TRANSPORTATION GUIDELINES

Transcription

1 TRANSPORTATION GUIDELINES Blue Book Services 2015 Transportation Guidelines contains information on customs, rules, and best practices for transporting fresh produce in the United States and Canada. I. INTRODUCTION 1. Notes on Usage 2. Organization II. III. IV. CONTRACT OF CARRIAGE TRANSPORTATION INTERMEDIARIES RESPONSIBILITY FOR FREIGHT CHARGES V. CARRIERS 1. Vehicle and Equipment Suitability 2. Authority of the Driver to Act for the Carrier 3. Communication VI. VII. VIII. IX. APPENDIX. TRANSIT TIME & TEMPERATURE 1. Transit Time 2. Transit Temperature 3. Temperature Recording Devices LOADING THE TRAILER 1. Carrier Responsibilities 2. Shipper Responsibilities ARRIVAL AT DESTINATION 1. Contract Completion 2. Detention Fees 3. Less-Than-Full Truckload 4. Reconsignment and Responsibility for Additional Services 5. Receipt for Delivery 6. Carrier s Obligation to Deliver 7. Handling Product for the Account of Whomever It Concerns 8. Wrongful Rejection to the Carrier CLAIMS 1. Evidence 2. Inspection Certificates 3. Burden of Proof 4. General Damages 5. Handling Produce on Consignment 6. Cover Purchase 7. Damages After Repacking Produce 8. Late Claims 9. Contract Modification 10. Suitable Shipping Condition 11. Force Majeure 12. Awaiting Payment from Third Party 13. Set-offs GOOD TRANSIT TIME GUIDELINES 1 of 14

2 BLUE BOOK SERVICES, INC. TRANSPORTATION GUIDELINES I. INTRODUCTION Blue Book Services, Inc. has provided trading and financial information to the fresh fruit and vegetable industry since Since 1909, the company has published trading guidelines and provided alternative dispute resolution services to the industry. This 2015 version of Blue Book Services Transportation Guidelines represents our best efforts to document the current best practices, customs, and rules applicable to the transportation of fresh fruit and vegetables by motor carriage. All segments of the industry have had a hand in shaping these guidelines. Previous guidelines should be replaced with this 2015 version. Please review the sub-section titled Notes on Usage immediately below before referring to any of the substantive topic areas. Any comments or suggestions regarding these guidelines may be submitted by sending an to tradingassist@bluebookservices.com or by telephoning our Trading Assistance staff at Notes on Usage (a) While every effort has been made to make these guidelines as complete and easy to use as possible, our Trading Assistance staff is available to assist industry members with locating or interpreting provisions contained within these guidelines. It must be remembered, however, that our Trading Assistance staff is not comprised of practicing attorneys. If legal advice is sought we would be happy to provide you with a list of attorneys who may be able to assist you. (b) The term Carrier is used broadly in these guidelines to include both Underlying Carriers and Transportation Intermediaries. (See Section III TRANSPORTATION INTERMEDIARIES) The term Underlying Carrier is used to specifically describe Carriers that physically haul fresh produce.. (c) The term reasonable is often used in these guidelines, as well as in state and federal statutes, regulations, and judicial and administrative decisions. Because the particular facts of commercial disputes often vary greatly, rigid rules that do not take into account the particular facts of a given case may lead to unacceptably technical and ultimately unfair decisions. The term reasonable allows the particular facts of a given case to be given fair consideration. (d) While these guidelines represent Blue Book Services position as to industry best practices, customs, and rules, there is no guarantee that a court, government agency, or another dispute resolution forum will apply these guidelines, or the principles set forth in these guidelines, in every case. These guidelines should not be used as a substitute for legal advice. Any responsibility for loss or damages arising from reliance on these guidelines is specifically disclaimed. (e) In reviewing these guidelines it must be remembered that the motor carriage of fresh produce is generally exempt from U.S. federal economic regulation because 49 USC 13506(6)(B) provides that agricultural or horticultural 2 of 14 commodities (other than manufactured products thereof) are not subject to the Interstate Commerce Act (ICA), which includes the Carmack Amendment. Consequently, readers will see that some of the terms, requirements, and liability standards set forth in these guidelines are different than those which apply to regulated carriage under the ICA and Carmack Amendment. It should be noted, however, frozen fruits and vegetables are expressly excluded from this exemption by 49 USC 13506(6)(C), and the list of exempted commodities has been further defined by Administrative Ruling (see excluding, for instance, bananas from the exemption). See Uniform Commercial Code 7-309(a) setting forth the liability standard for exempt contract carriers. 