Shippers protest move by carrier classification group to binding arbitration

A move by an autonomous board of the Nationals Motor Freight Traffic Association (NMFTA) to require binding arbitration in freight claims and billing disputes is drawing fire from a major shippers group.
  
The Transportation & Logistics Council, an organization that claims 300 shippers and receivers of freight nationwide, is protesting two new rules that were added to the National Master Freight Classification.
 
One deals with procedures governing investigation and disposition of freight clams for loss or damage and the other for procedures governing billing disputes, including overcharge claims.
 
The dispute resolution calls for binding arbitration by the Transportation Arbitration and Mediation PLLC in Washington “or another body experienced in resolving transportation disputes or claims” within 30 days after parties are unable to resolve their dispute or claim.
 
“The arbitration decision shall be enforceable in a court of competent jurisdiction,” the dispute resolution reads.
 
The NMFC is a standard guide used by truckers to establish commodity classifications, as well as various rates and practices followed by motor carriers. It is developed and maintained by the Commodity Classification Standards Board, an autonomous board of the National Motor Freight Traffic Association.
 
While admitting arbitration has a role in settling small claims and rate disputes on a voluntary basis, shipper representatives say the idea of mandatory arbitration violates the Carmack Amendment, which establishes uniform federal guidelines designed to remove the uncertainty surrounding a carriers liability when damage occurs to a shippers interstate shipment, as well as other standard procedures in transportation law.
 
Shippers have not yet heard whether the Commodity Classification Standard Board will reverse course on the matter.
  
“We are patiently awaiting a response,” says George Pezold, executive director of the Transportation & Logistics Council. “We think they should just take it out,” Pezold told LM. “I have no objections to arbitration. But that’s voluntary. But the way this is written makes it mandatory if a carrier is participant in the NMFC.”
  
Pezold said few shippers are even aware of the proposed changes because very few of the nation’s thousands of shippers are subscribers to the National Motor Freight Classification. Those who do are more concerned about the articles and commodities they ship when a reclassification could impact their shipping costs.

Unfortunately for shippers, there is no independent board to which they can turn. The Interstate Commerce Commission closed in 1995. Its subsequent agency, the Surface Transporation Board, no longer hears motor freight discputes.
 
“You can’t go to STB on something on this,” Pezold said. “It’s very clear that very few people want this thing. If you have a million dollar cargo loss, you don’t want to give it to an arbitration group. You want to have the right to go to court.”
 
Pezold is relatively confident the classification board will clarify matters in the coming months.
  
“I think when they realize this is a grave mistake, they will take it out,” he said.. “But if they don’t do it, and somebody decides to assert it as a defense in a lawsuit, hopefully we can tell the court or the attorneys that the court should hold it to be unlawful.”
 
“I would think most savvy judges would say we’re not going to recognize this arbitration,” Pezold concluded.
  
Most shippers turn to arbitration boards to solve inexpensive claims disputes. Pezold recommends shippers with disputes involving less than $10,000 go to arbitration, rather than sue carriers. But that’s a voluntary decision, he said. Making arbitration mandatory is something entirely different, he added.
 
“I recommend to my clients that any dispute under $10,000, they should go to arbitration,” he said. “These days you can’t litigate anything for under $10,000.”