A golden opportunity for shippers

By William J Augello -- Logistics Management, 11/1/1998

Shippers and receivers have a golden opportunity to preserve and improve for the next millennium the current liability regime governing motor carriers. This opportunity was created by a report to Congress by the U.S. Department of Transportation (DOT) on its congressionally mandated study of cargo liability. The impetus for that study was the continuing impasse between shippers and carriers, primarily over the carriers' demand that they be limited to a liability of $2.50 per pound, per piece, for cargo loss or damage.

Shippers have other, related complaints that were discussed in the DOT's study. They say carriers are misinterpreting the Interstate Commerce Commission Termination Act (ICCTA) as permitting them to limit their cargo liability without a shipper's written consent. Shippers also complain that carriers are not giving their customers advance notice of their rules and accessorial charges, particularly in regard to liability limitations and restrictions.

After studying the evidence and arguments by both sides, the DOT has responded by rejecting the carriers' request for a uniform limitation of liability and by finding that the current version of the Carmack Amendment is "ambiguous" on the subject of shippers' consent to liability limits. To remove that ambiguity, the DOT has recommended that Congress remove a clause in 49 U.S.C. 14706 that now links two subparagraphs. If Congress adopts the DOT's recommendations, the law would more clearly preserve the 100-year-old requirement that carriers obtain a shipper's written consent to a lower rate in return for a lower liability limit.

Motor carrier lobbyists surely will plague Congress in its next session, urging legislators to reject the DOT's recommendations. Shippers and their organizations will need to launch a united campaign urging Congress to make the DOT's recommendations law. If successful, the Carmack Amendment should be preserved for the next millennium. If shippers miss this golden opportunity, years of litigation and disputes over loss-and-damage claims and undisclosed rates and charges will follow.

Fixing the law now also will enhance competition in the marketplace. Today, many carriers do not inform customers of their rules before a shipment takes place. As a result, shippers generally do not use liability rules and accessorial charges as a means of comparison when selecting carriers.

If notice of carriers' rules becomes mandatory, however, then shippers will be able to compare competing motor carriers' rules and charges easily. That will put pressure on carriers to remove unreasonable provisions on liability and other matters from their tariffs, particularly those that the ICC would not have permitted when it was charged with protecting the shipping public from unreasonable tariff provisions. One example of a provision that could potentially be eliminated is a maximum liability limit that contravenes the strict liability standard in the Carmack Amendment. Another is a rule published by some carriers that reduces claim payments by the same discount percentage that applies to the freight rate.

Act now to take advantage of this opportunity. The ball is in the shipping public's court, and the clock is running.

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.