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Shippers: do not use the new NMFC bill of lading.

Well, they've done it again. The National Motor Freight Traffic Association (NMFTA) has published a new revised bill of lading with language that seriously affects shippers. In fact, shippers should not use the new form.

I've suggested before that shippers create their own shipping form reflecting contract terms and rules that they've agreed to. Now, the NMFTA has quietly inserted language that reverses centuries of common law and business practice by making it the shipper's problem to prove negligence when a shipment arrives damaged or is lost in transit--and amazingly the U.S. Surface Transportation Board (STB) has permitted it to be published.

On July 14, 2016, the NMFTA issued a supplement to the National Motor Freight Classification (NMFC) that became effective on August 13, 2016. "Unless the shipper and carrier have an effective prior written agreement to use another shipping document in place of the bill of lading, all motor carriage performed by carriers participating in this NMFC shall be subject to the bill of lading terms and conditions of the Uniform Straight Bill of Lading shown in NMF 100-X and successive issues in NMFC Rules Item 362B."

The supplement is a revised Uniform Straight Bill of Lading that is particularly favorable for the motor carriers and not their customers. Sections 1a and 1b restrict claim rights, and Section 5a allows the carrier to unilaterally limit liability.

Essentially, all of the changes found in the new NMFC bill of lading serve to protect the carrier. This creates a challenging burden to successfully recover a claim for loss and damage whenever a carrier asserts one of what are known as the "bill of lading defenses." In particular, the new language places the burden of proof of loss on the shipper, even where the carrier has signed for shipment at origin.

The changes to the bill of lading were made without notice to the public, while the shipper was never given an opportunity to comment or protest the changes. However, as part of its decision, the STB did announce that it would consider further comments from the parties in order to decide whether to investigate further.

Rather than fight an STB that ignores shipper interests and grants carriers new legal defenses, shippers should immediately insist that all traffic is moved under a private contact with carrier rules reviewed and approved in writing by the shipper. In discussions with shippers, I was reminded that any move to reduce carrier liability must pass the bar set by the Carmack Amendment of 1913--over 103 years ago.

The Honorable Colin Barrett Esq. has written eloquently on this subject. In response to an inquiry some years ago on previous carrier rule changes and recent court cases to limit liability he wrote: 'Yes, I'm well aware that many carriers do seek to limit their L&D liability by means of rules in their tariffs, but the thing about those rules is that they don't override the law, meaning Carmack. Carmack says carriers are liable for the full, actual value of lost or damaged goods, which, according to those venerable court decisions that you [the questioner] disdain, can only be contractually overridden if the shipper agrees in exchange for a reduced rate."

Barrett continues: "And that is still, I'm afraid, the law today. Because you [the questioner] don't like the court rulings of the past, let me give you a couple of more recent ones: Emerson Electric Supply Co. v. Estes Express Lines, 451 F.3rd 179 (U.S.C.A.1, 2006), and ABB, Inc. v. CSX Transportation, 721 F.3rd 135 (U.S.C.A.4, 2013). Both of them stand for the proposition that unilateral tariff provisions attempting to restrict carrier liability without express shipper agreement and the requisite rate trade-off aren't legally valid."

I agree with Barrett and believe that this is the position the STB should be taking as well. I would also predict that this change to the NMFC Bill of Lading will be adjudicated at some point when a carrier denies a claim. I don't hold out hope that the STB will suddenly become a shipper protection agency. But in the meantime, this is yet another reason why shippers need to deliberately exclude NMFC references in all carrier contracts.

Peter Moore is adjunct professor of Supply Chain at Georgia College EMBA Program, Program Faculty at the Center for Executive Education at the University of Tennessee, and adjunct professor at the University of South Carolina Beaufort. Peter writes from his home on Hilton Head Island, S.C., and can be reached at peter.moore@gcsu.edu.
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Title Annotation:Moore on Pricing
Author:Moore, Peter
Publication:Logistics Management (Highlands Ranch, Co.)
Date:Nov 1, 2016
Words:764
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