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Carriers might not feel comfortable • Does the contract govern all rela- For example, carriers may not be
arguing with a shipper about the details tionships between the two parties? aware that signing a Carmack waiver
of a contract, but if a carrier pushes • Is there a geographical limitation? means giving up the defense that fed-
back on 10 or 15 points in the contract, eral law trumps any state laws in the
the shipper will probably meet the car- • Is the contract for both domestic event of cargo loss or damage litigation.
rier halfway on seven or eight of them, and international transportation? This so-called “preemption defense”
Zalud said. • Does it include warehousing, protects the carrier from all state law
“That’s better than just accepting freight bill audit and payment, and claims, including breach of contract,
everything without any comment or customs services? misrepresentation and unfair and
negotiations,” he said. • Are the needs and expectations deceptive trade practices claims.
In today’s economic climate, power of both parties clearly described, “If the Carmack Amendment is not
is returning to carriers simply because including services to be provided, waived, then it’s very easy to eliminate
of the driver shortage. “Carriers have the volume and metrics? any of those crazy claims,” Zalud said.
trucks but no one to drive them. If “This is America, so claims lawyers
there’s less capacity that’s really not • How will compliance be measured? think of a lot of creative ways to get
good for anyone, but it gives carriers The scope of the contract can be into court.”
the option to choose. And they will pick included in the body or put in a sepa- Other federal law provisions that
shippers they have better arrangements rate appendix. carriers should try to avoid waiving
with, that are more profitable for them, address the time limits for filing claims
and that didn’t turn the screws when price and cosT or lawsuits against the carrier. The
they had the upper hand.” Carriers need to make sure they federal provisions are generally much
know exactly what their costs will be shorter than state statutes of limita-
conTracT LengTH and — how much they’ll have to pay for the tions, which would apply if the carrier
TerminaTion labor, equipment, fuel and other items agrees to waive the federal provisions.
One of the most important issues needed to provide the promised services. “You could have claims lingering
for carriers to consider is the length of The prices set in the contract have to around for a decade,” Zalud said. “There
a contract and what kind of exit clauses reflect those costs accurately to allow are a lot of good reasons to be very care-
to include. Longer contracts may seem the carrier to make a reasonable profit, ful about how many of those [provi-
more desirable, but they can wind up Zalud said. sions] you waive.”
locking carriers into arrangements that The contract should also spell out
aren’t profitable — such as requiring a how the charges will be determined. LiaBiLiTy for cargo
carrier to commit a certain number of Will it be based on a rate per mile, Loss/damage
trucks to a shipper’s business even when accessorial charges, other means of pric- On the other hand, the Carmack
the shipper’s volume doesn’t justify it. ing, or a combination of methods? Will Amendment also states that the car-
Carriers should negotiate for volume there be a fuel surcharge? Gain shar- rier is liable for the actual value of any
guarantees if possible, Zalud said. ing? This section is also a good place for goods that are lost or damaged. This is
In some situations, carriers should carriers to incorporate their Rules Tariff. one of the main provisions that carriers
negotiate for a long-term contract with should modify by contract in order to
a shipper, he said. For instance, if the To carmack or noT To limit their liability, Zalud said.
carrier commits to large capital expen- carmack? The contract or the bill of lading
ditures for additional equipment to One of the unavoidable issues of should state that the carrier is respon-
provide the services in the contract. In the transportation business is determin- sible for a specific released value rather
that case, carriers need enough time to ing who is responsible when something than the actual value. This can be an
recover their startup costs and should goes wrong. amount per pound with a maximum
include provisions in the contract for The Carmack Amendment to the liability amount per shipment. National
cost recovery if the contract is termi- Interstate Commerce Act put into fed- freight classifications set limits for par-
nated early. eral law a number of provisions govern- ticular types of cargo, Zalud said.
ing liability. Some provisions benefit The amount of liability limitation is
cLariTy carriers and others benefit the shipper, typically negotiated along with the car-
Contracts need to be very detailed Zalud said. Shippers will sometimes rier’s rates, Zalud said, so that the car-
and clear about each aspect of the car- try to include waivers to some parts of rier offers the shipper the opportunity
rier/shipper relationship, Zalud said. the Carmack Amendment in their con- to choose different levels of coverage.
Some questions to ask include: tracts. Carriers should be very careful in “If they pay less, they often will
this area, he said. get a liability limitation, Zalud said. “If

34 ArkAnsAs truckinG report | issue 3 2014