| Most motor carriers limit their liability for shipments which are lost or damaged while in their possession. The real question the shipper must ask itself, however is “what is that limit of liability for the products I ship?” In today’s deregulated transportation environment each carrier will publish these limits of liability in their Rules publication. The problem is that most shippers never ask the question of liability limitations or ask for a complete copy of the rules and regulations they agree to be bound to by signing the bill of lading contract and tendering shipments to the carrier. Here are just two examples of where shippers lost a considerable amount of money when they found out their carrier had limited liability.
A shipper negotiated a Freight All Kinds rating of class 50 for its products which are normally classed at 70. This produces a savings of approximately 24% of the net freight charges assessed by the carrier. A pretty good deal! The shipper found out after an entire shipment was lost that the carrier had limited its liability based on the Freight All Kinds rating. The carrier’s liability for class 50 product was limited to $2.00 per pound when product shipped at higher classes was limited to $20.00 per pound. A reduction of over 90%. The shipper filed a claim for $60,000 against the carrier to recover its loss but only received a check for $6,000 from the freight carrier. A very costly oversight on the shipper’s part! How many shipments would the shipper have to make with this freight carrier to recoup the $54,000 it lost while at the same time jeopardizing their customer’s shipment? The reality is the shipper immediately stopped doing business with this carrier as soon as the claim was paid at the reduced level. In another case a furniture manufacturer had to send a multi million dollar piece of machinery back to the manufacturer of the equipment for repair. He selected a motor carrier that had direct service between the origin and destination points that quoted a very favorable freight rate. Well you guessed it, the machinery was almost destroyed in transit and the shipper filed a claim totaling hundreds of thousands of dollars to cover the additional repairs the machinery now needed. What the shipper did not know was that the carrier limited its liability for “Used Machinery” to $0.10 per pound instead of the carrier’s normal liability limitation of $25.00 per pound per piece subject to a |
Tony Nuzio