Negotiating released-value ratings can cut your shipping costs

By Ray Bohman -- Logistics Management, 10/1/2000

You've all seen that section of the Uniform Straight Bill of Lading or the Straight Bill of Lading-Short Form that reads:

NOTE (1) Where the rate is dependent on value, shippers are required to state specifically in writing the agreed or declared value of the property as follows: "The agreed or declared value of the property is specifically stated by the shipper to be not exceeding____________ per ____________."

More than likely, however, most of you have never had occasion to execute that section because you probably don't ship any commodities that are subject to so-called "released value" ratings published in the National Motor Freight Classification (NMFC). In fact, only a handful of commodities listed in the NMFC are subject to released-value ratings. Some examples include:

Chinaware, Earthenware, Porcelainware, or Stoneware, NOI

Drugs, Chemicals, Medicines, Toilet Preparations, and other articles named in items making reference to this item

Rugs, NOI

Engines, Internal Combustion

Paintings or Pictures, NOI

Printed Matter, paper paperboard, having exchange value

Watches, clock

In cases where classification ratings on a particular commodity depend upon declared or released values, the shipper may elect which rating it desires to be applied, but should loss or damage occur while the shipment is in transit, the carrier's liability is limited to the value shown in connection with the selected rating.

To give you an idea of what a somewhat typical released-value provision looks like, NMFC Item 196420 is reproduced on this page.

Released-value ratings are generally established on commodities that have a wide range in values, are susceptible to loss or damage, have a high ratio of claims to freight charges, and are the frequent subject of loss and damage claims. They give shippers a choice of two or more ratings: Under the higher rating, the carrier assumes greater liability if loss or damage should occur; under the reduced rating, the shipper assumes greater liability for loss or damage.

Although motor carriers may no longer collectively establish or change declared or released-value ratings (as a result of a provision included in the Motor Carrier Act of 1980), they may still do so individually. If your freight meets the criteria mentioned above and you are willing to assume greater liability in the event of loss or damage, you may want to consider sitting down with your carriers to negotiate fair and reasonable released-value ratings for such commodities.

Ray Bohman is a well-known consultant and author. Mr. Bohman is editor of several highly successful newsletters on transportation and is a consultant to a number of national trade associations. He is president of The Bohman Group, consultants and publishers in the freight-transportation field. His offices are located at 27 Bay Lane, Chatham, MA 02633. Phone: (508) 945-2272.