Know Your Carrier

For decades, banks and financial institutions have followed a simple principle: Know Your Customer.

Before they move money or assume risk, they are expected to understand exactly who they are doing business with. They document their process, verify information, and maintain records that demonstrate reasonable diligence.

In light of the Supreme Court's recent unanimous 9-0 decision in the Montgomery case, shippers and brokers must consider a similar principle:

Know Your Carrier before they move your freight

The Court's decision means brokers may now face state-law negligence claims involving carriers they select to haul freight. While the case centered on a freight broker, many legal and transportation experts believe its implications may ultimately extend to shippers as well, particularly when carrier selection practices come under scrutiny following a serious accident.

If you're uncertain whether your carrier qualification process would withstand scrutiny from customers, regulators, auditors, or plaintiff attorneys, now is the time to find out—not after an accident occurs. Take advantage of TranzAct’s complimentary one-hour review of your carrier vetting process and determine whether your current carrier qualification process is documented, defensible, and consistently applied—or whether hidden gaps exist that could cost millions tomorrow.

To get in touch, give us a call at 630-833-0890, send us an email, or schedule a conversation.

An executive problem 

Most executives assume the greatest risk is the accident itself. It isn't. The greatest risk may be discovering, after the accident, that your company cannot clearly demonstrate why that carrier was selected in the first place.

That is why most CEOs won't lose sleep over the Montgomery decision itself. What keeps them awake is a far more troubling question: If a carrier selected by our company is involved in a catastrophic accident tomorrow, could we demonstrate that we exercised reasonable care when selecting that carrier?

Heaven forbid it ever happens but imagine your company becoming involved in litigation following a catastrophic accident involving a truck hauling one of your shipments. Once in court, imagine the plaintiff's attorney asking a simple question:

"What due diligence did your company perform before entrusting freight to that carrier?"

How would you answer that question? More importantly, could you prove it?

Many organizations want to believe they have a carrier qualification process. Truth be told, what they probably have is a collection of good intentions, experienced employees, tribal knowledge, and unwritten assumptions. That may feel like a process. It isn't.

A practice exists in people's heads. A process is documented, measurable, auditable, and repeatable. Practices rely on people. Processes survive scrutiny.

So, as you once again ponder the question, “Do we really have a carrier vetting / selection process, consider a few additional questions. Could your company: 

Produce a written carrier qualification policy?

Demonstrate that metrics and policies were followed consistently?

Show how safety performance, operating authority, insurance coverage, compliance history, and other risk indicators were evaluated before freight was awarded?

Identify who approved exceptions?

Demonstrate that the same standards were consistently applied across all carriers?

If those questions are difficult to answer, the issue isn’t your carrier selection practices. The issue may be your ability to defend it.

That distinction matters because transportation procurement is no longer just about rates, capacity, and service. Increasingly, it is becoming a risk management function. As nuclear verdicts continue to reshape the transportation landscape, organizations are finding that carrier selection decisions can carry consequences far beyond the loading dock.

In the post-Montgomery environment, the companies best positioned to manage risk will not be the ones scrambling to explain their decisions after litigation begins. They will be the organizations that can clearly demonstrate how carriers were evaluated, why they were selected, and how those standards were consistently applied.

At TranzAct, we've been helping organizations strengthen carrier governance, qualification, and transportation risk management disciplines long before the Montgomery decision.

One of the first things we often discover is that companies genuinely believe they have a documented carrier selection process—until we start asking questions. That's when the gaps become visible. The companies, run by smart and capable people never realized that gaps like the following existed.

Documentation is incomplete.

Standards are applied inconsistently.

Exceptions aren't tracked.

Responsibilities aren't clearly defined.

Those gaps may never create a problem—until they become the focus of a lawsuit. That's why we help shippers evaluate, document, and strengthen carrier vetting processes before those decisions are ever examined in a courtroom.

Once again, to get in touch, give us a call at 630-833-0890, send us an email, or schedule a conversation.

After all, Know Your Carrier is just as important as Know Your Customer.