2) Air Freight Forwarders - Licensing Requirements

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.

3) Arbitration of Freight Claims

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.

4) Bills of Lading - Carrier PRO Stickers

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.

5) Bills of Lading - Case or Piece Count

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.

6) Bills of Lading - Description of Freight

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".

7) Bills of Lading - Forms

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.

8) Bills of Lading - Forms

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.

9) Bills of Lading - Hazardous Materials

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.

10) Bills of Lading - Inter-Company Transfers

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.

11) Bills of Lading - Pallets vs. Cartons

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.

12) Bills of Lading - Piece Count

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.

13) Bills of Lading - Private or Contract Carriage

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.

14) Bills of Lading - Required Information

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.

(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.

15) Bills of Lading - Requirements

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.

16) Bills of Lading - Retention by Shipper

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.

17) Bills of Lading - Retention Period

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.

18) Bills of Lading - Shipper's Signature

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.

19) Bills of Lading - Stickers on Shipper's Forms

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.

20) Bills of Lading - Terms & Conditions

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.

21) Bills Of Lading - The VICS BOL

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."

22) Broker Surety Bonds

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.

23) Brokers - Errors & Omissions Insurance

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.

24) Brokers - Insurance Coverage

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.

25) Brokers - Liability for Negligence

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.

26) Brokers - Licensing Requirements

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.

27) Brokers - Record Retention Requirements

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.

28) Cargo Insurance - BMC 32

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.

29) Certified Claims Professional Accreditation Council (CCPAC)

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

30) Charge Backs for Late Deliveries

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.

31) COD Charges

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.

32) Contracts - Broker Liability

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.

33) Contracts - Legal Requirements

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.

34) Contracts - Liability Limitations

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.

35) Contracts - Waiver of Interstate Commerce Act Provisions

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.

36) Contracts - Waiver of Interstate Commerce Act Provisons

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.

37) Detention Charges on Inbound Collect Shipments

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.

38) Dropped Trailers - Liability

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, 3^rd 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.

39) Exempt Products

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").

40) Federal Regulations - Claims Processing Rules

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.

41) Freight Bills - Re-Classification & Reweighing

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

42) Freight Bills - Time Limits for Air Freight Carriers

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.

43) Freight Bills - Time to Contest

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.

44) Freight Charges - Setoff for Delay

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.

45) Freight Charges - “Shipping and Handling” Charges

Question: