Q&A: Trying to Avoid a Trip to the Cleaners

Copyright 2009, Traffic World, Inc.

Q:

I am having a discussion with another carrier regarding whether a carrier is liable for prepaid freight charges that are not added to the merchandise invoice when a claim is filed for the destination value of a lost or destroyed shipment.

The other carrier wants to pay the claim at the full destination invoice amount, in addition to repaying the prepaid freight charges.

I thought my position was fairly basic to the claim rules. Have I lost my mind here?

I have included our e-mail stream.

What do you think?



A:

This is the kind of discussion that''s usually held between a shipper and a carrier, but it''s instructive withal.

Evidently this is a claim on an interline shipment for which you and the other carrier are jointly liable. A claim was apparently filed with the other carrier for destination value plus freight charges, and the other carrier proposed paying in full. Then the discussion went like this:

You: "From what you''re telling me, the invoice total was $1,067.92, nothing more, right?

"Shipper paid our freight charges of $436.69 and did not invoice that amount to the consignee/buyer. So, had this shipment delivered as intended, he would have gotten his $1,067.92, the destination value, that''s all. The freight charges of $436.69 are buried at that $1,067.92.

"If we pay them $1,504.61, the shipper gets his anticipated sales dollars and the $436.69 he never would have gotten."

Other carrier: "What am I missing? I don''t get this.

"Shipper''s product cost $1,067.92. Freight charges were $436.69.

"Product was lost so they should get $1,067.92 in compensation. Delivery service, which they paid for, was never performed so they should get reimbursed $436.69.

"As an analogy, suppose you pay for dry cleaning when you drop off your laundry. You pay $10 for the cleaning. When you go back to pick it up they have burned the shirt. Shouldn''t you get paid for the shirt and for the $10 service that they screwed up?

"That''s how I''m looking at it."

You: "This is the basic `freight charges prepaid and not added'' claim.

"The shipper sold his product for $1,067.92. The prepaid $436.69 freight expense was not invoiced to the buyer/consignee. The shipper is providing that service to the buyer as part of the sale price.

"The carrier is liable for the total invoiced amount (destination value) anticipated to be received by the seller.