Shipper beware

When it comes to accessorial charges — those extra charges carriers add to the freight bill for certain services rendered — the relationship between shippers and carriers is getting downright contentious.

When Jerry Moyes, chairman, president and CEO of truckload carrier Swift Transportation Co. Inc. (www.swifttrans.com), called for carriers to pass on costs for services provided to shippers in his recent keynote address at the annual National Industrial Transportation League meeting, it confirmed in some shippers' minds that the long-dreamt-of road to collaboration between shippers and carriers remains very much a dream when it comes to accessorials.

Shippers are questioning what exactly should be part of the transportation rate and just how much of the accessorial charges they should have to pay. "Are we paying for requested services?" asks Richard Macomber, strategic distribution projects manager with high-tech giant IBM Corp. (www.ibm.com).

"How do we know the work was actually performed?"

Macomber offers some arguments to differentiate between work actually completed and revenue-generating accessorial charges. Security surcharges should be resisted, he says, citing a freight forwarder association's advice to its members. It's a cost of doing business, he argues.

But infuriating to Macomber is a case where a driver with an appointment to deliver a shipment to dock 7 of a distribution center was redirected to dock 33. Macomber questioned the redelivery charge the carrier submitted as an accessorial, and the carrier responded, "How do you expect me to make money on this shipment?"

Not all fuel surcharges should be passed through to shippers, Macomber continues. He says shippers need to agree to pay for value-added services, but there should be some standardization — even within the shipper's organization. He points to a 50% turnover rate in logistics buyers and the confusion that creates. His own organization lists 33 different accessorial charges in surface contracts and another 23 in air contracts. When he looked at carriers' service guides, he found one carrier lists 112 different accessorial charges and another lists 99.

Macomber says shippers are willing to pay for requested extra services, but he doesn't expect to be nickel-and-dimed on the rate — especially for things that should be in the rate itself.

Brad Jones, vice president, Jones Trucking, sees it differently. "Part of what is propelling the driver shortage in this country is unpaid extra work," Jones notes. "If the dock worker assigns a dock door, then asks the driver to move, the driver has a right to be compensated for the extra move at the shipper's direction."

"Absolutely, the carrier must be paid for additional service," acknowledges Bill Gravel, shipping supervisor with Ledalite (www.ledalite.com), a manufacturer of lighting solutions. That's why all carriers have service tariffs spelling out the additional service and costs. The problem I see, though, is when a shipmentis 'prepaid' by the shipper. The contract of carriage, and most service tariffs, state that the additional charges for the shipper account must be preapproved and in writing prior to performing the service."

"As far as documenting that move," says Jones, "it should be equally shared because if it is economically disadvantageous to the shipper it is possible for that documentation to be 'lost.' If you assume the carrier is trying to 'stick it to you' with accessorial charges, you must also take into account the culpability of the warehouse employees trying to use the trucker's services for free."

Legal experts weigh in on Gravel's side in that accessorial charges are spelled out in carrier tariffs or service guides and are incorporated into the contract by reference.

"The documented proof of the additional service must be written on the delivery 'pro' and so signed by the receiver prior to being performed," Gravel notes. "This would make them liable for the charges. Even if they refuse to pay and advise the driver the shipper will pay, the notation on the delivery bill must state that they have approved [the additional services]. The contest as to additional charges would be between the shipper and receiver to settle. Without-a notation on the delivery pro and transcribed to the freight bill or correction, then you are paying blind."

James Calderwood, Logistics Today's "Legal Briefs" columnist and an attorney with Zuckert, Scoutt & Rasenberger LLP, points out the terms of the transportation contract take precedence over the bill of lading. Arguably, that's where the shipper and carrier define the terms and agree on which services will be paid for and at what price. This may be as simple as incorporating the carrier tariff or service guide by reference. Without stated exclusions, that would bind the shipper to pay any accessorial charges contained in the tariff. The proof of delivery or bill of lading with notations as to what services were performed would serve to confirm which charges were valid.

"A contract is your chance to structure the deal the way you want it," adds Robert Spira, a transportation attorney with Benesch, Friedlander, Coplan & Aronoff LLP. Spira quotes the U.S. Code, saying, "A carrier... may enter into a contract with a shipper... to provide specified services under specified rates and conditions." The shipper or carrier may expressly waive rights or remedies in writing that are provided by the Interstate Commerce Act.

Standard transportation contracts include items like volume guarantees, fuel pegs and how mileage is determined, establish thresholds and charges on waiting time, and include any specific waivers of terms of the Interstate Commerce Act. In addition, terms of dispute resolution should be spelled out.

Spira also makes his case for careful consideration of performance metrics. Too much time is spent on price and not enough on defining metrics and performance expectations, he says.

The bottom line: Shippers need to be aware what terms apply to a particular shipment — whether they are contained in a contract or a motor carrier's tariff or service guide.

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