Are Mixed Shipments Being Misrated?

Are Mixed Shipments Being Misrated?

Copyright 2008, Traffic World, Inc.

Q:

I audit freight bills for a company that ships various densities of plastic articles.

The bills of lading are properly inscribed with the number of boxes and weight for each different density, e.g., nine cases of 10-12 pounds per cubic foot, four cases of 6-8 pounds per cubic foot, etc. These are apparently unitized on pallets. The carrier is inspecting some of these shipments and changing the charges by using the total dimensions and the total weight of each pallet. This usually results in higher charges since the overall density is less than some of the individual articles contained therein.

I can see where they would be justified in doing this if they were changing the weight of the shipment, but they don''t.

Are they in order to change shipments this way when the shipments are properly described on the bill of lading? Wouldn''t National Motor Freight Classification Item 640, sec. 3(b) preclude them from doing this without changing the weight?

Why should our client go to the trouble of listing separate weights and densities if the carrier can do this with any shipment they like?

A:

It took me a little while and review of several examples you provided to sort this out, but for what it''s worth I agree with you. Trouble is, it probably isn''t worth very much.

The carrier isn''t changing the shipment weights because it doesn''t disagree with them. What it''s doing is treating the entire pallet as a single commodity and calculating density based on aggregate weight and volume, rather than as multiple commodities.

I can understand the thinking of the inspectors who are doing this. They take a quick look at the B/L and see a lot of descriptions of "plastic articles," run their quick-and-dirty calculation on the whole thing and bump the individual densities your client has so painstakingly listed.

But by the NMFC these different types of plastic articles are not a single commodity. If NMFC goes to the trouble of distinguishing between different types of plastic articles and rating them differently according to their density, that makes them different commodities for rating purposes. And they should be so treated.

NMFC Item 640(3)(b) deals squarely with this:

"When articles subject to different classes... authorized in the applicable classification description for such articles are securely unitized on ... pallets ... they will be charged for at the actual weights of the separate articles ... at the applicable classes."

There''s a lot of song and dance about how the B/L is to be prepared, and the B/L samples you gave me don''t comply in every detail. But there''s at least substantive compliance - the carrier knows the separate weight of each type of plastic article and the pallet weight - and really, to assess higher charges based on minor specifics of documentation seems to me a little excessive.

So by rights the carrier should be treating these pallets as mixed shipments subject to the NMFC item and rating the individual components accordingly (the pallet itself gets billed at the lowest class rating for any of the commodities).

To be sure, the carrier has the right to break out the individual packages and do its weight-and-cube measurements on each one and, if it finds discrepancies, rerate on that basis. But it''s acting improperly in lumping everything together as a single commodity and re-rating based on aggregate measurements.

You''ll recall, though, that I prefaced this by saying "for what it''s worth," and there''s the rub. The examples you gave me are quite low-value in terms of freight charges - under $300 a pop. If they''re typical, you probably don''t have more than petty cash at stake here.

Economically, taking this to court or the Surface Transportation Board (which still regulates motor carrier practices, though without much enthusiasm) is out of the question. So your only realistic course of action is to go back to the carrier itself and push for voluntary refunds of the overcharges.

Which, because of the technical nature of this problem and the minor deficiencies of the B/Ls, is not likely to be easy. Perhaps it will help if you show them this column, and please feel free to do so. But in light of the inspections you''re going to be shoveling it uphill against the tide claim by claim, and for very little reward.

I can, however, suggest something that may help avoid the problem for future shipments. Read over Item 640(3)(b) very carefully and have your client re-do its B/L preparation so that every single "i" is dotted and "t" crossed. Further, each B/L should specifically reference the NMFC item.

If your client forcefully draws attention to the relevant rule in this way, it should be enough to deter any but the most bull-headed inspector from rerating on the aggregate basis. And you''ll also have a much simpler case for refunds of future such overcharges.



-- 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 536-page compiled edition of past Q&A columns, published in 2001, at $80 plus shipping. Later compilations by request.