If you are a shipper, you are no doubt approached by a sales representative of a company providing transportation services from time to time. And, sometimes such an initial contact may lead to more serious discussions. In these discussions, questions about rates typically dominate. A shipper may also ask questions about the services available and the provider’s ability to perform them.

However, there is another question that should be asked but is, I believe, often overlooked: “What are you?” Let me explain. Earlier this year I attended an industry conference. While visiting with various persons in the conference hotel lounge, someone I knew introduced me to one of the other attendees. I asked him the usual question, “What do you do?” He said he was a sales representative for “such-and-such” company. 

Since the name of the company did not indicate the nature of the company’s business, the next natural question to ask was “What is such-and-such?” to which the attendee replied “We are a transportation service provider.” 

As a transportation lawyer, this inevitably led me to ask, “So are you a carrier or an intermediary?” to which the attendee replied “Neither.” This reply only heightened my curiosity. 

I went on to ask, “So, are you consultants?” He replied, “Yes, but we also go in to a customer’s place of business and pick up their freight and then arrange with other providers to get their freight to destination.”

If you are a regular reader of this column, you probably understand that this response only increased my curiosity. I won’t relate further details of the conversation, but I will tell you that the issue was ultimately resolved when we used a computer terminal located in the hotel lounge to log on to the Federal Motor Carrier Safety Administration (FMCSA) website and determined that his company was a duly licensed motor carrier.

So, why does this matter at all other than to resolve a friendly debate? It matters because the legal nature of a “transportation service provider” determines its legal rights and responsibilities. To state the obvious, a carrier and an intermediary are just that. 

Carriers have primary responsibility for the safe handling of the freight in its possession and the resultant liability for claims for cargo loss and damage. Further, there are different types of carriers — motor carriers, air carriers, rail carriers and ocean carriers and they all have differing legal characteristics. These differences were previously explored in a past column entitled “Fundamental Legal Differences within UPS and FedEx.” You can search for this column in the content library ofwww.PARCELindustry.com.  

Also, when one is dealing directly with a carrier and pays the carrier its invoice, one knows that the carrier has been paid. When one is using an intermediary and pays the intermediary its invoice, the risk arises that the intermediary may not pay the carrier who then looks to the intermediary’s customer, you, for payment.

There are also different types of intermediaries — truck brokers, intermodal marketing companies (IMC’s), surface and air freight forwarders, and so forth. Just as different types of carriers have differing legal characteristics, so do the different types of intermediaries. These legal differences in turn result in different legal rights and responsibilities with respect to their shipper customers. 

Thus, the most important question to ask a transportation service provider is “What are you?” and don’t take “neither” for an answer! All for now!




Brent Wm. Primus, J.D., is the CEO of Primus Law Office, P.A., the Senior Editor of transportlawtexts, inc. Previous columns, including those of William J. Augello, may be found in the “Content Library” on the Parcel website (http://www.parcelindustry.com). Your questions are welcome at brent@transportlawtexts.com
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