We need a law mandating advance notice!

By William J Augello -- Logistics Management, 1/1/1999

What's the biggest problem shippers will face when dealing with motor carriers in the coming year? In my opinion, it will be ensuring they receive notice of a carrier's terms and conditions of carriage before shipping.

Without that notice, shippers of all commodities may become the victims of secret tariff charges, liability terms, and credit rules resulting in a loss of discount. Problems with household-goods carriers grew to such proportions that the Interstate Commerce Commission (ICC) ordered household-goods carriers to obtain a signed receipt certifying that the carrier had given the shipper a copy of an ICC booklet that explained how to avoid problems when shipping household goods.

That requirement has reduced the number of complaints filed against household-goods carriers. It has not eliminated them, though, because there are fundamental flaws in the household-goods ratemaking system. For instance, rates are based on the weight shipped. But how many homeowners know the weight of their belongings? Carriers, therefore, give shippers a cost estimate based on an informed guess of the cube the furnishings will occupy in the vehicle. Invariably, a dispute arises when the freight charges calculated on the actual weight differ from the estimate.

The ICC's booklet informs shippers that binding estimates are available at an additional cost and explains the options for obtaining liability coverage (also at an additional cost). But homeowners again are at a disadvantage, because liability limitations are based on weight and homeowners generally don't know their goods' value based on their weight.

When the ICC was "sunsetted," Congress wisely preserved regulation of household-goods carriers because shippers continued to experience problems, mostly due to the lack of advance notice and their failure to understand household-goods carriers' liability rules. During the next session of Congress, freight shippers would be well advised to seek a similar remedy for dealing with freight carriers.

Such a law would require all carriers to furnish prior to shipping a summary sheet (or "pony tariff") listing the liability terms and accessorial charges that could apply to the customer. Many carriers, such as UPS and Federal Express, routinely provide such tariffs to their customers. Because these tariffs give notice to the customer, the courts uniformly uphold these tariffs' terms and conditions when they are incorporated into contracts of carriage.

To make such a requirement fully effective, however, such a law must provide the customer with a defense against any adverse tariff provision if the carrier failed to provide notice of its terms prior to shipping. Without this protection, shippers would continue to be charged with constructive notice of tariffs that are maintained only at a carrier's terminal and are rarely provided before shipment even when requested by a shipper.

Congress must understand that there is little difference between an unsophisticated household-goods shipper and an unsophisticated small shipper of freight. Both need advance notice of the terms and conditions of carriage--in plain English!

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.