As used here, the term “data” means the historical information relating to the shipping of goods by a parcel shipper. In recent years, there have been numerous articles in PARCEL relating to how a parcel shipper can use this information relating to prior shipments to increase efficiency, lower costs, and better negotiate with carriers.
In this installment of PARCEL Counsel, we will look at another aspect of data: the two interrelated legal issues relating to data — who can see it and who owns it. As a starting point, there is a federal statute (49 U.S.C. 14908) that prohibits the unauthorized disclosure of information. It reads, in part, as follows:
A [regulated interstate] carrier or broker… or an officer, receiver, trustee, lessee, or employee of that carrier or broker, or another person authorized by that carrier or broker to receive information from that carrier or broker may not disclose to another person, except the shipper or consignee, and a person may not solicit, or receive, information about the nature, kind, quantity, destination, consignee, or routing of property tendered or delivered to that carrier or broker for transportation provided under this part without the consent of the shipper or consignee if that information may be used to the detriment of the shipper or consignee or may disclose improperly to a competitor the business transactions of the shipper or consignee.
A variation of this statute has been in effect since at least 1978. This statute also provides for a civil penalty of $2,000.00 for anyone who violates it.
While many shippers have confidentiality clauses in their contracts with their transportation providers, this statute also protects the greater number of shippers who do not have contracts with their transportation providers. For those involved in transportation, the significance of this statute cannot be understated.
For example, if one were to know “the nature, kind, and quantity” of products shipped, one could, at least in theory, figure out the legendary secret formula for Coca-Cola. A more mundane example would be the disclosure of a shipper’s routing and transportation pricing to a competitor of the shipper.
It is also significant to note that this statute does not apply to entities providing service as an air carrier. As an example, the statute would apply to UPS ground service and FedEx Freight, but not UPS or FedEx when operating as an air carrier.
This leads us to the issue of the ownership of the data. While many larger shippers have sophisticated software so that it can generate and maintain information relating to its shipping patterns, many other shippers do not. On the other hand, most carriers (and especially the larger ones) do have sophisticated systems for tracking a particular customer’s data.
Several years ago I received a call and was asked, “Who owns the data?” My first instinct was to head over to the local law library. However, the thought then occurred to me that, as so often happens with the law, there may not have been many court decisions on this topic… or else there would have been many decisions addressing particular situations. Either way, any research would be unlikely to lead to a definitive rule.
Having considered the issue further, I believe the true question is whether or not a carrier has to share the information it compiles with its shipper-customer. Which then leads to the conclusion that the solution to this legal question — as with others where there is no bright line answer — is to address the issue in a contract.
For instance, a contract would have a clause stating unambiguously that the shipper has ready access to all data generated by the carrier in the course of providing service to that shipper-customer. At the same time, it should be noted that carriers might resist such a clause, or seek to narrow it, since one of the uses of the historical data would be to use it to solicit bids from a different provider.
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 on PARCEL’s website. Your questions are welcome at email@example.com.