To start the new year, PARCEL Counsel will take a look at two legal developments from last year that will have an effect on parcel shippers in 2020. This begs the question: “Why do I need to know this stuff; I am not an attorney?”
The short answer is that a working knowledge of the laws and regulations affecting the supply chain is critical for a transportation professional in order to identify and then minimize legal and financial risks. For transportation professionals involved in finance, an understanding of legal trends and their effect upon one’s company better equips them for budgeting transportation expenses.
During 2019, there were two developments relating to loss and damage claims — one favorable, one not so favorable. The favorable development for parcel shippers is that the limit of liability for most international air shipments was raised from 19 SDRs to 22 SDRs per kilogram to account for inflation since the previous adjustment in 2009.
By way of background, an SDR, or Special Drawing Right, is comprised of a blend of the currencies of the United States, European Union, China, Japan, and the United Kingdom. It is the monetary unit used to settle accounts between countries.
The exact dollar equivalent of an SDR varies daily. As of January 8, 2020, one SDR equaled US $1.38. Thus, the new limit which went into effect for claims on or after December 29, 2019 will be approximately $13.80 per pound compared to the previous limit of $11.92.
The unfavorable development for parcel shippers is that UPS issued a new tariff that went into effect on October 2019 and required that “UPS must receive notice of claims within sixty days after Delivery.” The tariff further states that “Where UPS does not receive notice of claims… such claims shall be deemed waived and will not be paid.”
In my own opinion, this tariff is not enforceable. This opinion is based on the fact that the federal statute governing claims, referred to as the Carmack Amendment, states in relevant part that “A carrier may not provide by rule, contract, or otherwise, a period of less than 9 months for filing a claim…” Thus, if UPS were to decline a claim because a claim had failed to file a “notice” of the claim within 60 days, the declination would be invalid.
However, whether my own opinion is correct or not, my suggestion for higher volume shippers is to try to contract away from this new tariff provision. For other shippers, I believe they should make every attempt to file the “notice of claim” within the 60-day period. I say this because, as a practical matter, I believe that it would be a very protracted and expensive process for a shipper to challenge this tariff provision in court. And even then, there is no certainty that the court would rule in favor of the shipper.
To conclude, 2019 is behind us and 2020 lies ahead. During the coming year, this column will do its best to keep the readers up-to-date on legal developments.
So… stay tuned!
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.
This article originally appeared in the January/February, 2020 issue of PARCEL.