Q: Our client has rates based on a frozen level of rates, 1988 specifically.
It has had several shipments going to Cicero, Ill. The current ZIP code for Cicero is 60804. In 1988, it was 60650.
The dilemma is that the 1988 rate scale does not recognize the current ZIP code, obviously.
The carrier is denying the overcharge claim because of this. It maintains that one cannot change the ZIP code to accommodate individual shipments. I used the 1988 ZIP code for Cicero, which is, of course, in that rate level. I tried to explain that because we are using the ZIP code in effect for the rate level used, the claim should be allowed. They disagree.
What are your thoughts?
A: My younger readers are probably asking what the dickens you’re talking about. Why, they must be wondering, are you bringing such a question to me?
Well, once upon a time, technical questions such as this played an important role in shipper-carrier relations, and in this column as well. “Back in the day,” as it’s said, carrier tariffs and rate agreements had mandatory legal enforceability on their literally construed terms, and distinctions such as the one you describe made a real-world difference in how rates were applied.
“Those were the days, my friend / We thought they’d never end / We’d sing and dance forever and a day.” Ah, but end they did. “Forever and a day” lasted only until the early 1990s, and with the end of that era also came an end to the time when questions such as the one you ask had “right” and “wrong” answers.
Your client and the carrier apparently agreed to a rate structure that applies only to specified ZIP codes. The carrier — as is, of course, to its economic advantage — wants to interpret this rigorously and disallow application to any ZIP not specifically mentioned. The shipper, through you, wants a more liberal approach allowing for changes in ZIP designations over the intervening years — which would, naturally, be to its economic advantage.
Technically speaking, I can see arguments either way. If you were to present the issue for arbitration — or if you could persuade a court to consider it (which I doubt) — I can see the decision going either way. But why on Earth would you take such a step when there’s a much simpler and more straightforward path?
Like everything else to do with carrier rates today, the issue is negotiable. The only correct answer to your question is the one on which the shipper and carrier agree, and it’s toward gaining such an agreement that you should be focusing your efforts.
Trouble is, at this point, you have the wrong people involved on both sides. On yours, you’re a post-auditor working on behalf of the beneficial shipper and as such have no authority to negotiate rate agreements. On the carrier’s, the folks you’re dealing with are the claims and rate specialists, not the sales and marketing people. That’s what has to change.
So your next move should be to contact your client and suggest that it approach the carrier through sales channels. It should say something like this: “Our understanding was that we had a rate deal that included Cicero. Cicero hasn’t moved; it just has a new postal designation. If you’d like to keep our Cicero traffic, please adjust your rating system accordingly.”
Now, this carrier has voluntarily agreed to maintain that 1988 scale for a range of points previously including Cicero, so presumably it finds the traffic attractive at that price. Its sales department has authority to make the adjustment and presumably will want to do so to retain the traffic. Presto change-o, there you are, problem solved without any need for nitpicky arguments with the lower-echelon people who’ve been denying your claims simply because they don’t happen to fit neatly into a long-ago mold.
This is the reality of the brave new world of contemporary transportation. There’s no Interstate Commerce Commission with a mandate to hold all shippers and carriers to the strict letter of standardized (and, in this case, outmoded) tariffs or agreements; the parties are free to readjust to allow for changed circumstances. And that’s what should be happening here.
You know, in a way, I’m kind of sorry; I used to enjoy delving into the niceties of little puzzles such as you present as an intellectual exercise. But these days, that’s all it is, an intellectual exercise. In the real world of today, it’s meaningless, and that’s how you need to see it.
Consultant, author and educator Colin Barrett is president of Barrett Transportation Consultants. Send your questions to him at 5201 Whippoorwill Lane, Johns Island, SC 29455; phone, 843-559-1277; e-mail, BarrettTrn@aol.com. Contact him to order the compiled edition of past Q&A columns, published in 2010.