Director of Corporate Risk & Support Jenn Wood provided insider 3PL commentary to the summer issue of the American Bar Association’s (ABA) Commercial Litigation newsletter, giving us a glimpse of how to best work with a third party logistics company (3PL) from a legal perspective.
Excerpts from the article:
- The range of services provided by a 3PL can add layers of legal risk above and beyond that of a traditional broker. Customers act in reliance upon a 3PL’s ability to cut costs, identify problematic trends with respect to overcharges or cargo claims, and above all, to choose safe carriers for the transportation of the customers’ freight.
- At the heart of every 3PL or broker’s business model is the need for careful and competent carrier selection. Customers hire 3PLs as transportation experts. A critical part of that expertise is knowing which carriers are good choices and which are not. The greatest risk to a 3PL is being pulled into a major litigation matter for third party injuries.
A nimble 3PL is most likely to thrive in the upcoming years, which means creating innovative solutions to customer needs, and assuming new risks along the way. As this article was being completed, Uber Freight was unveiled. Its effect on the industry is yet unknown, but exemplifies the need for 3PLs to stay competitive.
- New contract requirements and negotiation needs arise regularly. A timely example is the FDA’s new rule on Sanitary Transportation of Human and Animal Food. Customers that handle covered commodities may seek to pass on as many duties as possible to 3PL/brokers. New contract provisions could necessitate a 3PL’s intimate knowledge of each commodity, in such a way that agreeing to the terms could automatically place the 3PL in breach of contract. In short, any 3PL (as well as any broker) that does not have in-house counsel would benefit from outside counsel for regular contract review and negotiation.
- Even with the technology assistance, 3PLs must be careful to monitor a shipment’s progress rather than direct it. Assuming control over the driver opens a door to additional pleadings in the event of an accident. Furthermore, a 2016 law expressly prohibits a 3PL from coercing a driver into breaking the law in order to meet service expectations.
Fore more important insight on contract negotiation, coercion, insurance, and cargo claims and key things to look for during carrier selection, read the full article beginning on page 6.
About the author:
Jenn is Director of Corporate Risk & Support for Sunset Transportation, managing corporate risk and compliance for Sunset Transportation. She is an attorney licensed in Missouri and Illinois with a background in trucking defense litigation. Her industry experience is complemented by her husband’s 17 years’ experience as a commercial truck driver.