall issue a receipt or bill of lading for property
tendered for transportation in interstate or foreign commerce containing the
following information:
(a) Names
of consignor and consignee.
(b) Origin
and destination points.
(c) Number
of packages.
(d) Description
of freight.
(e) Weight,
volume, or measurement of freight (if applicable to the rating of the freight).
I would
not recommend that you use an “off the shelf” bill of lading or try to copy the
contractual language from the motor carrier's Uniform Straight Bill of Lading.
I
recommend that shippers enter into written transportation agreements with their
motor carriers that clearly spell out the duties and obligations of the
parties, and the terms and conditions of carriage. A properly drafted transportation agreement avoids problems inherent
with using the Uniform Straight Bill of Lading (and many variations thereof)
that incorporate by reference the Classification and the carrier's rates and
rules tariffs. If you use a bill of
lading that incorporates other terms by reference, unless you review all the
incorporated terms, you may be unpleasantly surprised when you discover what
you have agreed to.
You should
contact a knowledgeable transportation attorney if you need assistance in
developing an appropriate transportation agreement or other shipping documents.
Question:
49 C.F.R. § 373.101, Motor Carrier Bills of Lading,
states that “Every motor common carrier shall issue a receipt or bill of lading
for property tendered for transportation in interstate or foreign
commerce…"
1. When doing business with carriers that you
do NOT have a transportation agreement or contract with, are you breaking the
law if you do not follow the above regulation, i.e. a receipt or bill of lading
is not issued, or the number of cartons is not shown on the receipt or bill of
lading? If it is unlawful, is there a
penalty? What about other information
such as the seal number(s)? Is there
any regulation stating that the seal number(s) must be shown on the receipt or
bill of lading, or some other document?
2. When doing business with carriers that you
DO have a transportation agreement or contract with, is it correct that you can
legally dictate whether or not a receipt or bill of lading will be used, and if
so, what form to use; and also what the freight details are to be shown on the
bill of lading and/or other documents, as long as all of this is clearly
defined in the transportation agreement?
Answer:
The requirement for a motor carrier to issue a bill or lading or receipt
is found both in 49 U.S.C. § 14706 (the “Carmack Amendment” language) and in the FMCSA (formerly ICC)
regulations at 49 C.F.R. Part 373. The regulations apply only to the motor carrier; they do not
apply to a shipper.
There is
no “penalty” if the carrier fails to issue a bill of lading or receipt. However, the carrier may be precluded from
asserting bill of lading or tariff defenses such as time limits for filing
claims or bringing suits, or limitations of liability that would otherwise be
incorporated by reference in the bill of lading.
Many
shippers prepare shipping orders or bills of lading and provide them to the
carrier's driver for signature. There
is no statute or regulation that governs the form or content of such shipping
documents. Obviously, the basic
information referred to in 49 C.F.R. § 373.101 should be included. Other
information such as seal numbers, purchase order numbers, etc. can be included
at the option of the parties.
If you
have a written transportation contract with a carrier, it is important to make
sure that your contract - and not the particular form of the bill of lading -
covers and includes all relevant provisions, terms and conditions.
Question: Is there a legal time frame that a shipper
must keep copies of bills of lading?
Answer:
There is no legal time frame for a shipper to retain bills of
lading.
There is,
however, a legal time frame for carriers to retain bills of lading. This can be found in the federal regulations
at 49 C.F.R. Part 379. Generally, a carrier is required to retain bills of lading for 1 year. However, if the bill of lading (or freight
bill) relates to a shipment involving a claim (i.e., cargo claim, freight
charge dispute), the carrier is required to retain the bill of lading, as well
as other shipping documents, for 1 year after the claim is settled or otherwise
resolved.
Although
there is no legal requirement for a shipper to retain bills of lading, if the
bill of lading (or other documents) relate to a dispute, we recommend that such
documents be retained until the dispute is resolved.
Also, for
shipments where there is no known dispute, we recommend that shippers retain
bills of lading (and other shipping documents) for 3 1/2 years at a
minimum. This is because a carrier has
18 months to file suit to recover freight charges, 49 U.S.C. § 14705(a). However, if the carrier files for
bankruptcy, the bankruptcy trustee has two years from the date the carrier
files for bankruptcy to determine if the carrier had any causes of action that
it was entitled to pursue as of the date it filed bankruptcy. In other words, if the carrier had any
causes of action during the 18 month period prior to filing bankruptcy, the
trustee has 2 years from the date of bankruptcy to pursue such causes of
action. Thus, if you add the 18 months
to the 2 years, you get 3 1/2 years.
