Q: Should a carrier be concerned when a bill of lading has the “Where the rate is dependent upon value … not to be exceeding $xxxx” section completed and the declared amount far exceeds the tariff (pricing) page for the shipper?
Specifically, a shipper recently tendered us a six-pallet shipment weighing 3,000 pounds. Our pricing agreement with this customer is for pallet rates with a limited liability of $1.00 a pound. The shipper declared the value at $65,000.
I brought this B/L to the attention of our chief financial officer, advising that, because our pricing tariffs aren’t signed by our shippers, this declared-value statement could “trump” our tariff or at least put us in a long court battle in the event of a loss or damage claim. My experience has been that shippers complete this section of the B/L because of past experiences or in an abundance of caution, not for the shipment to be rated based on the value.
Should a carrier require a shipper to delete the declared value if it exceeds the tariff page liability or simply rate the shipment based upon the value?
A: You headed your e-mail of this question with the first words of your question — “Should a carrier be concerned?” — and the answer is that of course you should.
How you handle it, though, depends on how friendly you feel toward this shipper. You can do it the courteous way if you’re in the mood, or you can do it the hard-nosed way if you’re so inclined.
The polite way would be to draw the attention of whoever you normally deal with at the shipper to this particular B/L, pointing out that the declared value is, like, $62,000 above and beyond your rate agreement, and asking — still politely — if he or she might care to alter that B/L. Otherwise, you might add, you’ll still be happy to haul the shipment, but at other (non-negotiated) rates appropriate to the stated value, per your generally applicable tariff.
Hard-nosed? Simply haul the load, considering it beyond the scope of the tariff agreement you’ve negotiated, and hand the shipper a whopping bill after the fact. You’re within your rights to do that if you choose.
Whether inadvertently or on purpose, this shipper has vastly exceeded the scope of your agreement with its value declaration. I agree with you that it can, in the event of in-transit loss or damage, hold you liable for up to the full amount of the declaration assuming you offer such liability to anyone else — and perhaps even if you don’t (there are court cases both ways), because you accepted the load for transportation with that value declared.
But your tariff page applicable to this shipper, you tell me, has the much lower buck-a-pound value restriction. That invalidates application of this tariff page to the shipment, because the shipper opted to violate the restriction.
I’m sure the shipper didn’t intend to give you this kind of open-ended option. Some lower-level employee way down the hierarchy from the person you negotiated your rate deal with likely just screwed up, and labeled the shipment with its actual (or possibly even an inflated) value, not recognizing that it would invalidate the agreement.
However, maybe this particular shipment was indeed of extraordinary value, was meant to move subject to that level of carrier liability, and the shipper didn’t care that it would cost extra. That’s why it’s polite for you to double-check with the shipper and give it the chance to change its mind if it desires.
Either way, what you shouldn’t do is simply overlook the differential. If you haul this shipment uneventfully, then the issue simply won’t come up and you’ve dodged a bullet. But if there’s loss or damage, you could be held liable up to the $65,000 declared value, and at the very least, you’d risk the “long court battle” you fear.
So evaluate your relationship with your shipper and determine how much you prize its business. The polite way sounds to me like the way to go here. But if it turns out that you really don’t like this shipper, this might be a good opportunity to turn it away permanently.
Consultant, author and educator Colin Barrett is president of Barrett Transportation Consultants. Send your questions to him at 5201 Whippoorwill Lane, Johns Island, S.C. 29455; phone, 843-559-1277; e-mail, BarrettTrn@aol.com. Contact him to order the most recent 351-page compiled edition of past Q&A columns, published in 2010.