2. Organization These guidelines are organized in nine sections as follows: (I) Introduction; (II) Contract of Carriage; (III) Transportation Intermediaries; (IV) Responsibility for Freight Charges; (V) Carriers; (VI) Transit Time & Temperature; (VII) Loading the Trailer; (VIII) Arrival at Destination; and (IX) Claims. Most sections are further organized into subsections. In order to keep the main text of these guidelines as concise as possible, endnotes have been used to illustrate and elaborate on issues raised in the main text. II. CONTRACT OF CARRIAGE When goods move under contract (as opposed to under tariff) the contract of carriage is the agreement between the carrier and the party that hired the carrier. Although the bill of lading may in some circumstances be viewed as a complete expression of the contract of carriage, bills of lading used in the produce industry are not usually intended to be a complete expression of the agreement between the parties. In these instances, and in those instances where the Carrier is hired by a party other than a seller at shipping point, the rate confirmation and related documentation passed between the Carrier and the party that hired the Carrier may be a better reflection of the agreement between the parties than the bill of lading, even if the transaction documentation passed between the parties is not formally identified as a Transportation Contract. The essential terms of the contract of carriage (however expressed) should be memorialized in writing and should clearly and fully state the particulars of the transportation service to be provided. The terms of the agreement and all other essentials, including transit temperatures, party responsible for paying freight, party to receive payment for the freight, payment terms, contact information and en route reporting expectations, and any other special terms (e.g., team haul, guaranteed arrival time, warehousing fees, etc.) or instructions should be specified. Regardless of whether the bill of lading takes on contractual significance, it should, at a minimum: (i) identify the names of the consignor and consignee; (ii) identify the

3 origin and destination of the shipment; (iii) describe and quantify the cargo; and (iv) identify the serial number of any temperature recorder(s) loaded on the trailer. III. TRANSPORTATION INTERMEDIARIES Transportation Intermediaries, often called truck brokers, do not haul produce loads themselves, but they are intimately involved in arranging and contracting for the transportation of fresh produce. They are responsible for ensuring that both the Underlying Carrier and the produce vendor understand the essential requirements of each haul, including temperature settings, en route communication expectations, any guaranteed arrival time(s), and payment terms. Transportation Intermediaries impliedly take responsibility for (i) paying freight to the Underlying Carrier even if the Transportation Intermediary does not get paid by its customer, the hiring produce vendor; and (ii) paying any properly supported carrier claims, regardless of whether the Transportation Intermediary is able to recover from the Underlying Carrier or its insurer. If a Transportation Intermediary wishes to operate as a true broker, responsible only for negotiating a contract between the produce vendor and the Underlying Carrier, then, to overcome industry custom and usage and prevent misunderstandings, it will need to communicate this, in writing, to all parties as soon as possible after the shipment is booked, and always before loading is scheduled. This communication should, at a minimum, identify the principals to the contract of carriage and their respective roles in the transaction, making it clear that the Transportation Intermediary will not take responsibility for the payment of the Carrier s freight in the event the hiring vendor fails to pay, and/or the payment of any properly supported carrier claims. IV. RESPONSIBILITY FOR FREIGHT CHARGES The party that hired the Underlying Carrier or Transportation Intermediary is the party responsible for payment of the freight charges to the party it hired, except in rare cases where the Carrier or Transportation Intermediary is hired on a collect basis, in which case the Carrier or Transportation Intermediary should look first to the consignee for the payment of its freight charges. Produce sellers will sometimes arrange transportation as an agent for (or as an accommodation to) their customers in conjunction with an f.o.b. (free on board) sale. When acting in this capacity it is recommended that the produce seller fully explain its role in the transaction to all interested parties in writing. This writing should be delivered as soon as practicable, and should, at a minimum, identify the principals to the contract of carriage and their respective roles in the transaction. V. CARRIERS 1. Vehicle and Equipment Suitability Carriers must provide vehicles and equipment suitable to the contracted haul. Carriers are generally responsible for 3 of 14 TRANSPORTATION GUIDELINES damages resulting from vehicle or equipment failure. 2. Authority of the Driver to Act for the Carrier Drivers have no implied authority to alter any contract term on behalf of the Underlying Carrier (unless an owner operator) or Transportation Intermediary, or any other party to the transaction. For example, drivers do not have the authority to negotiate settlement of claims on behalf of the Underlying Carrier or Transportation Intermediary. Drivers do have implied authority to verify and approve the load, count, and pulp temperature of produce received on behalf of the carrier. 