''Handling Charge'' Surprises Broker

''Handling Charge'' Surprises Broker

Copyright 2006, Traffic World, Inc.

Q:

I have been in trucking and brokerage for more than 24 years. I''ve had my own business for 15 years. Throughout the 15 years we have paid many claims for many different reasons, but this is a new one to me.

I''ve just been sent a claim for a load I shipped on which there were a total of 46 cases damaged from a leak in the trailer. The total claim for the product is $2,292.06. I''ve been doing business with this customer for 14 years, but they now have a new traffic manager and the claim came in the mail for the $2,292.06 plus a 15 percent "handling fee" of $343.81 for a total claim of $2,635.87.

I''ve never seen this before. The product was thrown away. If we had returned the product for reworking and restocking, I could see a charge for that in a claim, but that wasn''t the case.

When I file this with the carrier, I know they will decline the handling fee. Personally, I feel this handling fee is inappropriate, unreasonable and somewhat unethical.

Have you ever heard of or seen this before? How could this be legal? There is a cost of doing business, which I agree with, and they were deducted $2,292.06 from their customer''s invoice. But if we pay the $2,292.06, I feel the only thing my customer is out is the time it took them to prepare the paperwork (approximately 10 minutes) as well as the $0.39 to mail the claim documents; this, in my opinion, is a normal cost of doing business, and not a valid 15 percent fee of $343.81.



A:

Well, it''s a new one to me, too. I kind of expect "handling charge" rip-offs in those late-night ads on TV, catalog sales, even returns sometimes, but in freight claims?

I think you''re a bit low in your estimate of how much time it took your claimant to put together the claim paperwork. Maybe you can toss it off in 10 minutes or so, but I can''t and I don''t know many others who can; and if the claimant properly included all supporting documentation there may well have been some extra postage required, not to mention the costs of copying that documentation, whatever internal record-keeping is involved, etc.

All of which is relevant only if this shipment moved under the so-called "shippers''" bill of lading developed under the aegis of the Transportation & Logistics Council, or some B/L form derived from that. In section 8 of the terms and conditions, this bill form specifies that "claimant may recover its administrative expenses incurred in connection with... claims." If you or your carrier allowed use of this form (most carriers won''t), the claimant is within its rights to add something for those "administrative expenses" of preparing and sending the claim.

But to suggest that those costs added up to nearly $350 is getting a bit out of control. Nor by any stretch of the imagination are such costs properly determinable as an arbitrarily fixed percentage of the claim value; as with any other claim element they must be properly supported and documented.

And if the shippers'' B/L or some close imitation thereof wasn''t used, the claimant has no business adding a thin dime to its actual damages. I don''t agree with your characterization of its action as "unethical," even "somewhat" so; claims are always a hassle and quite often involve a variety of secondary costs (administrative and otherwise) to the claimant. How can you blame it for trying to recoup those costs? But as I wrote in my "Manager''s Guide to Freight Loss and Damage Claims" (Fort Valley, Va: Loft Press, 3rd ed., 2003), "the costs [that shippers] must incur in filing and pursuing claims... are legally unrecoverable" in the absence of some special agreement allowing this (p. 223).

Which brings me around to a final point: how come you''re handling this claim anyhow?

You don''t specify your role here, and you say you''ve "been in trucking and brokerage" both. Seems pretty clear to me, though, that you acted as a broker on this shipment since you''re talking about filing the claim with the carrier that actually moved this load. And that should give you a fairly easy out.

Brokers aren''t liable to their customers for freight claims unless they contractually agree to such liability. Unless you''ve done that, which is pretty unusual in my experience, you''ve got no legal obligation here at all. Oh, sure, most brokers will help their clients pursue claims against the underlying carriers as a matter of both courtesy and good customer relations, and I certainly support you in providing that service to your long-standing customer here.

That, however, is as far as you need to go. So pass this claim on to the carrier as is, "handling charge" and all, and let it be the one to tell the shipper to go pound sand. That way you avoid making yourself the bad guy; and it also gives you a chance to try to educate this shipper''s new traffic manager in the realities of freight claims without having to yourself be the one to decline this part of the claim.



-- Consultant, author and educator Colin Barrett is president of Barrett Transportation Consultants. Send your questions to him at P. O. Box 76, Morganton, Ga. 30560; phone, (706) 374-7201; fax, (706) 374-7202; 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.