Logistics and Legal Rights: Where Do Shippers Stand?

01/23/2020 — Jen Deming

Every shipper will likely encounter loss or damage and seek reimbursement by filing a claim. In order to navigate this tricky scenario, smart shippers become their own advocates by taking a deep dive into the legal policies that affect shipper's rights and responsibilities. When going against powerhouse national carriers who have every resource in their corner, you can arm yourself with critical information that helps you get the best outcome possible for your business.

The Carmack Amendment Basics

First things first, the term "Carmack Amendment" is frequently thrown around in the industry, but what exactly is it and why should shippers care? Put simply, this law was set in place in 1935 to draw the line between carrier and shipper liability. Prior to that, with the Bill of Lading (BOL) serving as a legal contract of carriage, carriers were almost exclusively held responsible for damage or loss. With the passage of the amendment, it was determined that the carrier should be held responsible unless one of the outline exclusions is met. This change let to a positive impact on the industry, incentivizing both carriers to proactively prevent theft and shippers to more effectively prepare their freight. 

5 Carrier Exclusions to Responsibility

The Carmack Amendment clearly outlines five specific instances in which a carrier is not to be held liable for damage, delay, or loss to freight. These events are intended to protect the carrier from circumstances outside of their control. The five are:

1. Acts of God: A carrier cannot be held liable for instances of natural disasters or other uncontrollable phenomenon such as severe weather, medical emergencies involving a driver, etc. In order to act under this defense, the event must be notably unanticipated and unable to be avoided.


2. Public Enemy: Carriers are exempt from damage liability if the incident was caused during a defensive call to action by the government, or "military force". While there has been relative peacetime on American soil for quite some time, the "public enemy" defense has also applied to acts of domestic terrorism in some recent court cases. It does not include events caused by hijackers, cargo theft, organized crime, or other criminal acts.


3. Default of Shipper: This is the most notable exclusion for shippers to be mindful of and indicates any event that the carrier can prove damage was caused by the shipper. This can include a defense of negligence, poor packaging, improper labeling and other mistakes made during preparation. The majority of carriers will try to prove these circumstances if there is any doubt a shipper could have made a mistake. Shippers must properly offset this risk with secure packaging, correct labeling, and maintaining communication with your customer for delivery.


4. Public Authority: If the government takes action that results in damage or delay, the carrier is not liable. Government policy cannot be controlled, so road closures, trade embargoes, recalls, and quarantines all exempt a carrier.


5. Inherent Vice/Nature of Goods: Some commodities are naturally subject to deterioration over time, and as long as the defect was not caused or sped up by the carrier negligence, they are safe from liability. A common example of high-risk commodities include produce, live plants, and medical supplies. If you are shipping temperature controlled or time sensitive products, be sure that you are taking every precaution to ensure security and viability.

Just as there are five distinct factors that exclude carriers from responsibility, there are three factors the shipper must prove in order to start a damage claim. To begin, it must be demonstrated that the shipment was picked up in "good" condition. This protects the carrier should the shipment have been damaged to begin with. In order to defend yourself, take pictures of your freight before it is picked up proving all is well. Collect invoices, product descriptions, and item counts so that you have a leg to stand on in the case of any loss or shortage. 

Secondly, the shipper must prove that the load was delivered in damaged condition. Complete a thorough inspection before you sign and again, take pictures of everything for proof. Concealed damage, hidden and only discovered after the carrier has left, is a tricky area for claims. Open and dismantle your packaging at delivery to check for issues, and don't feel bad for delaying a driver. If there is any doubt at all, make a note on the delivery receipt. If you are not present for delivery, make sure clear expectations are established with the receiver or customer so that everyone is on the same page.

Lastly, the shipper has to prove that the freight damage resulted in a specific amount of loss. It won't work to throw an arbitrary number in a freight claim, so collect itemized receipts and quotes or bills for replacement or repair costs. Be reasonable and accurate in your request.

Fair Compensation Rights for Shippers

Even if the shipper does everything right, claim payouts are rarely what one would expect. Carriers do everything in their power to minimize financial losses, so they will look at every loophole possible. So how does a carrier determine a claim payout?

The amount is typically determine by a set dollar amount per pound based on the commodity. It's important to review carrier tariffs and agreement limits before you ship your product. Some carriers will pay nothing on a used item, so be sure to review the fine print. It's also critical to have an accurate BOL. If there are incorrect details, you're likely to see that reflected in your payout. It's also important to note that a carrier claims department will examine the damage, and limit a payout if they feel the product can be salvaged or repaired at a lesser amount than what is requested.

Since carrier liability is limited, a smart shipper will obtain supplementary freight insurance. It's a super smart option for anyone shipping fragile goods or a high value commodity. While most carrier liability only pays out a certain dollar amount per pound of freight, freight insurance can be purchased in the value of coverage you need, and you are not required to prove the carrier is at fault.

It's important to note carrier compensation timelines for payouts. A carrier should acknowledge receipt of the claim within 30 days, with a ruling completed within 120 days. In the event of a denied claim ruling, the shipper has a right to file a lawsuit. Most need to be filed within 2 years and one day, but there are exceptions so it's best to work quickly.

Shipper's Requirements for Proper Claim Filing

It's up to the shipper to follow a precise protocol in filing a claim to increase their chances of a suitable resolution. Collecting as much hard evidence as possible will help your case. Seeking written statements by warehouse receivers and testimonies of loading procedures, as well as video evidence can assist your cause. Being thorough is crucial but working quickly is just as important, so be mindful of deadlines. You have nine months from the delivery date to file, but for those concealed damage cases, you have five days—so get on it. 

