Waynes World - November 2004

Q: Since an “Order Bill of Lading” is negotiable, does this mean that the “title” to the goods passes to the consignee when the bill is signed and the freight is picked up at the shipper’s warehouse? Does this type of Bill of Lading legally have anything to do with title to the goods, and if so, at what point is it passed to the consignee? Mike B., Holland, MI.

A: When an Order Bill of Lading is used, the original itself is evidence of title or the right to possession. Order Bills can be transferred from one party to another, similar to a check. Order Bills of Lading are frequently used in international commerce as security for payment for the goods. The reason is that, with an Order Bill of Lading, the carrier may not lawfully deliver the goods unless the original Order Bill of Lading is presented.

In a typical international transaction, the original Order Bill of Lading is sent to an agent or a bank at destination and is released to the consignee only upon payment for the goods. The consignee then takes the original Bill of Lading, endorses it, presents it to the carrier, and then receives the goods.

Q: What is the definition of a licensed property broker, and what advice would you give in regards to dealing with them? Carl H., Hickory, NC.

A: The definition of a “broker” is found in the FMCSA regulations at 49 CFR Sec 371.2, and provides: (a) “Broker means a person who, for compensation, arranges, or offers to arrange, the transportation of property by an authorized motor carrier. Motor carriers, or persons who are employees or bona fide agents of carriers, are not brokers within the meaning of this section when they arrange or offer to arrange the transportation of shipments which they are authorized to transport and which they accepted and legally bound themselves to transport.” And, (c) “Brokerage or brokerage service is the arranging of transportation or the physical movement of a motor vehicle or of property. It can be performed on behalf of a motor carrier, consignor, or consignee.”

In today’s market, beware of the broker! Just today, while writing this article, I have received two calls from truckers who have been cheated by unscrupulous brokers. The first call came from a small company who had over $10,000 in unpaid freight charges. It seems the so-called logistics company in Utah had scammed many truckers. When it got too hot for them, they simply closed down and started up down the street under a new name. The other call came from a friend of mine in Arizona. He also had about $10,000 in unpaid freight charges. Because of the situation, this company is having financial problems.

So before you haul that load or commit yourself, check out that broker. There are three very good broker credit companies; Red Book, RTS and CompuNet. By dealing with reputable brokers only, you will not have as many problems.

Q: Our company is a licensed broker. We were arranging transportation for a shipper to ship a perishable product from NC to NJ. The original truck we had scheduled for the load was put out of service by the DOT. At that time, we immediately notified the shipper that we would miss the pickup and would continue to look for a truck, but he should look as well. Throughout the next day, we searched for a truck and kept in communication with the shipper and, finally, found one. During that period, we spoke with the shipper several times, so he was well aware of the problem. When the shipment got to NJ the next day, it had spoiled as a result of sitting in the shipper’s cooler. The shipper is filing a claim with us because we did not pick up on time. As the shipper was aware of the problem and had time to arrange other transportation, what is our liability? Joe B., Trenton, NJ.

A: As a general rule, a broker is not liable for loss or damage to shipments, since it does not physically handle or transport the goods and merely makes the arrangements for the transportation. However, a broker may have liability if it is negligent in some way, for example, if the broker selects a “fly by night” carrier that has no operating authority or insurance, or an unsatisfactory safety rating from the FMCSA.

Unless you had given the shipper some affirmative representation or guarantee that the shipment would be picked up and delivered according to a particular schedule, and from the facts you have described, I don’t see how the shipper could establish that your company was liable for its loss.

~ Do you have any transportation-related questions you would like me to address? If so, send them care of Wayne Schooling at NorthAmerican Transportation Association, 2533 N. Carson St, Suite 346, Carson City, NV 89706-0147. Or, if you prefer, e-mail them to wayne@ntassoc.com.

The NTA is a nationwide transportation benefits association established to provide services, benefits and information to owner operators, trucking companies and private fleets. For more information, please call (562) 279-0557 in CA or (800) 805-0040 nationwide, or visit us online at www.ntassoc.com. Until next month, “Drive Safe - Drive Smart!”