Settling Claims With Interline Carriers

Settling Claims With Interline Carriers

Copyright 2008, Traffic World, Inc.

Q:

We filed a claim with Carrier A, which originated our shipment. During the haul they gave the load to Carrier B to deliver.

Right now Carrier A is telling me that they cannot settle the claim because Carrier B needs some more information (which Carrier A should already have).

What is the status of a claim that is filed with the originating carrier? I was under the impression that since our claim was filed with Carrier A, if they have a problem settling with Carrier B that shouldn''t be my problem.

What''s your take on claims with interline carriers?

A:

You''re hollering before you''re hurt.

I can understand your concern, and perhaps even your frustration. If Carrier A has the requested information it should itself pass that on to Carrier B. The possibility must be considered that Carrier A is simply stalling.

However, there''s time enough to deal with that. Right now Carrier A is only asking for more information. It isn''t material whether it''s asking on its own behalf or that of a connecting carrier; in your shoes I''d go ahead and provide the requested information - which you don''t indicate should pose any difficulty - and await further developments.

You don''t provide enough detail for me to know just how the interchange with Carrier B was handled, and perhaps you don''t know yourself. So let''s explore all likely possibilities.

One is that this was handled as an interline shipment, with Carrier A relinquishing custody as well as physical possession of the shipment at the point of interchange.

In such a case Carrier A remains liable to you under the concept of "joint and several liability" as spelled out in the Carmack Amendment to the Interstate Commerce Act, 49 U.S.C. ? 14706. The carriers are considered mutual agents of each other, and claim may properly be filed with either the originating carrier (as you have) or the delivering carrier; that carrier is liable irrespective of where the loss or damage occurred.

A second possibility is that Carrier A engaged Carrier B''s services as a subcontractor, relinquishing possession but not custody.

This case is even simpler; Carrier A, having legal custody of the shipment throughout, is liable to you on that basis, again irrespective of which carrier had the goods when they were lost or damaged.

Of course, there''s a third option - that this was one of those bastardized arrangements where it''s unclear in which capacity Carrier B acted. There''s a lot of sloppy documentation these days, and it may even be the Carriers A and B understood their arrangement differently.

Since Carrier A is liable to you under both setups that really doesn''t matter a lot, but only because you filed against Carrier A. Had you filed against Carrier B, though, it would have mattered considerably; Carrier B would be liable only for loss or damage while it had the shipment, and moreover its liability would be to Carrier A, not you.

As matters stand, however, you''re quite correct, any problem between Carriers A and B as to which should bear the cost of paying your claim shouldn''t be your problem. This is strictly between the two of them, and doesn''t affect Carrier A''s liability to you.

So while I''m telling you to provide the requested information, there''s a right way and a wrong way for you to do this.

For starters, provide the information to Carrier A. And in doing so, present a cover letter stating your intent to hold Carrier A liable without regard to which carrier had the goods when the problem giving rise to the claim arose.

You should, in particular, have no direct dealings whatever with Carrier B. Legally speaking, Carrier B is nothing in your young life, and you want to keep it that way. If you start dealing with Carrier B you will at the least offer some confusion as to your intent; don''t do that.

It is therefore up to Carrier A to pass along the requested information to Carrier B. Whether it does so or doesn''t is its choice; but if you act as I say, you allow no misinterpretation.

Then give Carrier A a reasonable time to handle the information. But by "reasonable" I mean maybe a few days, perhaps as much as a couple of weeks, but not a lot longer. Then press it again for payment.

And if it doesn''t pony up then, you have a much clearer reading of the situation. Carrier A''s obligation is to pay you promptly and worry later about its interline claim against Carrier B. If it doesn''t do that, I think then is the time to take action.

Assuming you''re certain of the validity of your claim-and the sequence of events you describe suggests that there''s no real doubt-your best answer is to set off the claim against freight charges you owe Carrier A. If that''s not practicable, then you can set legal action in motion.

But comply with the information request first; it can''t hurt, and it may save you a lot of bother.



-- 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.