New Truckload and LTL Bill of Lading Regulations Now in Effect

If you are a shipper utilizing the USBOL as your standard Bill of Lading, stay informed regarding the updated terms and conditions that became effective August 13, 2016.  

by Mick McGrory, VP Sales, Sunset Transportation

Effective August 13th 2016, the National Motor Freight Traffic Association (NMFTA) implemented an addendum changing the current rules governing the Uniform Straight Bill of Lading (USBOL) published in the National Motor Freight Classification (NMFC) guide (Item 360-B).   Included in this supplement were silent but drastic changes to the Uniform Straight Bill of Lading, Straight Bill of Lading–Short Form and the NMFC rules in Item 360 regarding bills of lading. These changes were made without notice and without a comment period for shippers.

Who?  The NMFTA represents the interests of the motor carrier industry, specifically less-than-truckload (LTL) carriers, who are a “driving” force behind trucking industry trends.

What?  The NMFTA Uniform Straight Bill of Lading (USBOL) is widely recognized and used by shippers of all sizes, freight forwarders, 3pl’s and brokers that tender freight to motor carriers.

How?  Unless a shipper has a formal transportation contract with a carrier, any carrier that is a member of the NMFTA is required under the NMFC guidelines to uses these “new” NMFTA BOL’s which incorporates the latest terms and conditions that are binding to both parties.   

Shippers of all sizes should take note of the four (4) more serious changes to the USBOL along with feedback on the potential impact to a shipper of record:

Section 1 (b). Under the new terms, the burden of proof to prove the carrier’s negligence for loss, damage or delay is now on the shipper.
Under the old terms, carrier responsibility was presumed when the shipper showed cargo was tendered in good condition, and the burden to prove freedom from negligence was on the carrier or the party in possession. The new supplement also adds “riots or strikes or any related causes” to the list of carrier defenses to a cargo claim.

Feedback:  It clearly defines and adds “riots or strikes or any related causes” to the list of common law defenses for carrier liability.   This is the most concerning upgrade to the USBOL because the language shifts the proof for negligence from the carrier to the shipper.   However, NMFTA is stating that this Section 1 (b) will have little impact on the current freight claims process for shippers of record.

Section 1 (a). The motor carrier responsible for cargo loss or damage is the one shown on the bill of lading, rather than the one in possession of the goods when they are lost or damaged.This qualification is in regard to loss or damage due to negligence of the carrier. Previously, the carrier—or the party in possession—had to prove they were not negligent. Carriers are actually in possession of freight when shipping damage occurs. Now the burden of proof has shifted to the shippers. This becomes exceedingly difficult because the shipper did not possess the freight at the time the damage occurs. They are not knowledgeable about the movement of the shipment from origin to destination, and therefore are at an unreasonable disadvantage.

This is also in contradiction to the Carmack Amendment. In the Amendment, the procedure is to prove that the shipment was handed over to the carrier in good condition, but was received by the consignee in a measurable, damaged condition – not needing to provide that the carrier caused damage AND that it was through negligence.

Feedback:  It is common in the LTL industry for LTL carriers to partner with other LTL carriers within their network for final mile or pick-up services.  The latest language would suggest that a carrier that is not “shown” on the USBOL could not be held liable for any loss or damage if their Company name wasn’t on the USBOL.

Section 3 (b). Claims for failure to make delivery must now be filled within nine months from the date of the bill of lading, and not “within nine months after a reasonable time for delivery has elapsed,” as stated in the old rule.

Feedback:  The new language will shorten the time for filing a claim for “loss” because the new timeline is based on the “date of the bill of lading” rather than the date of delivery.   Until a product is actually delivered, you won’t know if a claim exists and sometimes that can take up to a week to 10 days for certain appointment deliveries.

Section 5 (a). The new language allows a carrier to limit liability simply by publishing the limitation in its tariff. The old language states that limitations of liability may apply if the cargo value has been stated by the shipper or has been agreed upon in writing as the released value.

Feedback:
  The new language will further stress the importance to all shippers of thoroughly reviewing and evaluating all carrier’s rules tariffs and contracts ensuring your liability protection.  Section 5 (a) will allow carriers to make changes to liability without having to notify a shipper of record.  

Adapt to Changes with Risk Management

These recent changes approved by the NMFTA provided an advantage to its carrier members while further protecting their interests.  Barring freight intermediaries (brokers, 3pls, etc.) and large shippers, most businesses that ship will find that these new USBOL changes should be met with thorough risk management procedures.

We recommend that larger shippers enter into exclusive transportation contracts/agreements with their current carriers/intermediaries.

These contracts/agreements should outline all pricing and rules, including those governing freight claims which will allow for a “neutral” bill of lading to be used that adequately and fairly protects each party’s interests.

Smaller to mid-size shippers need to work with freight intermediaries and current carriers to re-engineer existing truck shipment processes to ensure they incorporate the latest NMFTA language.  This could entail:

  • evaluations of current packaging processes
  • insurance requirements
  • vendors shipping processes along with carrier selection
  • current shipper/carrier evaluations regarding the USBOL.

It is extremely important that all shippers take immediate strategic actions to continue to protect their shipments and work with motor carriers to adapt to these changes or modify these changes in new agreements/contracts.

Resources:
http://www.nmfta.org/pages/NMFC
http://www.amtr.com/2016/08/25/smart-answers-a-response-to-nmfc-supplement-2-bill-of-lading-changes/#.V9wW7_krJhE