On your own terms

On your own terms

A tariff provides assurance that a carrier will be compensated

Micro and small motor carriers that are concerned about not getting paid for things like detention, rerouting of freight, cancelation of a scheduled load, etc., have an option:  motor carrier tariffs.

“Wait,” you say, “I thought they were abolished when the Interstate Commerce Commission (ICC) was closed down and trucking was deregulated?”

When Congress abolished the ICC, the law only stated that tariffs were no longer required to be filed by federal code; it never said they were eliminated. In the 1980 Motor Carrier Regulatory Reform and Modernization Act, Congress allowed carriers to rely on tariffs to limit their liability for freight damage and establish rates and rules.

Frankly, any carrier that operates without a tariff is missing a great opportunity to protect itself in a dispute with a broker or a shipper.

Under 49 U.S.C. §13710, all motor carriers are required to have a written or electronic copy of the “rates, classifications, rules and practices" upon which any rate applicable to a shipment is based. Have you ever wondered about the terminology that is on most standardized bills of lading,  which, by the way, almost every shipper issues?  “This shipment is subject to the rates, classifications and rules that have been established by the carrier” is a standard example.

With the removal of filing requirements, the format of standard numbering, appearance, and contents of tariffs are no longer used. The modern tariff is typically a series of paragraphs describing the rules that the carrier has decided to enforce on all of its shipments, coupled with the rate schedule.

What you put in your tariff will depend on your type of operation; the more specialized you are, the more specific the tariff should be. Nearly all trucking tariffs have the following items in common:

LIMITED LIABILITY
Federal law allows carriers to limit their liability within each trucking company’s tariff language. Most carriers limit their liability to a specific dollar value per pound. Other trucking companies add a “full value” option in tariffs for an additional fee.

HIGH VALUE SHIPMENTS
Hauling freight that is of extraordinarily high value would require the trucking company add a tariff that contains accommodations requiring the shipper to state the value of the goods on the bill of lading, along with wording stating that freight valued at higher than a preselected amount wouldn’t be accepted transport.
detention

With the ELD mandate coming on board, this paragraph takes on even greater importance. Detention tariffs separate driver detention rates from equipment detention rates. The tariff should also have requirements that access charges to shippers for unnecessary detention after specified free time.

PAYMENT PROTECTION
Here’s one that can help a carrier get paid. This tariff section contains language that gives the carrier the right to withhold delivery and states that freight may be held to satisfy all outstanding unpaid claims. (If you want to use this, consult a transportation attorney for the precise wording necessary.)

LATE PAYMENT CHARGES
This tariff assesses charges for late payment. LTL carriers typically use “loss of discount” provisions that offer service to customers at discounts but then cancel the discounts if freight charges are not paid on time. Keep in mind that surface transportation rules must be followed when using this provision.

SHIPPER LOAD AND COUNT
If the shipper or the consignee loads, unloads, sorts and/or segregates products in the shipment, you must make sure you and your drivers are not held responsible for shortages.

SUBSTITUTED SERVICE
There are going to be loads that, due to unexpected circumstances, you would like to subcontract to another carrier to meet some or all of the contractual requirements. A well-written substitution provision can protect you from being accused of brokering a load without authorization. The provision reserves the carrier the right, for operational convenience, to hire other qualified carriers as subcontractors. Again, consult a transportation attorney for the proper wording.    

Then there are the accessorial service charges. This area includes provisions such as the previously mentioned detention clause. It also might feature a number of other services such as these (or other specialty offerings):

  • Loading and unloading, including lumper fees;
  • Pallet exchange;
  • Truck ordered not used;
  • C.O.D (collect on delivery) shipments;
  • Additional licenses and permits;
  • Consignment or diversions (Includes rejected items);
  • Territorial charges (loading from or delivering to Long Island, NY, is a good example);
  • Proof of delivery charges; and
  • Expedited services/ exclusive use.

As a great starting point for assembling your tariff, I highly recommend Protecting Motor Carrier Interests in Contracts, the eBook by Henry E. Seaton, Esq., especially chapter two, “Service Conditions or Rules Circular.”  

Having a tariff published is one of the best protections a carrier can have to provide that legal leg up when there is a disagreement between the carrier, broker, shipper and consignee.

TAGS: Regulations
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