3. Communication Unless otherwise stipulated, drivers should be available on a daily basis for telephone communication with the Transportation Intermediary, the consignee, and other financially interested parties. Drivers should contact interested parties immediately when: (1) there is a delay at shipping point, en route, or at unloading; (2) pulp temperatures at shipping point are too high or too low; (3) there is any inconsistency between the driver s understanding of the contract of carriage and the bill of lading; or (4) the consignee refuses delivery of the shipment or makes any objection or protest related to the haul. It is recommended that any verbal communications or agreements between the Carrier and any interested party be confirmed in writing and delivered via facsimile or other electronic transmission immediately following the communication or agreement. VI. TRANSIT TIME & TEMPERATURE 1. Transit Time A Carrier is required to use reasonable dispatch to ensure produce is delivered in a timely manner. A motor carrier that hauls a load more than 500 miles per day (1,000 miles per day if a team is hired) will be presumed to have used reasonable dispatch. A Carrier s failure to cover 500 miles per day, evidence of mechanical breakdown, and/or other failure to keep the load moving as expeditiously as possible, within legal limits, may be used to establish that a Carrier failed to use reasonable dispatch. Transit times must be calculated from the time loading is completed, and with reference to applicable hours of service regulations. To maximize a driver s available hours of service, it is recommended that Carriers confirm pick-up times with shippers prior to arriving at shipping point. Carriers are expected to notify all interested parties if a driver s available hours of service are significantly restricted as a result of a previous unrelated haul. Carriers shall not be responsible for delays at shipping point that are solely attributable to others. Pick-up and delivery dates and times should be included on bills of lading and delivery receipts. Guaranteed arrival times are contractually enforceable as long as the shipment can be legally delivered by the specified time. 1 Any such guarantee is impliedly subject to force majeure provisions. (See Section IX (11) CLAIMS: Force Majeure.) Since delivery times or appointments are customarily only estimates, a party alleging that a guarantee as to arrival time was made should be prepared to prove

4 TRANSPORTATION GUIDELINES such a guarantee was made by clear and convincing evidence (e.g., a price premium and clear contractual language of guarantee). A signed agreement which conspicuously states, DELIVERY TIME IS GUARANTEED is recommended. Additionally, because proving damages resulting from a late claim can be difficult, if a guaranteed arrival time is made part of the contract, it is recommended that the parties consider (in consultation with their attorneys) a liquidated damages provision in the event the Carrier fails to meet the arrival time. For example, the contract could include a provision providing for damages of $30.00 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 onions. 2. Transit Temperature If temperature control is required, the temperature within the trailer must be maintained at the agreed-upon temperature. Carriers should consider all factors that may affect transit temperatures (e.g., field heat and BTUs coming from the commodity, ambient air temperatures, air flow within the trailer, insulation, and capacity of the temperature control system) before signing for the load. Ideally, drivers should take multiple random pulp temperature readings throughout the load. If the Carrier cannot warrant that air temperatures in transit will be maintained as instructed throughout the trip, either the load should not be taken, or a specific release from liability should be negotiated. 2 In the absence of an agreement as to transit temperature, conformity with the transit temperatures recommended by the USDA, CFIA or other recognized industry source may be considered customary and reasonable. On mixed loads of produce with varying recommended transit temperatures, Carriers are encouraged to contact the responsible party for specific temperature instructions. Reefer systems are expected to provide steady temperatures in transit and should be set to run continuously, and not on a start-stop basis. Slight deviations in transit temperature based on, among other things, the location and accuracy of the temperature recorder, are inevitable and permissible. What constitutes a slight deviation will vary, but as a rule of thumb temperatures within the trailer should not deviate more than four (4) or five (5) degrees Fahrenheit from the agreed-upon transit temperature. If a temperature range is specified, any deviation will be assessed from the midpoint of the specified range. A temperature variance lasting less than twelve hours may also be categorized as a slight deviation, depending on the extent of the variance, the relative perishability of the commodity, and other circumstances. For example, a shipment involving multiple pick-ups or drops may be