On July 14, 2016, the National Motor Freight Traffic Association (NMFTA) issued a supplement to the National Motor Freight Classification (NMFC) to become effective on August 13, 2016. The gist of the supplement was to publish a revised Uniform Straight Bill of Lading which is extremely favorable for the motor carriers using it — and not so friendly, to put it mildly, for their shipper customers. Although many parcel shipments move pursuant to the terms of an air bill, other parcel shipments are transported by motor carriers pursuant to the NMFC Bill of Lading.
By way of background, a “bill of lading” is old English for a “list of the cargo.” Although often prepared by a shipper, it is “issued” when the carrier’s driver signs it at the point of origin. Its primary function is to serve as a receipt for the goods and, in the absence of an individually negotiated contract between the shipper and the carrier, is also used as the “contract for carriage.” The terms of the contract consist of nine sections known as the “bill of lading terms” as well as a carrier’s individual tariffs — all of which are incorporated by reference.
The first Uniform Straight Bill of Lading for motor carriers was approved by the Interstate Commerce Commission (ICC) in 1922. It was the result of a collaborative effort by both shippers and carriers.
After the demise of the ICC in 1996 and the further deregulation of the motor carrier industry, a need arose for an updated bill of lading. This need was filled by another collaborative effort of both shippers, represented by the National Small Shipments Traffic Conference, and carriers, represented by the NMFTA. The updated version was approved by the Surface Transportation Board (STB) in 1997 and has remained essentially the same until now.
Virtually all of the changes found in the new bill of lading serve to protect the carrier — especially those which are intended to, and will, create virtually insurmountable burdens to successfully recover a claim for loss and damage whenever a carrier asserts one of what are known as the bill of lading defenses.
To explain, in a landmark decision in 1964, the United States Supreme Court confirmed that under the Carmack Amendment to the Interstate Commerce Act, a carrier is liable for damage to cargo in transit with only five exceptions: (1) the act of God; (2) public enemy; (3) the act of the shipper; (4) public authority; or (5) the inherent vice of the goods… but only if the carrier was free from negligence and the carrier had the duty to prove freedom from negligence.
Accordingly, since 1997, Section One of the bill of lading has stated: “The burden to prove freedom from negligence is on the carrier…” However, Section One of the new bill of lading states “The burden to prove carrier negligence is on the shipper.” This is not surprising considering that the new bill of lading was created solely by the carrier community… with no notice to shippers or any input from shippers.
The provisions of the new bill of lading are so troubling for shippers that the Transportation & Logistics Council, a shipper’s organization, has filed a petition with the STB to suspend the implementation of the new bill of lading. With respect to who should have the burden of proof, the petition argues that:
“The reasoning for not requiring the shipper to prove negligence is obvious. When the shipper tenders his goods to the carrier he doesn’t “ride shotgun” with them. He has no way to know what the carrier does with the goods, so it would be virtually impossible for the shipper to prove that the cause of the loss or damage was the carrier’s “negligence”....
Moreover, the addition of a negligence standard runs counter to the strict liability standard implemented by the Carmack Amendment… one of the core principles behind the enactment of the Carmack Amendment was to do away with forcing shippers to prove a carrier was negligent…”
The petition includes a detailed analysis of all of the differences between the prior bill of lading and the new bill of lading. It may be found at http://www.tlcouncil.org/sites/default/files/tlc_petition_7-29-16_docket_35008_0.pdf.
When and whether the STB will suspend the provisions of the new bill of lading will not be known for some time. In the meantime, what is a shipper to do to best protect itself and its ability to recover loss and damage claims?
The answer is the same as has been written in this column many times before with respect to other troublesome carrier tariff terms — get a contract! While not necessarily easy to do, it is perhaps the only way to avoid the one-sided terms developed by the carrier community.
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 on the Parcel website at http://parcelindustry.com/by-author-1130-1.html. Your questions are welcome at firstname.lastname@example.org.