Please
note that if the shipper and carrier agree to a statute of limitations period
in a contract that is different than 18 months, then the recommended retention
period would change accordingly.
Question: When using an electronic bill of
lading of warehouse receipt is there a legal requirement (under the UCC or any
other statute) to retain the original hard copy. If so, can you point me in the correct direction to research this
issue.
Answer: There are federal record retention
regulations that apply to motor carriers, but I am not aware of any
"law" (or regulation) that requires a shipper to retain a bill of
lading or a warehouse receipt.
The real
question is whether an electronic record will be adequate in the event of a
later dispute between the parties, or whether it will be admissible in a court
proceeding if there is litigation.
Obviously, the safest course of action is to create a hard copy and
retain it for a reasonable time. We
usually recommend 3 1/2 years for retention of shipping documents because the
statute of limitations on suits for freight charges is 18 months, but it can be
extended if the carrier files for bankruptcy by an additional 2 years.
Question: Does a shipper or consignor need to sign the
bill of lading? We would like to use a system that generates the BOLs with our
name printed on it. Does the lack of a signature limit our legal recourse if we
were to end up in some sort of transportation related litigation.
Answer: 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.
Question: We are a
common and contract carrier and do not participate in the NMFC. Most of our
shipments are LTL loads we receive from brokers and we use rate quotes to
settle on a price. While we have published tariffs, they are generally not sent
to the brokers or shippers. When our drivers pickup back-hauls, we have them
put a sticker on the shipper’s paperwork (BOL) that reads: "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/lbs limit
of liability, detention information, shipper, consignor, consignee, rate
information and wording "subject to terms and condition of the Uniform
straight bill of lading on file in carrier’s office".
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. My questions are: 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/lbs 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?
Answer: 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 that 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 that 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 by an
experienced transportation attorney is the best way to avoid problems and
disputes.
Question:
In reference to a Straight Bill of Lading, is it a good practice to have
the contract terms and conditions printed on the back of our bills of lading?
Answer: If you are
using a short-form version of the Uniform Straight Bill of Lading, it will
probably already have language incorporating the National Motor Freight
Classification (NMFC) and the long-form version of the Uniform Straight Bill of
Lading (which contains the terms and conditions on the reverse side). It may also incorporate by reference the
carrier's unfiled rate and rules tariffs.
Note
however, that only carriers that are participants in the NMFC can incorporate
provisions from the Classification, including the bill of lading terms and
conditions set forth therein.
The best
practice is to have a written transportation contract with each of your
carriers.
Question: We are a
shipper of consumer electronics. Many
of our customers are requesting/requiring that we use a new standardized VICS
Bill of Lading (“B/L”). What is this
and what are the advantages or disadvantages of its use?
Answer: 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 B/L data.
However, the
authors of this B/L adopted what they call the "legal statements"
from the Uniform Straight Bill of Lading in the National Motor Freight
Classification. Thus the VICS B/L
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 B/L 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 B/L. 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."
Question: How does
one access a brokerage bond's history and how does one file a claim against it.
Is there a required form that we need to get.
Answer: FMCSA
regulations provide that brokers must file a surety bond in the amount of
$10,000, 49 C.F.R. 387.307.
To obtain
surety bond information, you can access the FMCSA's "Licensing &
Insurance System" on its website at www.fmcsa.dot.gov. You can also call the FMCSA at (202)
358-7000 and request the name, address and surety bond number of the broker's
surety or insurance company. Then write to that insurer and submit your claim
with proper documentation.
You should
note that the bond is only $10,000, so that if there are other claims the
insurer will probably pay each claimant only a pro-rata share of the bond
amount.
Question:
You recently advised us that we should include a provision in our
“Shipper-Broker” contract that requires the broker to acquire and maintain
Errors and Omissions Liability Insurance.
We have
not required this of our brokers in the past and I'm wondering if this point
may be a show-stopper to them signing a contract. Do you feel this is a definite requirement for the broker and
something we shouldn’t compromise or can we possibly delete this point from the
contract without too much concern?
Answer:
As a general rule, brokers are not liable for loss, damage or delay to
goods in transit. However, a number of
recent court decisions reinforce the principle that brokers can be liable if
they are negligent, and their negligence causes or contributes to the loss, see
e.g., Professional Communications, Inc.
v. Contract Freighters, Inc., 171 F.Supp.2d 546 (D.Md., Oct 17, 2001) (NO.
