A new era in transportation

By William J Augello -- Logistics Management, 2/1/1998

On Dec. 27, 1997, a new Uniform Straight Bill of Lading became effective for most of the nation's motor carriers. Published by the National Classification Committee (NCC), this B/L threatens to create conflicts between shippers and carriers because it attempts to resurrect the "filed-rate doctrine" that caused the undercharge fiasco of the 1980s and '90s.

The NCC's B/L incorporates by reference tariffs that are filed only at the carrier's office and are furnished only if the shipper requests them. A shipper is bound by the terms of those tariffs unless it has a different written transportation agreement with the carrier.

Since the demise of the Interstate Commerce Commission (ICC) and the loss of its regulatory oversight functions, carriers have inserted in their tariffs numerous liability limitations, penalties, and restrictions that the ICC never would have permitted.

The principal controversy is whether carriers have the right to unilaterally limit their liability without the shipper's written consent. For almost a century, the U.S. Supreme Court has required the informed consent of a shipper before a common carrier could limit its liability for losses in transit in exchange for a lower rate. But the ICC Termination Act, which took effect Jan. 1, 1996, allegedly permits carriers to publish unfiled tariffs containing liability limitations and does not require them to furnish copies to shippers unless the shipper specifically requests them.

Although it permitted the new B/L to become effective, the Surface Transportation Board (STB) reminded carriers in its Dec. 19, 1997, decision in Docket No. ISM 35002, that:

"...in the absence of filed tariffs and the 'filed rate doctrine,' carriers clearly have a greater responsibility to ensure that shippers are made aware of the applicable provisions, and courts may well disallow attempts to enforce incorporated provisions where it can be shown that the carrier failed to provide adequate notice of such provisions to shippers. See H.R. Rep. No. 422, 104th Congress, 1st Session 222-23(1995)...We assume that carriers will fully and promptly respond to all shipper requests for copies of the relevant provisions. Although the courts have ultimate responsibility for resolving such issues, we believe that, should any carrier fail to provide shippers with the full notice required by law, they should be barred from enforcing those limitations against the shipper."

Thus, the stage has been set for a new round of litigation over two issues: (1) Is a shipper's prior written consent to a tariff limitation of liability necessary under the law? and (2) If a shipper requests a carrier's tariff but does not receive it before a shipment must move, will the shipper be bound by that tariff? Until these controversies are settled, shippers must demand, in writing, copies of carriers' tariffs and study them for limitations, restrictions, loss-of-discount penalties, etc., before using that carrier.

Other significant changes have been made in the new bill of lading, including making shippers primarily liable for payment of freight bills unless the bill of lading is marked "COLLECT," and restricting the "Section 7'' clause to "COLLECT" shipments.

Shippers and their representatives now have a more urgent need than ever to draft their own contracts and/or bills of lading incorporating all of the terms of carriage, and thus avoid costly "surprises" and litigation.

William J. Augello Esq. has practiced transportation law for 46 years. He also is the executive director of the Transportation Consumer Protection Council, an organization that is devoted to protecting shippers and receivers in transportation matters, such as freight loss and damage, undercharges, and contracts. He can be reached at (520) 531-0203 or via e-mail at augello@transportlaw.com.