Brokers beware

SCAM CHASER

SCAM CHASER

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Feb 18, 2008
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Shipper has broker arrange transportation for $150,000 worth of product from Victoria to Ottawa.

Shipment weighs 10,000 lbs with no delcared value on B/L

Cargo is stolen

Insurer for shipper pays shipper full $150,000
Insurer for carrier pays $20,000 @ $2/lb

Insurer for shipper sues broker $130,000 for failure to perform due diligence. Broker is not party to the B/L and cannot use the limit of liability clause.
 
I have had a similar incident just before the holidays (only for much less money). My customer orders product from their supplier to be shipped to end user. Skid (875lbs.) dissappears with a value of $4500.00. Carrier applies the $2.00/lb liability limit for a total of $1750.00. When I asked our customer why they didn't have a declared value on the B/L, they told me the did not want the end user to know what the value was thereby concealing whatever mark-up they applied. I would think that this practise is quite common on shipments that go directly from a supplier to an end-user. Something that I will be sure to explain to my customers and advise them of the potential risk they are exposing themselves to.
 
hmmmm... I am confused.. in my experience, most carriers will NOT take an LTL shipment if there is a declared value on the BOL?? I always say to my cutomers that they can not put the D/V on ..... ???
 
I don't think that's good advice and could come back to bite you. If your customer ships a 300lb. skid within Canada that happens to contain a big screen plasma TV worth $3500.00, and it goes missing, the most you will recover from the carrier who misplaced it is $600.00. (300lb. X $2.00/lb.) If the customer had declared a value on the face of the Bill of Lading, he would be compensated for the full amount. Most carriers have a minimum of $100,000.00 - $250,000.00 cargo liability insurance, more than enough to cover a 45,000lb. load that is either completely destroyed or stolen (45,000lb. X $2.00/lb = $90,000.00).
 
Loaders if you put a declared value on a BOL I expect extra compensation as pricing is based on that $2 a LB. We carry $500,000 in load insurance but there is a cost to that and I need to be compensated. If you are a regular customer we will usually cover anything up to $300,000 which is a lot more than most will do. If you are not a regular customer and want to put a value on the BOL we will negotiate an extra insurance charge. If the load is originating from the States into Canada it is completely covered so carriers need to beware of the value of these shipments because if you have a low limit it does not take much to go over it and you will be responsible for that money.
 
What lowmiler said is what I am talking about... if you pay a carrier to haul a skid to FL and pay them $300, but the skid is worth $10,000 - it is not worth it to the carrier to take a $10,000 risk for a pay of $300- carriers will want more money if the shipper is going to declare the value....
so.. how do we cover ourselves if the customer does not want to pay the extra? - and for that matter, even if the customer wants to pay extra most carriers will not even take a bit more money for the liability - most will just pass on the freight.

The first post scares me, as how can we cover ourselves in this situation?

Lowmiler... can you clarify "If the load is originating from the States into Canada it is completely covered" - does this mean that the $2.00 per pound rule does not apply for inbound shipments into Canada?
 
All our quotes state max liability of $2.00/lb and even quick email quotes have the same indicated.

We also confirm commodity prior to quoting and value if possible. Most brokers (larger/not from basement) offer full value insurance to the customer at a much more appealing rate then most carriers standard charges. We will advise customer not to indicate value on BOL or the carrier may charge additional fees that they will be responsible for.

Any regular customers that ship high value goods or commodities not covered by our regular insurance, and do not want full insurance, we will only move once we have an insurance waiver on file.
 
ServFre anything coming from the United States is 100% covered there is no $2 LB rule. The tricky thing is Canada to the United States the $2LB rule does exist. I am not sure how it works inside the US as we do not do any state to state movements.
 
It gets even trickier when it originates in the US and is covered for the value at time and place of shipment or the amount on the commercial invoice. Then the freight crossdocks to interline somewhere in Canada and is now picked up in Canada using the same US BOL, the terms and conditions will remain the same.
 
thanks guys!! good lord eh?? sure is tricky to cover our butts!!!
thanks for the info about inbound lowmiler!
 
SCAM CHASER said:
Shipper has broker arrange transportation for $150,000 worth of product from Victoria to Ottawa.

Shipment weighs 10,000 lbs with no delcared value on B/L

Cargo is stolen

Insurer for shipper pays shipper full $150,000
Insurer for carrier pays $20,000 @ $2/lb

Insurer for shipper sues broker $130,000 for failure to perform due diligence. Broker is not party to the B/L and cannot use the limit of liability clause.
Click to expand...

Scam Chaser,do you know if the broker aware of the value? Also do you know if this was a regular shipment that the broker was familiar with? Thanks
 
Shipments from the US

It's my understanding that all shipments origininating in the US are covered under the Carmack Amendment, even if the final destination is in Canada. Cargo is covered at FULL VALUE regardless of what's on the BOL.

To agree to a lower liability it's worded something like, "Carrier and shipper may agree to a lower value limit in exchange for a discount"

So you would have to show that you quoted $x but in exchanged for a reduced rate the shipper waived the full value, not the other way around where you charge more for full value.

I've seen US carrier provide rate quotes that say,

"Rates ared discounted to reflect cargo liability coverage of $0.30 per pound"

After hearing this, I'm thinking of changing the verbage on our quotes as well.
 
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