CIV. CCB-00-CV1309); Custom Cartage, Inc. v.
Motorola, Inc., 1999 WL 965686 (N.D.Ill., Oct 15, 1999) (NO. 98 C 5182); Commercial Union Ins. Co.
v. Forward Air, Inc., 50 F.Supp.2d 255, Fed. Carr. Cas. P 84,107 (S.D.N.Y.,
Jun 14, 1999) (NO. 98 CIV. 6814 (AGS)).
It has
become common for brokers to be involved in loss & damage claims and
lawsuits under various theories: negligent carrier selection (unlicensed or
uninsured carriers, failure to verify a carrier’s insurance, selection of a
carrier with an “Unsatisfactory” safety rating, use of drivers in violation of
safety regulations, etc.); failure to transmit critical information to the
carrier (special equipment or protective services needs, etc.).
Because of
this, we recommend that brokers should have appropriate insurance coverage for
their “errors and omissions” - in other words, their negligence. Whether this coverage is part of a general
business liability policy or a separate “E&O” policy is not critical, but I
do think it is a reasonable requirement.
Question:
Some brokers that we deal with have been submitting cargo insurance
certificates that are notated “contingent cargo”. I am aware that generally brokers are not liable for loss or
damage, yet we require they use motor carriers with specific limits of liability. If in fact, the broker used a carrier with
low or no cargo insurance, how would contingent cargo insurance affect
potential claims?
Should we
ever accept contingent cargo insurance regardless of whether it’s a broker or
carrier?
Answer:
Broker’s “contingent cargo insurance” policies come in different flavors
from different insurers. They are
supposed to cover loss or damage to the goods if the actual carrier or its
insurer fails to pay the shipper's claim.
Usually
there are quite a few conditions that must be complied with before the policy
becomes applicable: the broker must obtain a certificate of insurance from the
carrier with a limit sufficient to cover the value of the goods that are
shipped, must file and pursue a timely claim that is not paid, etc. Also, the typical policies that we have seen
contain many exclusions from coverage.
The broker
is not a carrier, and he is not the shipper, consignee or owner of goods - so
he really has neither common carrier liability nor an insurable interest in the
goods.
As you
have noted, a broker would not usually have liability for loss or damage in
transit - unless he was negligent and his negligence caused or contributed to
the loss, or he has contractually assumed such liability.
My opinion
is that most of these policies miss the boat, and that brokers really should
have two kinds of coverage: “errors & omissions” insurance in case they are
negligent, and insurance that covers contractually assumed liability if they
have held themselves out to the shipper to be responsible for transit loss and
damage.
Question: I am an agent for Landstar Logistics, a
transportation broker. As an agent I am required to have all potential carriers
insurance and safety approved through the Landstar staff located in Florida
prior to allowing them to move any of my customers cargo. I used an approved
carrier to move a in-bond load of wine from WA to CA. The trailer and cargo
were stolen in CA. It turned out that the approved carrier had an exclusion on his insurance to
transport wine and other goods. The claim was denied by the carriers insurance.
It also turns out that Landstar's insurance approval process does not include
making sure that insurance policies contain exclusions. Landstar does not want
to honor the claim on the basis that they are a broker only. I feel there is
negligence on Landstar's behalf and that they need to honor the claim with
contingent cargo liability insurance. If Landstar does not honor claim, I will
probably lose customer & business and am willing to go to court over this.
Is there negligence and what legal recourse do I have?
Answer: As a general rule the court
decisions hold that a transportation broker is not liable for loss, damage or
delay to goods in transit. A broker can
be liable if it is negligent, and its negligence causes or contributes to the
loss.
The
question is: (1) was the broker negligent in failing to inquire whether the
carrier's insurance policy covered or excluded the commodities that were being
transported; and (2) if so, whether its negligence caused damage to the
shipper. The answer depends on the
specific facts and circumstances, and the standards to be applied to a
reasonably prudent broker.
In my
opinion, from the facts you have described, there would be a cause of action
for negligence against the broker.
I would,
however, observe that you described your position as an agent of the
broker. This raises the question as to
whether you would have any standing to bring a legal action, since you have no
ownership interest in the shipment.
Question: I own two shipping stores and am interested
in freight brokering. I am aware that
in many instances that I will be required to have a freight brokers license in
order to resell certain services. What
are the requirements and where can I get more information?
Answer: 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 C.F.R. Part 365. Application forms (Form
OP-1) are available from the FMCSA, 400 Virginia Ave SW, Washington, DC, 20590,
phone (202) 358 7000.
