What do you do as a shipper when you have a documented FOB contract and the truck fails to show up at the scheduled pick-up time? First, you must have previously documented that you and the buyer had agreed to an exact appointment time/date for loading. Before you consider the buyer in breach of the contract, please use a reasonable person formula.
In other words, how late is too late. Unless there is a prior written agreement, a carrier is generally not bound by an exact schedule down to the minute. If we are talking about several hours, then it would be a reasonable expectation in the produce industry that you make reasonable accommodations to reschedule the truck for loading as soon as practical. If the delay is significant, and includes such things as failing to communicate arrival status, missing one or more days, or actually never shows, then you need to be proactive and always document your steps to inform your customer in writing:
1. Immediately notify the buyer of the failed scheduled pickup, and afford the buyer the opportunity to remedy the situation, holding the buyer responsible to the original FOB sale terms.
2. If rescheduling is not possible, place the buyer on notice in writing that there is a breach of the FOB contract because of the failure of the carrier to load the produce.
3. It is incumbent on you to minimize any possible loss by mitigating damages. Advise the buyer that the produce (make sure to track the exact lot and quantity that was to be shipped) is being moved and sold for the account of whom it may concern.
4. In order to hold the buyer liable for the difference between the agreed FOB price and you must thoroughly document that the source of the proceeds were generated from the exact lot that was not shipped to the original buyer.
Remember, even with a specific time to load, you must be reasonable with your expectations. If you, as the shipper, agree to load a truck well past the original loading date, you must remember that you have obligated your company to load product that under normal transit will arrive at contract destination and meet Good Arrival Guidelines. That could possibly mean fresh product should be loaded, unless you and the buyer stipulate to loading the original lot.
There can be lots of variables and exceptions associated with the truck not arriving at the required time at shipping point and no one size fits all solution will cover every possible scenario. So, in order to properly protect yourself as a shipper, if you’re a regular grower/shipper member of Western Growers, please contact me to discuss the specific details.
If you have a question on this topic or would like to offer a subject for a future blog, please forward your questions or suggested topics to TommyO@wga.com.