Co-author Alexis Foster
Thanks to the power of the trucking lobby, the prevailing policy on the question of who wins and who loses if a carrier of goods goes unpaid favors the carrier over the broker, shipper, consignor and consignee. The rationale is that allowing shippers the benefit of carriage of goods without compensating the carrier would eventually cripple the shipping industry and the economy. Thus, the carrier will be paid, irrespective of the carrier’s failure to collect from the shipper or consignee or payment by one of the other parties to another.
The Bill of Lading
In these transactions, the Bill of Lading (the two-sided, tiny-print document that the company man signs without reading) governs the rights and obligations of the parties. Problem is, there is no uniform or standard bill of lading. For the consignee (often the operator) the liability to pay the carrier its full freight cost results from an implied obligation arising from simply receiving the goods, regardless of whether the consignee had anything to do with shipment.
So, if you hire a freight carrier, or if you receive goods or have goods picked up from a facility or yard you own or operate, beware.
In a recent carrier non-payment case handled by Alexis, the unpaid carrier sued the logistics company that hired them, the mill where the carrier picked up the pipe, the intermediary buyer of the pipe, and the operator that received the pipe at its job site. The carrier had colorable claims against each of the companies it sued even though because key protections were not in place:
- the carrier’s only contract was with the logistics company,
- the mill had arranged for and paid the logistics company for the freight, and
- the operator had nothing to do with shipping.
What to do about it?
There are ways to avoid double liability. See this helpful article by Alexis in Pipeline Magazine to learn how. But, if you do nothing else, never sign a bill of lading without first marking it either “COLLECT” (if you are a shipper/consigner) or “PREPAID” (if you are a consignee).