Carrier Diverts Shipment, Bills For It

Carrier Diverts Shipment, Bills For It

Copyright 2008, Traffic World, Inc.

Q:

We ship rail carloads of a raw material from the U.S. West Coast to a major Midwestern center for diversion.

On the shipment in question the railroad waybill shows the destination of the major center. It was shipped to us prepaid by our supplier F.O.B. the major center. Somewhere along the route the railroad took it upon itself to divert the shipment to a nearby point, but one outside the switching limits of the major center.

We then sold the car and diverted it to an East Coast point.

The railroad has now issued a bill of nearly $2,000 to move the car from the nearby point where the railroad had placed it into the major center for interline with a carrier serving the East Coast destination.

When we asked the railroad about this they told us they have no room in the major center to hold cars for diversion. The amount the railroad billed us is a little over three times our anticipated profit on this particular shipment.

We cannot find authority in the railroad''s publications for substituting the nearby point for the major center.

A:

I always try to maintain anonymity in this column, and I''ve gone to some pains to remove all references to locations and identities from your e-mail. But anonymity was a lot easier when I started writing this column in the days when there were thirty-plus major railroads and lots of transcontinental interchange points. I doubt that anyone familiar with the rail industry will have a lot of trouble filling in the blanks in this day and age.

Be that as it may, one of the things that hasn''t changed from that day to this is that transportation carriers are obligated to fulfill their contracts. This railroad didn''t.

It agreed to haul your carload from the West Coast to the major center (let''s call it "C" for short). Instead it stopped off at another point (we''ll call this one "E").

Now, if you''d actually wanted delivery at C that would have been a problem right there. But you didn''t, as presumably the carrier knew, so no problem - yet.

But now the railroad wants to give you a second bill for moving the car from E, where it arbitrarily stopped the haul, to C, which was the original named destination.

I''m so sorry the carrier doesn''t have room at C to hold the car while awaiting your diversion order. And it would have been free to tell you that up front and refuse the order consigning it to C (although let''s not go into the ramifications of that any further).

Having accepted the order, though, and therefore the obligation to get the load to C per the original bill of lading and waybill, it can''t double-bill for discharging that obligation.

Indeed, this is so obvious that my feeling is the subsequent bill for moving it from E to C is simply a clerical mistake. Somehow or other a billing clerk, or perhaps a computer, lost track of the fact that the original billing was to C, not E, and treated the E-to-C transfer as an independent movement.

It may still take you a while, and some effort, to get this rectified. The railroad you name is a pretty big operation, and what you''re trying to do is get the folks in one part of the bureaucracy to actually talk to the ones in another part. This isn''t always easy in large organizations.

Even so, stick to your guns - even (if necessary) to the point of defending your position in court. I know $2,000 isn''t enough to warrant legal action, but you don''t want to set some kind of precedent for future railroad behavior here.

You didn''t ask this, but I note from the supporting documents you sent me that you''re also asking the carrier to waive a small demurrage charge. Your argument is that, if the car had been physically moved to C instead of being shortstopped at E, there would have been no demurrage.

I agree with you there, too, but not on the basis you present. To be sure, E is about 35 miles short of C, and perhaps the carrier would have taken the extra day or two to go to C and negotiate the congestion there. I can see room for virtually endless speculation on this point, but that''s all it is, speculation.

A much stronger point, though, is that the carrier has no right to charge for any demurrage no matter how long because it never completed the originally contracted haul! Demurrage doesn''t begin to accrue until after tender of delivery; and it can''t tender delivery at C while holding the car at E for its own convenience.

Furthermore, at the least I think the carrier owes you waiver of the demurrage for the inconvenience it''s given you by submitting the bogus line-haul bill from E to C. Once you''ve finally got that mess sorted out I think you should insist on the demurrage waiver as well.



-- 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.