As a practical matter, the shipping department can be the area that causes claims for loss, damage, non-delivery or delay, or worse, that results in a law suit filed against your Company. Responsibility does not end when the driver signs the bill of lading and the truck leaves your dock.
Consignees should be instructed by their vendors as to the proper procedures to follow when receiving freight as they may be relatively unsophisticated in transportation matters and carrier liability issues.
Many good shipping practices are taken for granted; even by the most experienced personnel. It is recommended that they be reviewed at regular intervals, as some procedures occasionally fall by the wayside.
The following practices are recommended:
- Maintain a “Daily Shipping Log” showing details about your shipments such as carrier information, the loaders and their method of loading, the condition of the equipment, pick up times, dates, the product and its condition, etc.
- Consolidate all shipments to the same consignee on the same date. This will not only result in lower shipping costs, but may also reduce loss and damage, and improve customer relations.
- To ensure the likelihood of safe loading and handling by the carrier, be sure to mark all freight properly with precautionary labels such as; “this end up”, or “fragile”, or “use no hooks”, “use extension forks on forklifts” for extra long freight, “protect from freezing”, etc.
- Identify hazardous materials on the bill of lading, the product, and also make sure that individual shipping containers (boxes, drums, pails?) and vehicles are properly placarded.
- Make sure to determine how much cargo insurance coverage you will need and convey that information to your transportation provider. This will enable you to determine whether to purchase supplemental cargo insurance or pay excess value charges as the situation dictates. Confirm that management is aware when product is being shipped with released, declared, or agreed values in order to obtain a lower shipping rate. This will result in reduced carrier liability in the event of a cargo claim.
- Properly describe the merchandise on the bill of lading in accordance with the National Motor Freight Classification (NMFC) product commodity description. Brand names should be avoided since they do not properly describe the product for shipping purposes. Using the correct tariff and product classification description may preclude a defense to a loss or damage claim that the carrier was unaware of the value of the goods, or that the goods were described incorrectly to obtain a lower rate.
- Verify the consignee’s name and address. Even the proper zip code is important since some states have two or more towns with the same name.
- Specify the carrier routing on the bill of lading. Carriers who are familiar with your freight, your normal business hours, and your customers will normally handle your freight more proficiently. Your freight claims will also be handled in a more expeditious manner by carriers who are experienced with your account.
- Properly load, block and brace freight on the carriers trailer. Standard loading procedures should be developed and described in manuals, with loading diagrams and pictures. These records greatly contribute to proving that a load was in good order and condition at the time it was tendered to the carrier. When product is loaded by the shipper in the carrier’s driver’s presence, do not permit the driver to write “SL&C” (shipper load and count) on the bill of lading. If a carrier has record that the product was loaded and counted by the shipper it can be difficult to establish carrier liability both in the event of a shortage or if a load had shifted and, as a result, was damaged in transit. The driver is ultimately responsible for making sure the freight is safely and securely loaded so that it will not shift in transit and create a danger to the public on the road. Some shippers maintain a strict policy against allowing any shipment to move “SL&C”, and post signs at their shipping dock to that effect as a reminder to drivers that they are responsible and liable for counting and loading the freight. You may want to take photographs during and after completion of loading. The back of the photographs must be signed, dated, and noted with the appropriate references to the shipment and vehicle used.
- When trailer seals are applied, record the numbers in a shipping log (NOT on the bill of lading) and alert the consignee to break the seal upon arrival, and to record the numbers. Do not allow the driver to break the seal! The consignee should also check the seal to be certain it has not been tampered with or broken and glued with super glue!
- Require the carrier’s driver to sign for all the pieces they are picking up and not the number of shipping units (skids or pallets). This will provide the best evidence in establishing a “prima facie” case of carrier liability in the event of loss or damage. Do not allow drivers to use the following notations on the bill of lading when they are picking your freight up:
- STC (said to contain)- In this instance, drivers are not assuming responsibility for any number of pieces- only that they are picking up a pallet that is “said to contain” a certain number of pieces. The driver was not able to verify the piece count. Unless the driver takes responsibility for the number of pieces he is picking up it will be difficult to establish that the carrier is liable for any shortage and did not deliver all of the product that they picked up.
- SWP (shrink wrap pallet)- In this case a driver is merely taking responsibility for picking up a shrink wrap pallet (with no reference to the number of pieces he is taking responsibility for). Therefore, in the event of an alleged shortage, if a carrier picks up a shrink wrap skid and delivers a shrink wrap skid, carrier liability will not have been established and any resultant cargo claim will likely be declined.
- When shipping any “used” product such as machinery, electrical equipment, etc? keep in mind that most carriers limit their liability to $0.10 per pound. When buying used machinery, or when shipping machinery for refurbishing or repair, be certain to declare its value on the bill of lading, unless it is covered by a rider on your Company’s business insurance policy. Supplemental insurance may also be available upon request prior to pick up. After a machine has been “rebuilt, refurbished, remanufactured or reconditioned in any way it will be subject to the same provisions applicable on such articles when new,” per Item 425 of the National Motor Freight Classification (NMFC). Be sure to advise your transportation provider and also indicate on the original bill of lading that the product you are shipping has been refurbished.
- Occasionally, a shipper may have a critical need to have a delivery made either at, or by, a specific time. A failure to meet that deadline could result in consequential damages being incurred. Generally, a carrier is only bound by “reasonable dispatch” and is not liable for the special damages that may result from; a production line shutting down, meeting a rigger to offload a piece of equipment, delivering to a trade show, purchase order cancellation dates, advertisements? When a carrier does agree to make a delivery within the designated time period, they can however, be liable for a specific amount of special damages if it fails to do so. HOWEVER, the bill of lading must be marked accordingly at the time the freight picks up. For example, the bill of lading may read:
“Delivery to be made by (date and time) or carrier will be liable for special damages in the amount of $______________________.
Signed (by carrier official)_____________”
- When tarpaulins are required to protect a load, insist on checking the tarpaulin after it has been applied by the driver to ensure that it will remain intact en route and fully protect the shipment from the elements.
- Verify the gross weight of your shipments, including the weight of the pallets and/or tonnage. Most less than truckload (LTL) carriers have aggressive weight and research programs and will charge for reweighing shipments when a variance is discovered from the weight stated on the original bill of lading.
- The practice of allowing carriers to “drop” trailers at the shippers, or consignees facilities and leave before the freight is loaded or unloaded, while being very convenient for both parties, can present problems. When loaded trailers are dropped without the shipper being present to inspect the seals or to check the condition and quantity of freight being delivered, recovery of a loss or damage claim will be difficult. Carriers will generally deny responsibility for any claims resulting from these types of deliveries. Therefore, if the parties agree on dropping trailers, an agreement must be reached beforehand which spells out how claims will be treated, or whether they may be filed at all. All freight should be counted by the carrier within 24 hours of pick up and all shortages reported to the shipper immediately upon discovery, and in no case later than 48 hours of pick up.
- Install security equipment, personnel and guard services. Guard against theft and pilferage of your products and equipment. Monitor them regularly. Cameras and other photographic devices are effective in preventing imposter pick-ups. Check drivers’ licenses, pickup orders, employee identification, and record them with vehicle license numbers.Do not give your freight to just anyone who claims to be sent to make a pickup!
- Shrink wrap pallets whenever possible. Use special tape printed with your Company’s name along with a warning label to the consignee to check the shipments contents if the tape is tampered with or broken at the time of delivery. Carriers may break down a pallet to improve loading and vehicle utilization unless directed not to do so in advance by the shipper.