When the economy is in bad shape, companies try to cut spending. One thing that is sometimes overlooked is to avoid unnecessary disputes and losses that eat into profits and hurt the bottom line. We see shippers, carriers, brokers and 3PLs getting into various kinds of trouble. Most of the problems arise from garden-variety disputes over freight charges or cargo claims, and most of them could have been avoided. Here are some tips.
-- Due diligence. Investigate the companies you deal with. Are they really a motor carrier or forwarder, or are they an intermediary — a broker, shippers agent or 3PL that will subcontract the actual transportation of your goods? You can check to see status of operating authority and insurance for motor carriers, forwarders and brokers in minutes on the Federal Motor Carrier Safety Administration’s Web site, www.fmcsa.dot.gov. Check their credit history — there are commercial credit services, the Better Business Bureau and a host of resources on the Internet.
-- A good contract. A properly drafted contract that covers all of the duties and responsibilities of the parties will help to avoid disputes. A good contract not only covers rates and charges, but also important provisions such as billing and payment terms, cargo liability, insurance, indemnity, and any special transportation requirements.
-- Loss prevention. The old saying, “An ounce of prevention . . . ” remains as true as ever. Proper packaging, blocking and bracing can avoid costly damage in transit. Security measures such as fencing, lighting, cameras, ID badges, gate records and background checks can help reduce theft and pilferage.
-- Insurance. Most carriers provide liability limitations in their bills of lading and/or tariffs. Transit insurance can protect against unrecoverable losses. It is important to identify the risks — they are different if you are shipping frozen foods, plasma TVs or steel pipe. Different risks apply to international and cross-border shipments.
-- Education. The best way to avoid unnecessary losses is to understand the laws and regulations applicable to the transportation of goods. Well-trained and -educated employees are less likely to make those costly mistakes.