Date: Apr 12, 2017

If you as a shipper have a vendor agreement with a buyer that calls for specified arrival conditions such as maximum pulp temperature than this is a blog for you!

An example, this type of vendor agreement clause would be if your customer stipulates the product must pulp 41° or lower on arrival for the buyer to accept the product.  If the product were to pulp above 41°, the buyer would have the right to reject the product back to you the shipper with or without the benefit of a USDA inspection scoring condition defects.  When this occurs and your customer rejects your product due to the fact the pulp temperatures are above the maximum allowable limit pursuant to the vendor agreement, in this example 41°, one would ask themselves who was at fault and does a claim exist?

When you run into a situation like this, it’s usually with a valued customer, to whom you would not want to pursue any type of claim procedure against.  Therefore, that leaves the carrier as the potential individual allegedly responsible for the high pulp temperatures of the product a destination.  When determining a carrier claim the key is determining what you were damaged monetarily and what was the physical damage to the product.  Hence, you have two burdens, first the carrier’s mishandling caused physical damage to the product and second you suffered a monetary loss.  For the physical damage it is necessary to secure USDA inspection on the product as soon as possible.  If the pulp temperatures were elevated at destination and the USDA inspection reveals condition defects associated with those high temperatures, you’re on your way with a potential claim against the carrier.  However, in the event the USDA inspection reflects little to no condition defects and meets good delivery guidelines, it will be difficult to successfully pursue a claim against the carrier.  If the USDA inspection reveals that the product is in a very merchantable condition, although you may have suffered a monetary loss one cannot allege that the carrier’s mishandling of the shipment caused physical damage to the product.

Without evidence that the product has deteriorated due to carrier negligence it will be extremely difficult in pursuing a successful carrier claim.  One important thing to keep in mind when shipping under a specified vender agreement like this, you are usually dealing with a customer that also utilizes preferred carriers.  Your customer’s preferred carrier is also likely to be subject to a similar agreement and no doubt fully aware of strict temperature requirements.  For this reason, I would strongly recommend you inform the carrier or its driver at shipping point of the pulp temperature requirement of the product at destination.

Now let say your product arrives at your customer’s place of business with elevated pulp temperatures and you customer rejects the product. What should you do as a shipper when the product is rejected for elevated pulp temperatures? The first and foremost thing a shipper needs to do is get a USDA inspection to report condition defects, and if your product is reflecting excess condition defects you have an easy truck claim. On the other hand if the product is in good shape and meets good arrival guidelines you are likely face difficulty pursuing a settlement with the carrier. Now the burden is on you as the shipper to demonstrate that the carrier damaged the product in transit and because of this fact you are entitled to be paid.  Unfortunately it rarely works out that way.  The most critical thing to do on your part is to secure a USDA inspection, with no inspection you most likely have no claim, as a carrier will generally require proof the product was damaged.

Since these types of supplier agreements are getting more common, I would recommend that these sales be Delivered sales to your customer and not FOB sales. Let’s face it, if there is going to be a carrier claim involved, your customer will be looking to you to pursue it and not them.  At least if you are controlling the freight bill you may have a little more negotiating power.

On a final note I cannot over emphasize the need to see the procedure through to the end.  Do not simply abandon or reject a shipment to the carrier and expect to be paid.  Working with the carrier to move a shipment for salvage sale does not mean that you are relieving the carrier from any potential liability.  Make it clear to the carrier that you are assisting in arranging a prompt and efficient sale to minimize any further loss for all concerned. And always, always document every step so there is no misunderstanding.

Should you have any questions or wish for me to review your documents, please contact me at TommyO@wga.com or 949-885-2269.

WG Staff Contact

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