Page 33 - ATR 5 2014 web

CARGO LOSS,
Continued from page 25
your staff calls the iNsuraNce ageNt to
thinks to ask, “Well, did we get that rePort the loss, aNd the ageNt coNfirms the
insurance for this load?” Your staff coVerage. “good job,” you thiNk, “we dodged
calls the insurance agent to report the
loss, and the agent confirms the cover- a bullet.”
age. “Good job,” you think, “we dodged
a bullet.”
Your loss prevention folks now
phone the shipper to report the bad
news. You’ve trained your staff to be
diplomatic about it. So they apologize,
but quickly tell the shipper that they’ve
already turned the loss over to the
insurance carrier. They re-assure the
shipper that the insurance more than
covers the released value for the load.
But then it gets sticky. The broker
calls. He yells, “That load was worth $8
million. And the shipper is demanding
to be paid in full.”
You review the bill of lading, the
$100,000 insurance requirement and
the released value. Your salesman asks,
“I know we might lose the balance of
the deal, but should I be blunt and just
tell the broker point blank that all the
shipper is entitled to is the released
value?”
So what do you tell him?
ers got two critical benefits. First, by “Yeah, I know” but you ask “what’s
undErSTanding THE CarMaCk establishing a nationwide liability rule, the upshot?”
aMEndMEnT motor carriers would no longer have to Your lawyer continues, “Some
So now you pick up the phone and confront a bewildering state-by-state observers, including at least one
call your company’s lawyer and ask him. patchwork of liability rules that ren- Arkansas federal court in a case
For over a century, the interstate dered risk assessment virtually impossi- called Bay Machinery Services have
shipments by motor carriers have been ble. We lawyers call that “preemption.” asserted that, given industry standards
largely controlled by a compromise of Second, the Amendment formally and absent notice to the carrier that
sorts that came about with the 1906 recognized the motor carriers’ right to additional cargo insurance would be
passage of the Carmack Amendment to limit their liability for damage.” required, contracts stipulating a set
the Interstate Commerce Act. “That sounds better” you say, “but amount of insurance coverage can limit
Your lawyer explains “That how does that play out for us now?” a motor carrier’s maximum exposure to
Amendment was enacted to bring the stipulated amount of coverage.”
national uniformity to questions over SETTing a nEW prECEdEnT But your lawyer continues, “But
a motor carrier’s liability for property Your lawyer pauses, then says “As not all industry participants and courts
losses associated with interstate ship- the industry has developed, shippers, agree. Just two months ago, one fed-
ments. Shippers got a valuable benefit motor carriers, and now freight brokers eral judge in Ohio addressed a dispute
– the ability to impose near-presumptive have addressed risk assessment through between a broker and a motor carrier
liability on motor carriers for cargo loss a variety of means, including indemnity under facts similar to what you’ve called
or damage occurring in transit.” agreements and contractual clauses me about. In Exel, Inc. v. Southern
You tell your lawyer, “That doesn’t requiring a motor carrier to procure a Refrigerated Transport, a shipper had
sound good for us carriers.” specified amount of cargo loss/damage
“Well, in exchange, motor carri- insurance.” 

aRkansas tRuCking RepoRt | issue 5 2014 33