You can
now get application forms and instructions through the Internet via the FMCSA
web site:
Go first to http://www.fmcsa.dot.gov
; then go to the Motor Carrier
Licensing Forms section at: http://www.fmcsa.dot.gov/factsfigs/licensing/licensing.htm
Select the
form "Op-1" and you will be given the instructions and you can
actually print out the forms.
Question: Can you please send us the pertinent
information regarding how long we have to store freight bills? We are a
broker/logistics services provider and need to know the law requiring retention
and storage of freight bills.
Answer: Record keeping requirements for brokers are
set forth in 49 C.F.R. Part 371 as follows:
371.3 Records to be kept by brokers.
(a) A broker shall keep a record of each
transaction. For purposes of this section, brokers may keep master lists of
consignors and the address and registration number of the carrier, rather than
repeating this information for each transaction. The record shall show:
(1) The
name and address of the consignor;
(2) The
name, address, and registration number of the originating motor carrier;
(3) The
bill of lading or freight bill number;
(4) The
amount of compensation received by the broker for the brokerage service
performed and the name of the payer;
(5) A
description of any non-brokerage service performed in connection with each
shipment or other activity, the amount of compensation received for the
service, and the name of the payer; and
(6) The
amount of any freight charges collected by the broker and the date of payment
to the carrier.
(b) Brokers shall keep the records
required by this section for a period of three years.
(c) Each party
to a brokered transaction has the right to review the record of the transaction
required to be kept by these rules.
Question: We've been requesting BMC 32 Endorsements
from our carriers this year. So far,
we've had some interesting responses.
Some have no idea what we are requesting, some send the wrong form,
etc. CWX has sent a copy of their BMC
83, which looks like it is something similar to the BMC 32. Is this sufficient information and why would
a carrier not have a BMC 32? Also, the
BMC 32's that we have received have expiration dates. Would it be wise to follow up for updated forms as we do with
Certificates of Insurance?
Answer: The BMC-32 is a cargo insurance endorsement;
the BMC-83 is a cargo surety bond. They
essentially serve the same purpose, see 49 C.F.R. Part 387.313.
You can
check with the Federal Motor Carrier
Safety Administration to find out if the carrier has current public liability
and cargo coverage by accessing their web site at www.fmcsa.dot.gov and selecting the
licensing and insurance database. We
recommend this as the best way of verifying carrier status and compliance.
Question: Is there a nationally recognized
certification program for individuals who specialize in the administration and
negotiation of freight claims?
How does
one become certified?
Answer: Yes, there is! The Certified Claims Professional Accreditation Council,
Inc. is a non-profit organization that
is co-sponsored by the Transportation Consumer Protection Council, Inc. and the
Transportation Loss Prevention and Security Association, Inc., and is
recognized throughout the industry.
Information
and requirements for accreditation as a Certified Claims Professional can be
obtained from:
CCPAC
P.O.
Box 441110
Fort Washington, MD 20749.
Phone: 301-292-1988/1970
Fax: 301-292-1787
Email: ANIMAG@LATTMAG.COM
Web page: http://www.LATTMAG.com
Question: Recently we
have been inundated with customer deductions on back charges for late delivery,
especially to job sites. From past experience I understand the carrier’s
liability is limited by reason of reasonable dispatch and carriers knowledge
and acceptance of financial consequences of late delivery. Have there been any
recent court cases upholding these principles? If not what references could I
seek to reinforce my position that carrier is limited in his liability for late
delivery?
Answer: Unfortunately,
the practice of “back charging” for missed delivery appointments seems to be a
prevalent practice.
There are
two basic issues - and two different contractual relationships involved.
First,
there is the contract of carriage - often a uniform bill of lading - with the
motor carrier. Ordinarily, a motor carrier is only required to deliver with
“reasonable dispatch”, which means to transport the goods within the usual and
customary time period, see “Freight Claims in Plain English” (3rd Ed. 1995) at
Section 11.2, et seq.
Carriers
can and do AGREE to deliver by appointment or at a particular “window”
specified by the shipper or the consignee. However, unless such an agreement is
in writing, it may be unenforceable. Most shippers that require delivery by
appointment or at specific times include such provisions in their
transportation contracts.
We always
advise our clients to enter into formal transportation contracts with their
carriers, and our contracts usually contain a provision that the carrier will
be responsible for customer charge backs resulting from late deliveries or
missed appointments.
