Shipment Stolen, Who Is Liable?

Shipment Stolen, Who Is Liable?

Copyright 2007, Traffic World, Inc.

Q:

I have a question on stolen material.

I shipped a container of material destined for my company''s Mexican branch. Our freight forwarder in Laredo received the material and was going to ship into Mexico the next day.

Overnight the container and material were stolen. The container was later found with no material. I was sent the police report.

My forwarder is saying I need to claim against my insurance. I feel that the forwarder was in possession of the material when it was stolen and they and their insurance company should pay the claim. Who is correct?

A:

You are, of course. This forwarder has bigger cojones than a pawn shop.

There''s a good deal missing from your question. You don''t say whether the shipment was actually in transit on some kind of through bill of lading at the time of the theft. Although you use the term "forwarder," I''m not entirely clear on the nature of its business. You mention nothing about whether the goods had been Customs cleared. And so on.

But none of it matters. As you say, the so-called forwarder had custody of the goods when they were stolen, and there''s an end to it.

Worst case (from your perspective) is that the "forwarder" is actually no more than a value-added broker - a third-party logistics provider - and thus had liability only as a warehouseman or ordinary bailee.

That''s quite enough, though. As an ordinary bailee it was required to exercise reasonable care of the goods, which doesn''t equate to having them stolen. It''s liable, and don''t let it tell you otherwise.

Q:

You asked in the July 2 issue if anyone knew who was the first motor carrier to start the discounting practice after deregulation in 1980.

From what I remember of that time, I was working for a shipper and Wilson Truck Lines was the first one to give us a 1 percent discount coupon to use if we gave them more than one shipment a day, 2 percent discount if more than five per day, and so on.

The discounts were first based on an aggregate of the number of shipments we gave to them per day. Then for quite some time the discounts were in the 10-20 percent area. After that it just went downhill (uphill in the discount) from there, so to speak.

A:

You''re the second reader to name Wilson, and that agrees with my own rather vague recollection as well. (That''s the Wilson Truck Lines of that era, by the way, not the present carrier of the same name, which is a Canadian firm based in Ontario.)

I hadn''t realized, though, that discounting had started on the basis of multiple shipment tenders. It certainly makes sense; that''s the way a lot of discounting still works in other economic sectors, being related to volume in one fashion or another. But I didn''t register, even at the time, that this was the genesis of discounting in motor carriage.

But yes, I do remember that in the early days 10 percent or so, maybe 20 percent, was the pinnacle of motor carrier discounting. Then it got to 25 percent, then 30 percent, and from there discounts kept escalating until today percentages in the 70s, even the low 80s are there to be had.

What always intrigued and puzzled me was the long-time focus of shipper traffic managers on discount percentages in their competitive shopping, often to the exclusion of all else. Once discounts became commonplace, many shippers would often choose a carrier based solely on the percentage discount.

That might have made sense if all discounts were off a common base. Sometimes they were; a lot of carriers did use standardized rate-bureau base rates. But many others did not; they had their own tariffs, often quite different from the bureaus''.

So you wound up with apples-and-oranges comparisons, and a marketplace premium came to be placed on running up base rates to support ever-higher levels of discounting. And if shippers were zeroing in on discount percentages to the exclusion of all else ...

Which is, of course, precisely how we reached the present point of outrageously high base rates and ludicrously big discounts. Most shippers by now have learned to put their attention on the freight bill''s bottom line and ignore discount percentages, and to watch carefully to be sure the discounts apply.

But occasionally the unwary shipper does get clobbered, as happened with my original questioner on this issue. It ships without observing the sometimes quite technical discount restrictions, and a carrier billing clerk gleefully applies the full base rate.

Even then most carrier managers will cut the bill drastically if the shipper protests vociferously enough. Still, only the squeaky wheel gets that grease, and then most often only if there''s more freight to be had for the future.

So I repeat what I said in my original column: When it comes to motor carrier discounting, let the buyer beware. The shipper needs to be trebly careful to dot all the i''s and cross all the t''s of the discount restrictions, whatever they may be.



-- 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.