Documentation you may need to file:

• Proof of delivery
• Original BOL
• Freight bill
• Merchandise invoice
• Replacement invoice or repair bill
• Pictures of damaged freight

Knowing the basics of the Carmack Amendment and how they relate to shipper's rights helps protect your business in the event of damaged or lost freight. the best part is, you don't have to go through the claims process alone. Working with PartnerShip can ensure you have an informed ally looking out for your best interests and your company's bottom line. For a thorough rundown on freight claims, download our free white paper.

Beyond Boxes and Pallets: 10 Other Ways to Move Freight

01/03/2020 — PartnerShip

When most people think of freight, it’s usually an image of the ubiquitous 40” x 48” wood pallet that comes to mind. But there are many other ways to move freight, including these lesser known, but still important, methods.

Pallets. They are so important to freight shipping that even though we’ve covered pallets in depth before, we can’t not mention them here.

In addition to wood, pallets can be made of plastic or metal. Plastic pallets are popular for export shipments because they don’t have to be heat treated to be used for international shipping, like wood pallets do. Aluminum and stainless steel pallets are strong and lightweight, and since they can be cleaned and sanitized, they can be used in food processing and pharmaceutical plants, where cleanliness is essential.

Gaylords. Named after the company that first introduced them, Gaylords are pallet-sized corrugated boxes used for storage and shipping. Sometimes called pallet boxes, bulk boxes, skid boxes and pallet containers, Gaylords can have between 2 and 5 walls and are meant to be single-use containers. Frequently used as in-store displays as well as shipping containers, Gaylords can be used to ship items as diverse as watermelons, stuffed animals, and pillows. Depending on configuration and how many walls they have, Gaylords can hold from 500 to 5000 pounds each.

Metal bins. Metal bins are typically made of steel and are mainly used in industrial applications where strong-sided containers are required to hold and move heavy and irregularly shaped items, like metal castings and forgings, stampings and scrap metal. Metal bins can be found in many different sizes and are essential in safely shipping heavy and potentially sharp objects.

Wire baskets. Available in solid or collapsible versions, wire baskets are strong and can store and move large and bulky items up to 6000 pounds. Wire baskets are stackable and can be used for shipping nursery stock, landscaping rocks, and other irregularly shaped items.

Stack racks. Featuring a flat, metal base and upright posts at the corners, stack racks are ideal for moving and storing large, bulky items. Stack racks can often be stacked on top of one another and are used for moving awkward items like furniture, carpets and rolls of fabric, tires, and coiled plastic drainage tubing.

Bulk storage bags. Perfect for moving powders, grains and very small items, these durable woven plastic bags have lift straps attached to the top which allow them to be filled, moved and emptied easily. Bulk storage bags are sometimes called big bags, super sacks, or FIBCs (Flexible Intermediate Bulk Containers), and can be lined for food-grade applications like shipping flour and peanuts, industrial products like dry concrete mix, or bulk agricultural freight like catnip.

Wood crates. Shipping crates made of wood are sturdy, strong, and can typically resist the sometimes extreme conditions of freight shipping. Items shipped using wood crates can be as diverse as priceless artwork, sensitive machines like 3D printers, and large and irregularly-shaped plastic injection or blow molds. Other common uses of wood crates are tradeshow exhibit shipments and when moving multiple slabs of natural stone.
 
IBC Totes. Intermediate Bulk Containers, or IBC totes, are perfect for transporting liquids and granular materials, like chemicals, food products and hazardous materials. IBCs can hold up to 550 gallons, with 275 and 300 gallons being the most common sizes. IBCs are stackable and can be used for food grade materials as well as corrosive or flammable industrial liquids and solvents.

Totes. Totes are small plastic containers that are commonly used in manufacturing and food processing facilities, as well as in shipping, storage and fulfillment warehouses. Totes without lids are often used for order picking in warehouses, and are useful because they are durable, nestable and stackable. Totes with lids that close are frequently used in shipping small products from distribution centers to stores, and are included in shrink-wrapped pallets of boxes.

Drums. Storage drums come in three main types: fiber, plastic and metal, and can be used to store and ship liquids and solids. Fiber drums are lightweight and sturdy and can hold food-grade and non food-grade materials such as grains and dry chemicals. Plastic drums can hold liquids or solids and are corrosion resistant, making them ideal containers for transporting industrial chemicals; they can also be food-grade and hold water, pickles or grape juice for winemaking. Metal drums are used for heavier liquids such as oils, greases and lubricants, and extremely hazardous materials, since they are the most durable drums available.

Plastic and metal drums are available in both open-head and closed-head designs. Open-head drums have easily-removable covers and work well for shipping solid items or thicker liquids. Closed-head drums have non-removable covers with openings and are better suited for lower-viscosity liquids.

The most common size of fiber and metal drums is 55 gallons, while plastic drums are available in standard sizes of 15, 30 and 55 gallons.

A-Frames. Shipping granite, quartz and marble requires the use of wood or metal A-frames to hold and stabilize natural stone slabs when they are shipped. A-frames are mostly used on local or short hauls, and can be loaded in dry vans, or more commonly, on flatbeds for transport. There are many factors to consider when shipping stone and working with an expert is certainly recommended.

As you can see, there are many more ways besides boxes and pallets to move your freight, and no matter how your freight is configured, we’re here to help you ship smarter. If you have a shipping challenge and need assistance finding a reliable carrier for your needs, contact PartnerShip or get a free quote!