The second
part of the problem is your customer. I assume that there must be some
provision in the purchase order or the contract of sale, which addresses
delivery requirements and penalties for missing appointments or delivery
windows. IF NOT, your customer probably has no legal right to assess charge
backs, and you should refuse to pay them. On the other hand, if your sales or
marketing people have accepted an order containing penalty provisions for late
delivery or missed appointments, you would be bound by that agreement. I would
suggest that your company legal department or a qualified transportation
attorney should be consulted on your terms and conditions of sale.
Question: Recently our company moved a shipment of
custom automotive accessories which were COD for $6600. Our driver failed to
collect the COD monies from the consignee and did not obtain the consignee's signature
for receipt of the shipment.
We have
since attempted to collect the COD monies owing to the consignor, but the
consignee is now stating that they never received the shipment.
What is
our potential liability? The shipping document used was a uniform bill of
lading showing a description of the shipment and its value and the COD amount.
Answer: Under the
facts as described, your company could be liable under two theories: failure to
deliver the goods, and failure to collect the COD charges. As to the
non-delivery, this is obviously a question of fact and depends on the veracity
of the witnesses - the driver vs. the consignee. The failure to collect the COD is considered a breach of
contract, however, and the court decisions generally hold the carrier liable
for the COD amount stated on the bill of lading if it fails to collect the
funds upon delivery.
I would
note that, if you have to pay the COD amount to the shipper, and it can be
proven that the goods were actually delivered to the consignee, you should have
a right of indemnity over against the consignee to collect the money.
Question:
I am preparing a shipper-friendly broker agreement and have included a
provision that the broker will be liable for all of shipper’s claims for loss,
damage or delay to shipments tendered to the broker. Is there any reason to
obligate the parties to follow the procedures in 49 C.F.R. Part 370, particularly when the
regulations do not apply to brokers?
Those would seem to put unnecessary constraints on the shipper regarding
time limits, etc. Would you recommend
including procedural requirements between the shipper and the broker for such
claims?
Second, it
appears that the regulations (Part 378) regarding claims for overcharges and
duplicate payments would not apply to a broker. If the shipper were to inadvertently pay to the broker an
overcharge or duplicate payment passed on by the broker from the carrier,
couldn’t the shipper simply offset the overcharges or duplicate payments (or
otherwise demand payment from broker) and leave it to the broker to submit the
claim to the carrier as required by the regulations so that the broker can be
reimbursed? Is there any need to refer
to procedural requirements between the shipper and the broker for the shipper
to be reimbursed by the broker for these charges?
Answer:
In reply to your first question, you are correct in observing that the
claim regulations in Part 370 do not apply to brokers. However, the claim regulations are generally considered to be for
the benefit of the shipper, so there is no harm in including them by reference
into your contract. On the other hand,
you may wish to depart from the regulations and draft your own language as to
claim filing and payment requirements.
Likewise,
the same considerations would be applicable to the regulations governing
overcharges and duplicate payments in Part 378. Again, if you choose not to incorporate the regulations, you
should cover the subject adequately in the contract.
I would
note that you might want to include an express provision for setting off loss
& damage claims, overcharges, etc. against freight charges due to the
broker.
Question: In a situation where a shipper is dealing
with carriers that are only licensed as contract carriers (and not as common carriers),
is it legally necessary to have a written contract with those contract
carriers?
Even if
not legally required, what are the specific benefits of having a written
contract, if any, other than being able to generally provide for the terms of
shipment.
It seems
that there is inconsistent case law in determining whether the Carmack
Amendment applies to both common and contract carriers and whether there is
even a distinction any longer between the two (even though it appears that they
are licensed differently).
Answer: The ICC Termination Act of 1995 eliminated any statutory
distinction between "common" and "contract" carriers and
replaced it simply with the term "motor carrier".
Unfortunately,
neither the FHWA nor the FMCSA (successors to the ICC following the sunsetting
of the ICC) have yet gotten around to updating the regulations and procedures
for motor carrier registration, so there are still carriers with "common
carrier certificates" and "contract carrier permits" - some
seven years after ICCTA.
The
current statutory provision relating to contracts provides that:
"A
carrier [i.e., motor carrier] may enter into a contract with a
shipper..." 49 U.S.C. § 14101(b). Because the statute uses the word "may," it is
permissive or optional as opposed to mandatory.
At one
time the ICC required "contract" carriers to have written contracts,
and there were regulations governing the content of such contracts. There is currently no requirement for
"contract" carriers to have written contracts in place. Nor is there a requirement for
"common" carriers (except household goods carriers and carriers
engaged in noncontiguous domestic trade) to have tariffs.
