Spoiled Shrimp Leads to a Raw Deal

Q: We’re involved in a claim for $117,000 on a load of imported frozen raw breaded shrimp. We’ve been doing business with this carrier for more than 15 years and have had a few small claims but nothing like this.

Our carrier gave this load to an owner-operator that was leased to them. Product was moved off the pier Wednesday night and delivered to a transload warehouse on Thursday; transloading took place on Friday. We’re not sure if the container was under temperature control Wednesday night to Friday, and it took five hours in the heat on the dock to floor-load 2,750 cases. The owner-operator had a 10 a.m. delivery appointment Monday.

Around 4 p.m. Monday, we got an e-mail from our customer saying the load had temperature abuse problems on 165 cases and that the trailer was in poor condition (had damage) for cooling. The 165 cases were wet and stained, and temperatures were 12.6 degrees Fahrenheit in the nose, 17.8 degrees in the middle and 29 degrees on the tail.

The bill of lading (delivery receipt), however, was marked one short and two damaged, with no comments of any temperature problems or damage to the cargo. The driver wasn’t allowed on the dock to observe unloading.

We asked for a reefer report, but the dates in the computer had never been set, and we weren’t able to get any useful information.

Weeks later, the consignee had the U.S. Department of Commerce inspect. The whole load was unfit for human consumption, the inspectors said.

The carrier and the owner-operator have cargo insurance for $100,000. We had our customer file a claim with the owner-operator’s insurance company, but the owner-operator has refused to submit any information to his insurer to move the claim along because there was no notation about any temperature problem on the bill of lading.

Is he right? Even if there is a valid claim, what about the balance of $17,000 over the $100,000 cargo insurance that was in place? Is the loading warehouse liable for loading a bad trailer and not doing due diligence to protect the load? Is the receiving warehouse liable for not documenting temperature problems on the bill of lading? Should we file against the carrier’s insurance?

A: This has gotten a lot messier than it should have because nobody’s done much of anything right so far. And too many of the errors can’t be corrected now.

First, the claimant’s obligation is to prove the load was properly chilled when tendered to the carrier. Never mind that this was an import (and so might have warmed up somewhere on the high seas), you can’t even prove temperature control for a day-and-a-half at the transload warehouse, and then there was the five hours of loading on the open dock.

Even so, your proof, although weak, isn’t entirely absent. The rear and center portions of the load were properly chilled on arrival, and truck reefer units aren’t usually strong enough to drop temperatures as low as you say over a weekend, so you’ve got that on your side. Plus, the carrier can’t offer any proof that its unit worked right; and there’s the damage to the trailer that arguably prevented proper cooling, and the high temperature in the trailer tail.

So there may be some valid claim here. The lack of a B/L notation, while no help to you, isn’t fatal, especially given the promptness with which your customer contacted you.

But that’s only for the 165 visibly damaged cases plus maybe a few more from that 29-degree tail section. You say your customer waited weeks for the Commerce inspection that wound up trashing the whole load, and that’s way too long given the opportunities for warming that arose post-delivery. The claim on the rest of the load is going to be tough to sustain.

Finally, forget the insurance companies; they insure the carrier (and owner-operator), not you. Forget the owner-operator, too. Your claim is against the carrier, who executed the bill of lading and took responsibility for the load; whatever offset it may collect from the insurers and/or owner-operator isn’t your problem. So the claim should be filed against the carrier, period.

As for claiming against either the originating or receiving warehouses, I suppose you can try, but I don’t like your chances. With them, you have to prove negligence, and you’re going to be shoveling it uphill against the tide to do so.

And for Heaven’s sake, learn from your mistakes so you don’t make them again!

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.

For the full story: Log In, Register for Free or Subscribe