I recently received a call from a shipper that was very upset. A carrier had damaged an expensive piece of machinery and the shipper wanted to be reimbursed for its full value. Instead, the carrier sent a check for a much lesser amount.
After he told me that under the Carmack Amendment he believed the carrier was liable for the full value, I asked him about the liability clauses in his contract with the carrier. Specifically, was there a Released Value Rate for freight tendered to that carrier? The long pause told me that there was a problem here; he was not familiar with how carriers reduce their liability for damaged freight by defining a Released Value Rate in their contracts. So this shipper has two options: Take the carrier to court or accept what the carrier is offering.
Here's the point of this story: When you’re negotiating your LTL contracts, make sure you pay attention to the little things. Little things can add up to costing your company a bunch of money. For example, the released value rates in your motor carrier contracts are very important because if your freight is damaged, it’s going to determine the amount for which the carriers are ultimately liable.
One other area to keep your eye on is the reclassification of freight by LTL carriers. As noted in previous Two Minute Warnings, LTL carriers are installing dimensionalizers at their terminals, so they will know the size and weight of the freight going on their trucks. Armed with this information, some LTL carriers are being very aggressive in challenging FAK rates or individual classes of freight being tendered to them. We are not too surprised by the large number of calls we have received from shippers who are having their freight reclassified by their carriers.
When we get these calls, we like to remind the caller that they do have options.
One option that will help you avoid those land mines and protect your company is to give us a call before you finalize your LTL contracts. We can discuss negotiating things like linear foot rules and cubic capacity factor rules BEFORE you sign your contracts.
If you have questions about these or anything else, send us an email or give us a call at 630-833-0890. We’re on your team, we’re here to help, and we’re passionate about seeing you be successful.
Regards,
Mike Regan and the TranzAct team
www.tranzact.com
