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Dock to Dock

Private label shipments and delayed claims

The Problem: Receiver refuses to allow carrier to handle distressed private label product.

The Key Point: Carriers do not have the right to reclaim and salvage product “received under protest.”

The Solution: Carriers should be aware of the increased risk of damages when contracted to haul private label product.

QUESTION:  We are a truck broker based in the Midwest.  This morning, I was informed that one of our retail receivers is claiming the truck we hired froze four pallets (of twenty-four). We have requested copies of the bills and requested a U.S. Department of Agriculture (USDA) inspection. The carrier is taking responsibility for the claim, but has asked to retake possession of the product to salvage it.  But the receiver is saying they will not give the product back to the carrier because it is private label product. What rights does the carrier have?

ANSWER:  Receivers are not required to release the product to the carrier; but receivers are obligated to take reasonable steps to mitigate losses.  In other words, when distressed product is received under protest, receivers cannot simply dump or donate product that retains commercial value.

Although your receiver may successfully make the argument that their private label product, when even marginally distressed, cannot be sold (by third parties or otherwise) without harming the brand, this does not negate your receiver’s responsibility to take reasonable steps to mitigate losses.  So, if only 10 percent of the product was affected by the cold temperatures, the receiver cannot dump 100 percent of the product and expect the carrier to pay for it. Of course, your receiver will probably argue that more than 10 percent of the product was affected, but it should be prepared to show this with a USDA inspection that quantifies the extent of the problem.  The private label argument takes on greater significance when a large portion of a lot is only slightly or moderately affected by the alleged breach.  Carriers should be aware of this increased risk of damages when they contract to haul private label product.

The Problem: Delay in filing a claim.

The Key Point: Exempt carriers may place “reasonable” limits on the time venders have to file claims.

The Solution: Pursuing collection of a freight bill may expedite the filing of any related claim.

QUESTION:  We are a truck broker based in California.  Months ago we received a timely trouble notice from our receiver, but they have yet to give us specifics with respect to the claim.  What is the time allowed after delivery for a receiver to file a claim against the carrier? In our experience, there seems to be a lot of confusion about this issue.