Finding financial damage due to a delayed truck.
The key point
Late claims require evidence of failure to use adequate shipping and evidence of the damage resulting therefrom.
Consider including a lump-sum compensation scheme in transport contracts.
Q: We are a consignee in Ohio and we want to protect ourselves in late trucking situations. We have read the Blue Book Transportation Policy and understand that trucks typically only need “adequate shipping” and that what we consider to be a “delayed truck” may not be considered delayed if it is in breach of the contract of carriage. In situations where the truck is clearly and significantly delayed, we want to make sure that we can identify financial damage. Please advise.
Cliff Sieloff is Claims Analyst at Blue Book Services Inc.
A: Damage caused by a carrier not using adequate shipping can be difficult to prove. As you saw in section (10.11) of the Blue Book Transport Policy, we have provided a rough framework for evaluating losses based on the extent of the delay.
This section contains in part:
[W]If delivery is only one (1) or two (2) days late (and temperatures have been properly maintained during transit) it may be difficult or impossible for the buyer to determine that the product was appreciably affected by the delay . Blue Book has generally taken the position that after a delay of one (1) or two (2) days damage must be substantiated by reports from the USDA Market News Service for the relevant data.
On the other hand, if the product is three (3) or more days late, Blue Book has generally taken the position that an injured party is referring to the difference between the target market value of the product in good condition at the time the product should arrive and the actual one Proceeds from the sale of the delayed product should be assumed, provided that such proceeds are evidenced by a government inspection certificate and detailed record keeping reflecting an immediate and proper resale of the delayed product. The perishability of the product in question can be an important consideration.
Applying this framework to a baseline scenario where a truck breaks down and arrives two days late, we have generally taken the position that any alleged damage must be supported by USDA’s Market News reports for the data in question.
In situations where a Market News report is not available or the price of the commodity has remained constant during the relevant period, recipients may not be able to quantify their alleged losses.
This can frustrate recipients who have lost their business and are looking for some remedy from an offending freight forwarder who may not be willing to offer a satisfactory price adjustment.
One approach to avoid this frustration is described in section (10.13) of the guidelines:
For example, the contract could contain a provision that provides for damages of $ 30.00 for every hour the carrier is up to seventy-two (72) hours late, or actual losses, whichever is greater. Since a liquidated damages provision may be considered unenforceable if it is criminal, it is recommended that such provision is reasonable and a real estimate of the losses in the event that the carrier is late. It is obvious that losses would occur more quickly with strawberries than with less perishable goods such as potatoes.
Of course, the details need to be agreed with your carriers, but the idea is to provide some level of protection in situations where a consignee cannot demonstrate damage due to a carrier’s delay.