In this installment of PARCEL Counsel we will consider one of three relatively recent changes to the National Motor Freight Classification (NMFC) which I believe to be very detrimental to a shipper’s interests. These changes relate to (1) establishing a 180 day time limit to submit claims for refunds of duplicate payments; (2) a requirement for mandatory arbitration; and (3) eliminating the 15 day “grace period” for submitting claims for concealed damage. 

By way of background, the NMFC is published by the National Motor Freight Traffic Association (NMFTA). Its primary purpose is to assign a class number to the merchandise being transported to use for determining the freight charges. However, there is an equally important section relating to rules and procedures. 

Although many parcel shipments move pursuant to the terms of an air bill, other parcel shipments are transported by motor carriers pursuant to a truck bill of lading. The bills of lading used by the major trucking companies typically incorporate by reference the provisions of the NMFC as well as their own individual tariffs. A list of the carriers using the NMFC may be found on the NMFTA website http://www.nmfta.org/pages/membershipdescription. 

As of May 1, 2015, these carriers included UPS Ground Freight Inc. and FedEx Freight Canada Corp., FedEx Freight & FedEx Truckload Brokerage Inc. It is very important to note that even though a carrier refers to the NMFC in their bills of lading, the individual tariffs of the carrier may have provisions which supersede or replace similar provisions in the NMFC. Thus, the only way to know for sure what is in the tariffs of the carriers you use… is to read them.

I. Duplicate Payments

The term “duplicate payment” is used to describe inadvertent payments made to a carrier for invoices already paid. Since January 1, 2013, the Classification includes duplicate payments in the definition of an “overcharge.” 

An overcharge is a charge made in excess of the tariff rate for which the shipper is entitled to a refund. The federal statutes provide that a claim for an overcharge must be asserted within 180 days of receipt of the challenged freight bill…or else it is deemed to be waived. The effect of this provision of the NMFC is to apply the same treatment to duplicate payments. 

This provision stands in direct contradiction to a long standing decision of the Interstate Commerce Commission (ICC) determining that duplicate payments were not the same as overcharges and, accordingly, were not subject to the time limits relating to overcharges. 

While at one time duplicate payments were quite frequent, with the evolution of sophisticated, computerized billing processes, there are no doubt fewer duplicate payments than even a few years ago. Nevertheless, they do occur. When they occur they could be substantial. For instance, an $8 charge for a parcel shipment is perhaps no big deal; however if over the course of a few months thousands of individual shipments were paid for twice, a very substantial amount of money could be involved. 

By the very fact that they occur due to mistake, duplicate payments might not be discovered by the shipper until long after the mistake was made. Although carriers are required by federal regulation to identify, record, and notify the payor of any such duplicate payments, it is my sense that this doesn’t happen as it should.

This new time limit in the NMFC does not seem to me to be at all fair. As stated by the ICC in 1975, “The carriers and their representatives are reminded that, had they acted to resolve duplicate payment claims promptly and with understanding of the reasons for which they occurred, instead of attempting to retain as a revenue source these monies paid in error and not paid for performance of transportation services, our action herein would not be necessary.” 

In the next installment of Parcel Counsel we will continue this discussion and take a close look at the changes relating to mandatory arbitration and the new time limits for giving notice of claims for concealed damage --- and the easiest, although not easy, way to avoid them. 

All for now!


Brent Wm. Primus, J.D., is the CEO of Primus Law Office, P.A. and 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 (www.PARCELindustry.com). Your questions are welcome atbrent@primuslawoffice.com.
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