expected to experience temperature variance during loading and unloading. Nothing in this paragraph should be interpreted as to suggest a temperature deviation was slight, and therefore permissible or 4 of 14 excused, when product has been frozen in transit. Because there is room for varying interpretations of this rule of thumb, and because temperature recorders may need to be calibrated before an exact temperature reading can be determined, it is usually not advisable for produce buyers to refuse delivery of produce based on initial temperature readings at arrival. A Carrier s temperature control equipment is not responsible for bringing produce pulp temperatures into compliance with industry standards. Consequently, high pulp temperatures at destination do not necessarily indicate a breach of contract by the Carrier because high pulp temperatures at destination could result from a shipper s failure to properly precool produce prior to loading. Pulp temperatures at destination, however, may be some evidence of temperatures within the trailer during the haul, particularly when the pulp temperatures at loading are stated on the bill of lading. If pulp temperatures reported on the bill of lading cannot be verified by the driver, the phrase shipper s temperature declaration should be noted on bill of lading before the driver signs for the load. Failure to make this notation, however, should not prejudice a Carrier when in fact the driver had no opportunity to verify the stated pulp temperature, such as when the driver is not allowed on the dock at shipping point. When considering the evidentiary weight to give destination pulp temperatures in a given case, the following factors need to be considered: 1. Was the product still loaded on the trailer when the USDA or CFIA inspected the product? The evidentiary value of pulp temperatures decreases rapidly once the product is unloaded. 2. Was the product wrapped in plastic or tightly packed in the containers where heat from respiration (or field heat) may have been trapped? 3. Do we know what the pulp temperatures at shipping point were? Many times the bill of lading only contains a temperature instruction and not a statement as to pulp temperatures. Additionally, we must keep in mind the reality that drivers are not always permitted to take pulp temperatures, let alone multiple random samples of pulp temperatures at shipping point. Depending on the answers to these questions, it may be that destination pulp temperatures are not particularly helpful in assessing transit temperatures. Another potential problem with relying exclusively on pulp temperatures is that transit temperatures sometimes vary considerably throughout the trip. Consider for example, a load that runs too cold during the first two days of the trip, and then too warm the last two days. Depending on how cold the trailer ran in the first two days, and how warm the trailer ran in the last two days, destination pulp temperatures may be too cold, too warm, or within a normal range. Because destination pulp temperatures often do not give a complete picture of the transit temperatures it is recommended that temperature recorders, whether portable or reefer-based, be included with all shipments of produce. (See TEMPERATURE

5 5 of 14 TRANSPORTATION GUIDELINES RECORDING DEVICES immediately below) 3. Temperature Recording Devices When temperature recording devices are permanently installed components of reefer systems on trailers used to haul produce, these recording devices must be activated. Information recorded by such devices should be preserved by the Carrier and promptly shared with all interested parties. In addition to these requirements, the use of one or more portable temperature recording devices is recommended for all shipments of produce. Portable temperature recording devices should be placed on either the top or the side of the product. Recorders should not be placed against an outside wall, directly under a vent, or inside of the product s packaging material. Temperature reports from refrigeration systems typically provide readings for both supply air temperatures and return air temperatures. Return air readings generally provide a better indication of air temperature within the trailer. It must be remembered that Carriers are responsible for maintaining temperatures throughout the trailer, and not simply blowing air within the desired temperature range. When temperature readings for supply air and return air vary by more than four (4) to five (5) degrees Fahrenheit, this could be a sign the refrigeration unit lacked sufficient capacity (given the particular demands of the load, including heat from the product, ambient air temperatures, insulation, etc.) or an air flow problem resulting from improper loading and/or shifting in transit. It should be noted however that the supply air temperatures may take on great significance in some cases, including freezing or chilling claims where it appears a portion of the load may have been subjected to abnormally cold temperatures as a result of an air flow problem caused by a torn or obstructed air delivery chute. When proper air flow within the trailer is interrupted, return air readings may not be a reliable indicator of air temperatures within the trailer. When