Legal Risks LTL FTL Shippers FacePosted On 9th October 2020
Shipping a product, even if your customer is choosing the LTL or FTL carrier, nevertheless involves heavy responsibilities which expose all shippers to many legal risks.
First, the shipper has a legal responsibility to pack the freight sufficiently such that it stays safe no matter the choice of LTL or FTL carrier.
If the shipment is tendered to a common carrier, the freight must be transferable by a normal forklift which can max out at 2500 lbs. and must be packaged in a rugged enough manner to the normal rough and tumble that the common carrier hub and spoke system will inflict on the freight.
This usually means that at a minimum, the freight needs to be shrink-wrapped and bound with strapping to a pallet, if possible, with corner protectors. Even better, add cardboard sheets on all sides, underneath the shrink wrap to protect the freight further. The best method is to package the freight inside a crate.
Freight that comes loose can cause damage to the truck or other freight and shippers can be held liable for that, and for any safety accidents that occur because of, or in proximity to, such improperly packaged freight.
Second, the shipper is legally responsible and liable for all details that are on the Bill of Lading. Correct description, weight, NMFC# (national motor freight classification number), and the correct Class and sub-class thereof derived are critical.
If a truck inadvertently goes overweight because your freight was listed at 1000 lbs. and it was really 2000 lbs., and then gets in an accident with fatalities, you can expect a large lawsuit against your company, and perhaps even against the shipper on a personal level.
Third, for collect or “3rd party pay” BOLs, unless you have a Section 7 in your BOLs and have the trucker sign that section if another party is paying the freight bill (via collect or third party billing) but ultimately fails to pay them, the bills will come back to the legal shipper.
Courts have found that that the shipper is responsible for paying them, including the full charges without the application of any discount from the LTL tariff. This is particularly true of common carrier shipping – you tendered the freight, the LTL carrier accepted contingent on their Tariff which you implicitly agreed to by tendering the freight to them (even if your customer chose the carrier – does not matter!).
This “chargeback” situation can happen if the receiver fails to pay, or if the broker, 3rd party distributor or seller of the goods (for drop shipments), or the paying party goes out of business.
Your company as the “legal shipper” will receive the bills eventually. This can prove extremely costly and career-ending for shipping and traffic managers and even CFOs.
Fourth, it is the shipper’s responsibility to ensure the freight is given to the correct carrier listed on the BOL. Negligence of giving the freight to the wrong carrier could result in the shipment being held until past due or disputed invoices are paid to the new carrier, and much higher rates may be applied by the new carrier.
Plus, you may owe a “Truck Dispatched Not Loaded” fee to the originally booked LTL of the FTL carrier.
Fifth, the shipper is legally responsible for proper labeling and documentation for any hazardous shipments. The shipper must provide correct UN number, hazmat class, description, and emergency contact numbers on the Bill of Lading.
The shipper must give the driver the proper BOL and a Material Data Safety Sheet. It is also a good idea to attach copies of that Safety Sheet to every pallet of the shipment.
Failure to take any of these measures opens the company and even shipping personnel to possible criminal negligence charges and certainly blows the doors of liability wide open if there is a serious accident and your improperly marked or weighted freight is on-board.
There could be severe legal and financial consequences. We know of a $9 million settlement that nearly bankrupted a shipper.
Sixth, shippers also have the legal responsibility to load trailers correctly and safely. Loading the items loosely could potentially cause harm to trucks, other freight, individuals unloading, and even cause collateral damage in an accident situation to people or property. Also, shippers must ensure that no illegal products are being loaded onto a trailer by their employees.
These are some of the most critical responsibilities in transportation and they fall on your personnel in shipping.
Training them well, requiring them to read up on logistics blogs contained at FreightRun.com’s Logistics 101 subsite, will make them more valuable and resourceful as well as aware of how to protect your company from unnecessary liability and the severe consequences of lawsuits.