A question we frequently receive from members is whether a carrier can collect freight charges from the shipper when the shipment is freight collect. The answer is it all depends on what you have printed and disclosed on your bill of lading.
Unless otherwise stated on the bill of lading there is a presumption that the shipper is responsible for payment of freight charges. This is why it is so important to include a “No Recourse” statement conspicuously located on the face of the bill of lading.
THIS SHIPMENT IS FREIGHT COLLECT
(unless otherwise stated)
If the carrier named herein or its agent, delivers this shipment to the consignee or its agent, without payment of freight charges or other lawful charges, the carrier or its agent, does so without recourse to the shipper or its agent.
There are two potential issues that can cause a carrier to demand payment of freight charges from the produce shipper. Even though the shipment is freight collect, merely stating that does not prohibit the carrier from coming after you (the shipper) when the receiver (your customer) for whatever reason fails to pay the carrier. The other reason, and one which unfortunately we see far too often, is that the truck broker was paid, but in-turn fails to pay the carrier. In this second scenario the carrier will look to either party for payment of freight charges.
While having the “No Recourse” statement will not necessarily prevent a carrier from pursuing freight charges, you now have a strong defense should the carrier contact you directly, through a collection agency or by taking legal action.
Next, just as important as having the “No Recourse” statement on your bill-of-lading, is the need to do your due diligence when selecting a truck broker or logistic company. While there are many reliable truck brokers there are, no doubt, quite a few brokers lacking credit and status worthiness, or operating history, in which you need to question before entrusting them with your shipment and payment of freight charges. You may not be in a position to dictate the selection of a truck broker when your customer is arranging the transportation, but when you are making the selection, at a minimum, look to the various trade publications to determine the truck broker’s credit history, time in business, and whether there is a history of claim or collection problems. Selecting a truck broker should be treated with the same due diligence procedures as when you select a customer to sell your produce.
Finally, several years ago, the California Air Resources Board instituted a requirement on the Trailer Refrigeration Unit (TRU) with respect to meeting certain clean air measurements. We strongly encourage shippers to insert language above where the driver would sign that the carrier is self-certifying that his/her TRU meets all the State of California’s requirement. (Example bill of lading here).
Please review your bill of lading today and if you have any questions, please contact Ken or Matt.
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