Most of
our shipper clients enter into written transportation agreements with their
motor carriers that clearly spell out the duties and obligations of the
parties, and the terms and conditions of carriage. A properly drafted transportation agreement avoids the inherent
problems in using the Uniform Straight Bill of Lading or some variation thereof
that incorporates by reference the classification and the carrier's rates and
rules tariffs. The bill of lading
essentially acts only as a receipt for the shipment because all material terms
and conditions are set forth in the transportation contract.
Question: We have contracted most of our carriers
since 1996 using one of your transportation contracts. This year's bid has shown a new twist, in
that several new carriers and two that we currently are doing business with now
want to limit their liability to $25.00 per pound. Does this mean that any shortage/damage would be covered using
the total weight of the shipment, or would the coverage be limited to the weight
of the shorted/damaged item?
Also,
after requesting a copy of their BMC 32 Endorsement, we received a form BOC-3
from one of our carriers. What is the
difference between these two forms and should we continue to ask for the BMC
32?
Answer: Many
motor carriers are now attempting to impose liability limitations in their
transportation contracts. Typically, these limitations range from $2.50 per
pound to $50 per pound. Obviously, you
do not have to agree to any limitation of liability, but if you do, you should
first carefully evaluate the value(s) of the goods that you ship or receive to
make sure the limitation is reasonable.
I would
note that they also have limitations in their rules tariffs, so be very careful
not to allow the carrier to refer to or incorporate any tariffs into the
contract.
As a
general rule, if the language merely says "$25 per pound" it would be
construed to apply to the total weight of the shipment. On the other hand, if it says "$25 per
pound per article" (or words to the same effect), the limitation would be
calculated on the weight of the article or package that is lost or
damaged. In order to avoid any
ambiguity, it would be prudent to make sure that the language is clear. If you do agree to a limited liability, I
would suggest that you state it as "$25 per pound based on the total
weight of the shipment".
As to your
second question, the BMC-32 is a mandatory cargo insurance endorsement that is
required by federal regulations and is filed with the Federal Motor Carrier
Safety Administration (formerly the ICC). The BOC-3 is a form that lists
registered agents for service of process, and is also filed with the
FMCSA. They are not the same, and you
should insist on a copy of the BMC-32.
Question: If we have a motor carrier
agreement in which the parties waive all rights under the Interstate Commerce
Act pursuant to 49 U.S.C. § 14101, does this automatically
waive the regulations in 49 C.F.R., such as the rules and regulations for
processing claims, etc?
Answer: If the parties expressly waive
the "rights and remedies under this part" as is provided in 49 U.S.C.
§ 14101(b)(1), I would say that they
have also waived the corresponding federal regulations of the Federal Motor
Carrier Safety Administration (formerly FHWA and ICC regulations). The reason is that the regulations were
promulgated by the agency to carry out the requirements of the statute, i.e.,
without the statute there can be no regulations. However, the statutory
provisions governing registration, insurance and safety fitness cannot be
waived. Therefore, any regulations corresponding to these items would not be
waived.
I should
note that, in the contracts which we prepare for clients, we specifically refer
to and incorporate selected regulations which are beneficial to the client such
as the claim regulations.
Question: After
reading several of your texts, one area I am still somewhat uncertain is when you
have a written agreement with a motor carrier. If liability for loss and damage
is not specifically addressed in the contract, do the terms of the Interstate
Commerce Act and the Code of Federal Regulations (49 C.F.R.) govern, or would
the carrier be held to a lesser standard of liability?
Answer: Normally,
a well-drafted transportation agreement will cover liability for loss and
damage, and the contract provisions will govern the transactions.
Under the
Interstate Commerce Act, all motor carriers are able to enter into
contracts. The statute also provides
that the parties to a contract may "waive" provisions of the Act
(except for registration, safety requirements, etc.). If you expressly "waive" provisions of the Act in your
contract, then you are free to include contract language which is different
from the statutory requirements such as the "Carmack Amendment" (49
U.S.C. § 14706), the time limits for
overcharges & undercharges, the statute of limitations for suits, etc.
However,
if the parties do NOT expressly waive these provisions in their contract, then
the terms of the Act (and the corresponding regulations) would continue to
apply.
Question: On our inbound loads, 50% of the
volume is delivered to us on a collect basis. We have contracts in place with
the carriers we use and detention time charges, i.e. allotted free time, costs,
etc. are addressed. On the other 50% of the loads, the shipper prepays the
freight and uses carriers of their own. On the loads that are prepaid by the
shipper, what are the obligations on the consignee to pay extra charges such as
detention?
