As a holder of one or more personal credit cards, you're probably aware that over the past two or three years, most credit card companies have not only shortened the period within which you must pay your monthly bill—to just 25 days in many cases—but they have also imposed late-payment fees of as much as $35.00 if your check is not received by that deadline.

Now, that same type of penalty is beginning to spread to the trucking industry.

Effective Jan. 6, 2003, United Parcel Service (UPS) amended its rule governing "Options for Payment of Transportation" under Item 560 of its Rules and Other Provisions Which Govern the Transportation of Property tariff. That amendment includes, for the first time ever, a provision allowing UPS to assess a late-payment fee of 5 percent if a shipper's payment is not received within 14 days of the invoice due date.

According to the tariff amendment, that penalty applies on the "total past-due balance of shipper's account (including, without limitation, any previously assessed but unpaid late-payment fees) or the maximum amount permitted by applicable law, whichever is less. Each late-payment fee shall be due and payable upon shipper's receipt of the invoice that first reflects the assessment of the late-payment fee."

The rule goes on to state that no late payment fee shall be assessed with respect to the carrier's Consolidated Payment Plan, Special Payment Plan, or UPS Prepaid Plan. The late-payment fee, moreover, will be assessed in addition to any costs that UPS may incur in the final collection of funds owed by the shipper. These fees do, however, apply to any weekly payment plan, including the Electronic Funds Transfer Plan. Nevertheless, UPS continues to maintain a rule that all weekly charges must be paid within seven days after being billed.

The amendment is quite clear that the late-payment fee doesn't let the shipper off the hook in any way: "Neither the assessment nor the payment of a late-payment fee shall (a) affect shipper's responsibility to pay all funds owing to UPS, or (b) in any manner preclude UPS from exercising any of its rights or remedies hereunder or under applicable law."

It wouldn't surprise this writer to see major competitors of UPS in the small-package arena adopt similar rules in the near future.

Whether or not late-payment fees like those recently announced by UPS will spread to LTL carriers in the months ahead remains to be seen. As the economy has weakened, motor carriers have seen a growing number of shippers delaying payment of their freight bills. Many feel strongly that shippers should be assessed some financial penalty if they do not pay on time. But competition being what it is in this sector today, it might prove to be difficult—if not impossible—for any individual LTL carrier to make a move in this direction stick.