The Problem
Solo driver used after team agreed to.
The Key Point
Proving damages resulting from late arrival can be difficult or impossible.
The Solution
A liquidated damages provision can be used to help compensate for losses.
Q: I handle transportation for a produce shipper located in Florida. We’ve been paying premiums to truck brokers for team deliveries to California and Arizona. We’re expecting third-day delivery on 2,700 to 2,900 mile trips to California, and second-day delivery to the 1,900 mile trips to Arizona.
We’ve had late arrival issues on our last three team loads. On each of these loads, it was discovered that a solo driver was used (not a team). I told the broker I was going to clip these freight invoices $1,000. I think this is fair, since we paid a premium for the team, and the carrier was 1 day late.
I sent the broker a notice for the deduction(s) this morning, and they’re extremely angry. The broker is threatening to file a Blue Book collection against me if I do not pay these invoices in full. Am I wrong for clipping these invoices?
A: Per our guidelines, teams are generally expected to cover approximately 1,000 miles a day after the truck is released. So this is consistent with your expectations. Based on your scenario, we would recognize a claim based on the premium you paid for a team, if this could be established with market price reports or with communications between you and the broker when they quoted the load.
Alternatively, Blue Book has recognized claims for damages for delays of one (1) or two (2) days based on the USDA’s Market News Service reports for the dates in question.
Significantly, however, when delivery is only one (1) or two (2) days late (presuming temperatures were properly maintained in transit) it may be difficult or impossible for the buyer to establish that the condition of the produce was appreciably affected by the delay. This can certainly frustrate buyers looking to establish damages in excess of any market decline (or the premium paid for a team) based on the disruption caused to their business and their actual sales results.
Consequently, given your truck brokers’ repeated issues here, you may want to consider including a liquidated damages provision in agreements for future loads.
Our Transportation Guidelines provide that – “…parties may want to consider (in consultation with their attorneys) a liquidated damages provision in the event the Carrier delivers late in breach of the contract of carriage. For example, the contract could include a provision providing damages of $30 for every hour the Carrier is late for up to seventy-two (72) hours, or actual losses, whichever is greater. Because a liquidated damages provision may be deemed unenforceable if it is punitive in nature, it is recommended that any such provision be reasonable and a genuine estimate of what losses would be in the event the Carrier is late. It stands to reason that losses would accrue at a faster rate with strawberries than with a less perishable commodity such as potatoes.”
For the invoices in question here, we would hope your truck broker would recognize that the transportation service it sold you fell short of expectations and will work with you to amicably settle these disputes. Working things out and establishing clear expectations for future loads is usually preferable to finding a new customer.
This is a Trading Assistance column from the January/February 2024 issue of Produce Blueprints Magazine.