faced with conflicting evidence as to the air temperatures in transit (e.g., temperature reports from recorders differ, and/or destination pulp temperatures are inconsistent with temperature report(s)) the recommended approach is to weigh all the information provided in each case and assess transit temperatures based on the preponderance of the evidence. Because portable temperature recorders are designed for the purpose of recording air temperatures, and because they have been widely used for decades by the industry for this purpose, temperature reports from portable recorders should be given considerable weight. Considerable weight is also given to temperature reports from reefer systems. Some of the limitations of relying solely on produce pulp temperatures to prove transit temperatures are described earlier in these guidelines. (See sub-section immediately above titled Transit Temperature. ) Each financially interested party has the right to require, at its expense, the installation of a portable temperature recording device. On shipments where portable temperature recording devices have been placed in the trailer, the shipper should note the identification number of the recording device and the location of the device within the trailer on the bill of lading. If the driver signs a bill of lading that indicates a temperature recorder has been placed on the trailer, it will be presumed that the Carrier received possession of the recorder. 4 Immediately after arrival of the shipment, the buyer should review the available temperature reports. If the temperature reports show improper temperatures, the buyer-consignee should (1) advise all interested parties of the situation, (2) note the problem with specific language on the original delivery receipt (see Section VIII (5) ARRIVAL AT DESTINATION: Receipt for Delivery), and (3) immediately call for a government inspection. If no recorder is found in the trailer, it is critical that this fact be noted on the original delivery receipt; if the consignee does not note that the recorder(s) is/are missing, the consignee will likely be deemed to have received the recorder(s). If the Carrier, consignee, or other interested party fails to deliver, preserve, or present a temperature recording device or record, a negative inference may be drawn from this failure. VII. LOADING THE TRAILER The specific responsibilities related to properly loading a trailer described below are categorized as either Carrier or Shipper Responsibilities, depending on the party that is typically responsible for the specific tasks described. However, there is a great deal of overlap between these responsibilities. The proper loading of the trailer is the joint responsibility of the Carrier and the shipper, and either party may incur liability when a shipment is not properly loaded, regardless of whether the primary responsibility for a specific task may be viewed as resting with one of the parties. In situations where the driver is not allowed on the shipper s dock to observe the loading, the shipper takes greater responsibility for the loading of the trailer. 1. Carrier Responsibilities The driver, on behalf of the Carrier, has a number of responsibilities with respect to loading the trailer. A driver that (1) arrives at the loading place at the agreed-upon time, (2) actively observes the loading process and objects (both verbally and in writing on the bill of lading and/or through his/her dispatch office as appropriate) to any perceived problems with the load, and (3) makes certain all documents related to the carriage are complete, accurate, and consistent with the rate confirmation and related documents provided by the party that hired the Carrier, is off to a good start. The driver should properly precool or preheat the trailer to the temperature specified by the party that hired the Carrier. If the bill of lading contains a contradictory instruction, the inconsistency should be resolved in writing before the driver signs for the load. If no temperature is specified, the temperatures specified in Appendix I may be considered reasonable and customary. The trailer must be thoroughly cleaned and in good condition before loading. All temperature and protective service equipment should be properly maintained (i.e., inner walls, insulation, air delivery chute, front air return bulkhead,

6 TRANSPORTATION GUIDELINES door seals and hinges, and closing devices). The driver should observe the loading of the trailer (assuming the driver is allowed on the loading dock) for proper count and loading. If the driver and the shipper cannot agree on a proper loading method, the driver should contact his/her dispatch office for instructions. Any agreements or understandings reached between the Carrier and the interested parties should be promptly confirmed in writing. Generally speaking, the Carrier is responsible for ensuring that the load is properly braced and loaded to prevent shifting in transit. If the count and/or loading method are strictly the shipper s own, shipper s load and count or similar words should be noted on the original bill of lading. The driver should generally take and record three or more pulp temperatures from a sampling of the product chosen at the driver s discretion at the time of loading. If