The
carriers are billing the shipper for the prepaid freight charges, and billing
us collect for detention charges.
Answer: The first question is whether the
inbound "prepaid" shipment is moving under a transportation contract
which governs the allocation of the charges, or whether it is a common carrier
movement governed by the bill of lading and carrier's tariffs.
If it is a
common carrier movement, and the bill of lading is marked "prepaid",
the shipper would ordinarily be billed for the transportation charges AND any
additional charges accruing on the shipment.
If the shipper executes "Section 7" (the non-recourse
provision) on the Uniform Straight Bill of Lading, any additional charges such
as detention must be billed to the consignee.
Question: 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?
Answer: 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. (See Section 3.0 in Freight Claims in
Plain English, 3rd Ed. 1995).
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.
Question: Fresh Fruits and Vegetables have always been
considered exempt products. With that
in mind, what guidelines should we follow with regard to:
1. time
limits to file claims?
2. normal
transit times for perishables, such as strawberries?
3.
responsibility of "brokers," are they an agent or the principal?
Answer: You are
correct in observing that most fresh fruits and vegetables are
"exempt" under 49 U.S.C. § 13506. This exemption has been construed to mean that the provisions of
the "Carmack Amendment" (49 U.S.C. § 14706) are not applicable, such
as the minimum time periods for filing claims and bringing suits for loss or
damage.
Although
such commodities are "exempt" from regulation, there are still laws
which are applicable, such as the Uniform Commercial Code, which contains
provisions about bills of lading, etc. and requirements that time limits and
liability limitations must be commercially reasonable.
As a
practical matter, many exempt shipments move under a Uniform Straight Bill of
Lading, so the terms and conditions are the same as non-exempt shipments.
For loss
or damage claims the time limits would be nine months to file a claim and two
years and a day from declination to file a suit. With respect to delay, the basic criterion is still
"reasonable dispatch", which is measured by the usual and customary
transit time. I would refer you to
"Freight Claims in Plain English" (3rd Ed. 1995) for a thorough
discussion of these subjects.
In theory,
"Brokers" in the produce business are not subject to the registration
requirements for property (truck) brokers in 49 U.S.C. §§ 13901 & 13904. In addition to arranging for transportation (as an independent
contractor), they may also perform other functions. For example, they often act as a commission agent for the grower,
in which case they may be subject to the Perishable Agricultural Commodities
Act ("PACA").
Question: We are a
broker company, and we broker loads to our contract carriers. We have a clause
in the contract that we are to be held harmless of any claims that arise for
any loads that were under the care of the carrier.
We submit
claims to the carrier if we are unable to deduct it from any settlements, a
good portion of the carriers don't care, ignore the claim filed. I try calling
them and don't always get a response.
In your
book, “Freight Claims in Plain English” under Claim processing rules 12.1.3, it
states that if a carrier fails to acknowledge claims that we can report them to
the ICC Is that correct? If so, what address is this and is there
anything else we can do other than filing them with a collection agency for
help? I would like to report all the
carriers that I can that refuse to follow the rules for claims. Can I still report them if I have to turn
them over to a collection agency, and they are able to discuss the situation with
them?
How do we
know if the carrier is a member of the National Freight Claim & Security
Council?
Answer: Motor
carriers are subject to the federal regulations governing the processing of
claims at 49 C.F.R. Part 370. These are the former ICC regulations which were in 49 C.F.R. Part
1005, and are now under the
jurisdiction of the Federal Motor Carrier Safety Administration. You might try writing to the General
Counsel's office at the FMCSA in Washington, DC. Unfortunately, the FMCSA does not have the resources to do much
in the way of enforcing these regulations.
Obviously,
if you are not getting anywhere with the carriers you have the option of
turning the claims over to a claims collection company or law firm. Contact
Headquarters for information on firms that specialize in transportation law and
handle loss and damage claims.
As to the
Transportation Loss Prevention & Security Council (formerly known as the
National Freight Claim & Security Council), this group was dissolved by its
parent, the American Trucking Associations.
A new group has been formed, the Transportation Loss Prevention &
Security Association, which is independent of ATA.
Question: We wish to know if there are minimum
guidelines that a LTL common carrier is to follow in regards to recording data
for changing a shipper's Bill of Lading description.
