Q&A: Locked and Loaded?

Q: We’re a motor carrier with something of what I guess you might call a problem customer.

When we pick up at its facility, our driver isn’t allowed on the dock. The loads are palletized, and our customer’s employees load with forklifts. Then the trailer is closed and a seal applied.

What’s been happening is that when we get to the destination and the seal is broken, there are often shortages. It’s usually only a few cartons, but a couple of times it’s been 20 of them or more. These are genuine shortages so far as I can make out; some of the consignees do allow our drivers on the dock, and the drivers have agreed with the count.

Although the seals are intact and the serial numbers match, this customer always claims against us for the shortages. They tell us our driver agreed to the count at origin by signing the bill of lading without exception. In fact, though, our drivers don’t have much choice; if we put “shipper’s load and count” on the B/L, it refuses to accept it and crosses it out, making the driver initial the cross-out. But without that notation, I don’t see that we have much of a defense, and they set off the claims against freight charges so we can’t get anywhere by declining the claims anyway.

What’s the legal situation here? If we decided to sue them for the withheld freight charges, would we have a leg to stand on?

 

A: How much do you want to keep this customer?

That’s the only issue here. I’ll go into the legalities in a moment, but the reality is that validity of the claims is moot; with shortages of this nature, no single claim would be worth the cost of litigation. And forget about using one as a “test case”; if you win, your customer will either dump you or ignore the past case for future claims.

Beyond much question, this shipper is using you for one or two purposes: rectifying discrepancies in its inventory or nibbling away at your freight charges. Actually, it could well be both, but apparently it’s nickel-and-diming you to death or you wouldn’t be writing me.

Legally, it’s on shaky ground, to say the least. The old Pomerene Act made this a lot clearer than does the current Bills of Lading Act. The current law says only that carriers may “insert the words ‘shipper’s weight, load and count’ ” on a B/L if that’s the case (49 U.S.C. 80113(d)). The old act made clear that the notation is meaningless if it’s not factual, and also that its omission doesn’t affect the facts if the shipper actually did the loading and counting.

The language of the statute may have changed, but the legality hasn’t. So omission of the “SL&C” notation isn’t all that crucial here save for the matter of giving you an extra evidentiary burden.

If you went to court, it would be up to the shipper to prove that, first, it gave you a certain kind and quantity of goods in a certain condition, and second, that another kind or a lesser quantity, or goods in poorer condition, were delivered; M.P.R. Co. v. Elmore & Stahl, 337 U.S. 134 (1964), reh. den. 377 U.S. 948. That’s all it needs to show; but it does need to show that much.

And it can’t. Your drivers were never in a position to make any kind of count, even by observing those forklifts whizzing past with preloaded pallets, and the trailers were sealed before the drivers could take a peek inside. So there’s only the shipper’s word for how much it loaded, in which it has a vested interest.

Moreover, the loads moved on under seal. Yes, I know the things can be slipped or the doors taken off their hinges and so on, but it passes into fantasy that somebody would go to all this trouble to remove just a handful of cases. Moreover, your drivers can attest in at least some cases to the accuracy of the delivery count.

So if matters went to court, the shipper would at the least have an uphill fight against the tide to prove its claim. And since the validity of the set-off depends on the validity of the claim, well, you see my point.

Because this isn’t worth a court fight, though, the issue is simply how much you care about retaining this shipper. Check your P&L; if you’re making money despite the claims, keep it, otherwise pitch it. Even if you win in court, you lose.

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.

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