WHAT SHIPPERS AND CARRIERS SHOULD KNOW
Reproduced with the Permission of Miles L. Kavaller
The bill of lading is the document used by carriers and shippers for transportation of freight. It serves as a contract as well as a receipt for the goods containing the description, quantity and condition of the property to be transported. It is an important document with significant legal consequences.
The most common form which is widely used in the U.S. is the multi-part, non-negotiable UNIFORM DOMESTIC STRAIGHT BILL OF LADING. Because it has been in use for many years, shippers have a stock of preprinted forms which often contain not only a description of their commodities and applicable class(es) but, in addition, reference to the carrier’s filed tariff. These forms were mandated by the National Motor Freight Classification (NMFC), a filed tariff in which virtually all motor carriers participated, which contained not only the classification of commodities and rules regarding the details of their transportation, but in addition, the contract terms and conditions for the uniform domestic straight bill of lading. And strict adherence to the carrier’s tariff was required by the law, commonly called the “filed rate doctrine”. On August 26, 1994, the filed rate requirement in the federal law governing interstate transportation was repealed. Effective January 1, 1996, it was abolished for intrastate shipments when federal preemption prohibited the states from regulating the rates, routes and services provided by motor carriers for intrastate transportation. Shippers and carriers have since had the opportunity to negotiate the terms and conditions of the bill of lading contracts since this deregulation took place. Individual shippers and carriers as well as shipper and carrier trade organizations are now debating the issue.
Operating in a deregulated environment is a new experience for transportation professionals and practices which have been followed over the years are slow to change. Further, the procedures of transportation are unlike other businesses. Where, for instance, a buyer issues a purchase order, a seller can negotiate the terms of sale before a contract is formed. When a shipper calls a carrier, however, there is no discussion of the terms or conditions of the service and even though the carrier issues the bill of lading when it is signed by the driver, the document is prepared by the shipper. A truck driver cannot be expected, nor has the authority, to review and accept, negotiate or modify a bill of lading at the time of pick-up when the shipment is tendered for transportation. Accordingly, there is a major problem where a shipper wants to use a new form bill of lading and it has not been previously approved by the carrier.
Many carriers still participate in the NMFC and insist that the bills of lading issued, even though prepared by shippers, adopt the terms and conditions in that tariff. While the “filed rate doctrine” has been abolished, compliance with the carrier’s tariff and the terms and conditions of the bill of lading can still be required under ordinary principles of contract law. It is of the utmost importance that the parties to the transportation contract be in agreement. This can only be accomplished if carriers and shippers communicate before they contract and reach agreement.