ABF
Freight apparently has all of their drivers measure shipments with a tape
measure. We have someone who describes their freight specifically as :Hangers,
garments, in boxes 92800 sub 6 class 100. The carriers copy of the B/L might
have dimensions such as 96x100x100 hand-written on it but not the shipper's
copy. No persons signature other than the driver's appears on the B/L.
At times,
ABF will also issue an inspection report, we don't have a problem with that,
but some times the inspection report does contradict the dimensions recorded on
the carriers copy of the B/L.
It is our
contention that without a valid inspection report certified by a carrier's
employees name/signature that just writing dimensions on their copy of the B/L
is not sufficient documentation to support re-classifying the density of a
shipment. If the shipper's copy of the B/L would also be noted the same, we
would feel more comfortable that they witnessed or acknowledged the dimensions.
We cannot
find anything that deals with documentation requirements for changing
descriptions.
Answer: I am not aware of any specific regulations
that govern the documentation requirements for re-classification of freight or
correction of information shown on a bill of lading under the circumstances you
have described. It is likely that
individual carriers may have internal procedures covering this matter.
In any
event, carriers have always had the right to inspect and/or weigh freight in
order to determine the correct rates that apply. This is reflected in Item 360, Sec. 3 of the NMFC, which
provides:
Sec. 3.
Inspection of Property. When carrier's
agent believes it necessary that the contents of packages be inspected, he
shall make or cause such inspection to be made, or require other sufficient
evidence to determine the actual character of the property. When found to be incorrectly described,
freight charges must be collected according to proper description.
I would
note that if you feel there is a bona fide dispute over the density of your
shipments, you should contact the National Motor Freight Traffic Association
and discuss the matter with one of the classification specialists, such as
George Beck at (703) 838-1813. You may
also contact NMFTA through their web site at http://www.nmfta.org
Question: Motor freight carriers have 180 day to
submit corrected freight bills (undercharges) and shippers have the same time
period to file for overcharge claims.
What are the requirements on invoicing for air freight carriers? Are there any similar rules controlling the
air freight industry and what statute
of limitations would apply?
Answer: I am not aware of any specific statutory
time limit for filing overcharge claims or for bringing overcharge suits
against air carriers or air freight forwarders. There often are time limits in the air waybills or tariffs, but
these would vary from one carrier to another, and you would have to check them
for the specific carrier you are dealing with.
In the
absence of a contractual time limit (in the air waybill or tariff), the time
for bringing a lawsuit would generally be the statute of limitations applicable
to contract actions in the state where the contract is made.
The
18-month statute of limitations in 49 U.S.C. § 14705 applies to motor carriers.
Air freight movements are "exempt" under 49 U.S.C. § 13506, and would not be
covered. However, the movement must, in
fact, be an air freight movement - in other words, it cannot be a surface truck
movement by a so-called "air freight forwarder". Many of these air freight forwarders are
providing various kinds of expedited services ("2nd Day Air", etc.)
that never see an airport. If that is
the case, the 18 month statute of limitations would apply.
Question: We have a weekly shipment from our facility
in Missouri to our branch in Canada. An American freight company picks up from
our location, takes the shipment to Chicago where it is transferred to a
Canadian company for the haul to Canada. The rates we are charged are according
to the Canadian company tariff even though the American company bills us. It
looks as if the American company has been overbilling us. I understand there is
a 180 day rule to collect on overcharges. My question is when does the 180 days
start? Is it from the day of pickup, day of delivery or day of invoice?
Answer: The "180 day rule" to which you
refer is set forth in 49 U.S.C. § 13710(a)(3)(B), and states in relevant
part: "A shipper must contest the original bill or subsequent bill within
180 days of receipt of the bill in order to have the right to contest such charges.
TIP:
Shippers would be well advised to have a procedure whereby all freight bills
are date-stamped on receipt.
Question: We are a broker and we took a load from a
freight forwarder that required a team to deliver the freight. Our charges were $1450. Our truck got lost and delivered freight 2
hours late. Our customer paid us short
and we got only $500 for the move. The
owner of the forwarding company refuses to pay anymore. What can I do?
Answer: Essentially, what you have is a claim for
freight charges, and a shipper's setoff for a delay claim.
There are
a lot of factors and questions involved. Did you have any written contract or
rate quote agreement, and if so, what did it provide? Was there a specific agreement or promise to make delivery at a
particular time or for an appointment?
Did the shipper present any kind of written claim in support of its
setoff?
In view of
the amount in controversy, you could try bringing a suit in your local small
claims court. Note that the defendant
would probably file a counterclaim for the alleged delay.
Question: