The following case study is based on facts presented to Blue Book for a written assessment earlier this year. Although the facts involved are rather routine, similar issues underlie many of the claims filed with Blue Book Services.
A distributor sold 216 cartons of strawberries and 24 cartons of raspberries to a receiver in South Carolina on or about March 24, 2016. The product was shipped out of California as part of a mixed load from three different shippers. Loading and delivery were completed as scheduled. Upon arrival at destination, the receiver called for a U.S. Department of Agriculture (USDA) inspection, which was performed that same day, showing the strawberries were affected with 36% defects and 18% decay—well in excess of good arrival standards.
Pulp temperatures of 41°F were also reported on the USDA inspection certificate.
At the outset, we note that per PACA regulation, f.o.b. shippers only promise their product will make good arrival at contract destination if transportation conditions (e.g., air temperatures in the trailer) are normal. Specifically, 7 C.F.R. 46.43 provides (emphasis added)—
(i) F.o.b. (for example, f.o.b. Laredo, Tex., or f.o.b. California) means that the produce quoted or sold is to be placed free on board the boat, car, or other agency of the through land transportation at shipping point, in suitable shipping condition (see definitions of “suitable shipping condition,” paragraphs (j) and (k) of this section), and that the buyer assumes all risk of damage and delay in transit not caused by the seller irrespective of how the shipment is billed. The buyer shall have the right of inspection at destination before the goods are paid for to determine if the produce shipped complied with the terms of the contract at time of shipment, subject to the provisions covering suitable shipping condition.
(j) Suitable shipping condition, in relation to direct shipments, means that the commodity, at time of billing, is in a condition which, if the shipment is handled under normal transportation service and conditions, will assure delivery without abnormal deterioration at the contract destination agreed upon between the parties. If a good delivery standard for a commodity is set forth in §46.44, and that commodity at the contract destination contains deterioration in excess of any tolerance provided therein, it will be considered abnormally deteriorated. The seller has no responsibility for any deterioration in transit if there is no contract destination agreed upon between the parties.
Therefore, even here, when a timely USDA inspection certificate establishes that condition defects far exceed good arrival standards, if the product was subjected to extreme temperatures in transit, this could undermine the buyer’s proof that the shipper failed to ship the product in suitable shipping condition. This is especially true when a highly perishable commodity such as strawberries is concerned.