the shipper will not permit the driver to take pulp temperatures, no pulping permitted or similar words should be noted on the original bill of lading. If the bill of lading states the produce is pulping at a specific temperature, this should be verified by the driver. If the driver is not permitted to verify the stated pulp temperature, no pulping permitted, shipper s temperature declaration, or similar words should be noted on the original bill of lading. The driver should verify that any portable temperature recording equipment placed in the trailer is properly located, e.g., not placed directly under a cooling vent or against an outside wall. The recorder s identification number and location within the trailer should be noted on the bill of lading by the shipper and verified by the driver. The driver should ensure that product is loaded in patterns to allow proper air circulation under, through, and around the load for satisfactory temperature maintenance during transit. At a minimum, proper air circulation requires that the air chute is not compressed and that there are at least four inches of separation between the last pallet and the trailer doors. If a seal is applied to the trailer doors, the seal should remain intact through tender of delivery. The seal number should be noted on the bill of lading. If a Carrier must break a seal during transit, it must do so only upon express permission of the party that contracted for the haul, except by authority of law. If a seal is broken by authority of law, the driver should note the following information on the bill of lading: identity of the authority, replacement seal number, and the reason the seals were broken. If there is concern that the trailer may be overloaded, it is recommended the Carrier have the trailer weighed at a local weigh station so that, if necessary, product can be returned and off-loaded to the shipper at minimal cost. A Carrier that fails to have a potentially overweight trailer weighed at a local weigh station risks being responsible for resulting losses. 2. Shipper Responsibilities First and foremost, the shipper must confirm that the driver is who he or she claims to be. At a minimum, the shipper needs to verify the individual s driver s license, the Carrier s name and DOT number, and the load number and destination for the load in question. Any inconsistencies between 6 of 14 the information provided by the driver, and the information discussed with the buyer and/or Transportation Intermediary should be resolved prior to loading the trailer. Once the identity of the driver is verified, the shipper is responsible for working with the Carrier to ensure the truck is loaded properly and in the best interests of all parties. It is recommended that shippers allow drivers on the loading dock to observe the load. The shipper may bear sole responsibility for any problems with the load the driver could not have been reasonably expected to detect during the loading process. The shipper should properly precool (if required) and package the produce before the scheduled loading time to ensure loading can be accomplished without unnecessary delay. Unreasonable delays at shipping point may be chargeable as detention fees against the party that contracted for the carriage, and this party may, in turn, have a corresponding claim to recover detention fees and other resulting losses (e.g., buyer may have a late claim as a result of the delay at shipping point) against a shipper that causes an unreasonable delay. For the purposes of these guidelines a delay of more than eight (8) hours may be considered unreasonable. (See Section VIII ARRIVAL AT DES- TINATION immediately below.) In cases of extended delay the Carrier may be within its rights to refuse to take the haul; it is, however, recommended that Carriers provide advance written notice to all interested parties, giving the shipper a final opportunity to load, before taking such action. The shipper should inspect the trailer before loading to ensure it is clean and free from any odors that may permeate the produce during transit. Containers used by the shipper must be capable of supporting the weight of the product stacked above; if a lower layer of containers collapses, this may be some evidence that the shipper failed to use suitable containers. On shipments requiring multiple deliveries to different locations, each consignee s lot should be clearly marked for identification and loaded so the lots are easily accessible at each delivery location. VIII. ARRIVAL AT DESTINATION 1. Contract Completion Unless otherwise specified, the carriage is completed when the trailer is made available for unloading at destination during the consignee s hours of operation and the consignee has been given a reasonable time for inspection and unloading. Carriers should give advance notice of their anticipated arrival time to the consignee a few hours before arrival. The reasonableness of the time for unloading must be considered in light of the consignee s right to examine the load and call for a third-party (usually government) inspection if it in good faith believes the produce fails to comply with the sales contract. A reasonable time for unloading, when consignees are properly and in good faith exercising their rights, may be extended up to the time periods listed immediately below. These time periods roughly correspond to the time periods

7 for rejecting product to produce sellers provided under the Perishable Agricultural Commodities Act (PACA) 7 USC 499a. A Carrier that fails to allow a reasonable time for unloading may be found to have failed to complete the carriage and may incur liability for resulting damages. (a) For fresh fruit and vegetables delivered by truck, within eight (8) hours after notice of arrival; for frozen fruit and vegetables delivered by truck, within twelve (12) hours after notice of arrival; provided that (b) If the consignee or other interested party promptly applies for but cannot obtain a third party inspection 5 during the time periods prescribed above, the period will be extended until the inspection is made, plus two (2) hours after the inspection report is made available. (c) In computing the time periods specified (i) for shipments arriving on nonwork days or after the close of regular business hours on work days, nonwork hours preceding the start of regular business hours on the next working day shall not be included; and (ii) for shipments arriving during regular business hours, the period shall run without interruption except for shipments arriving less than two (2) hours before the close of regular business hours, in which case, the unexpired balance of the time period shall be extended and run from the start of regular business hours on the next working day. Unless otherwise specified in the contract of carriage, however, and irrespective of the reasonableness of the time it takes the consignee to unload the trailer, if unloading cannot be accomplished within eight (8) hours after the truck is made available for unloading during the consignee s hours of operation, detention fees may accrue. In cases of extended delay the Carrier may be within its rights to unload at a local third-party cold storage facility; it is, however, recommended that Carriers provide advance written notice to all interested parties before taking such action. 2. Detention Fees Carriers may be entitled to recover detention fees (sometimes called demurrage or warehousing fees) when loading is unreasonably delayed (See Section VII(2) LOADING THE TRAILER: Shipper Responsibilities), or unloading is not completed by the consignee within eight (8) working hours of the time the truck is made available for unloading (See subsection (1) immediately above), unless the delay is caused by the carrier. In the absence of a specific agreement to the contrary, a detention fee of $ per day may apply for temperature-controlled shipments; a fee of $ per day may apply for shipments that do not require temperature control. These fees may be applied on a pro rata basis. 3. Less-Than-Full Truckload When a shipment involves multiple drops, consignees must use special care to ensure unloading is completed without delay. A consignee that unreasonably delays a Carrier may be found liable for damages incurred by subsequent consignees. It is often advisable for a produce seller arranging for a shipment with multiple drops to negotiate written terms with its buyer-consignees whereby they agree not to reject the produce under any circumstances, but retain the right to TRANSPORTATION GUIDELINES have the product inspected after unloading and to place a claim for any damages resulting from a breach of contract. (See PACA Regulations, e.g., 7 C.F.R (l) defining the term F.o.b. acceptance ) Such terms may not be advisable when product is not identifiable by brand or otherwise after unloading from the Carrier. 4. Reconsignment and Responsibility for Additional Services When, due to no fault of the Carrier, a load is reconsigned (or redelivered to some location other than the original consignee ), the carrier is entitled to reasonable compensation over and above the original agreed-upon fee for its services. Reasonable compensation shall be no less than any additional expenses necessarily incurred by the Carrier as a result of the diversion. It is recommended that Carriers comply with reconsignment requests that are reasonable and customary. In situations where loading or unloading services have not been expressly made a part of the contract of carriage, the shipper shall be responsible for loading services, and the consignee shall be responsible for unloading services. 6 Similarly, Carriers shall not be responsible for market entry fees or pallet exchanges 7 unless expressly made a part of the contract of carriage. 5. Receipt for Delivery No delivery receipt (usually a copy of the bill of lading) should be signed with the expectation of later repudiating its apparent meaning or effect. Consignees are expected to note, with specificity, any problems or objections before signing the original delivery receipt. A generic notation included on delivery receipts as a matter of general practice will not preserve or advance a consignee s claim. Failure to make such a notation may undermine a consignee s ability to successfully pursue a claim for damages. 8 A notation on the delivery receipt may not constitute timely notice of claim to a Transportation Intermediary; notice of claim (commonly called a trouble notice ) should be provided separately and in a timely manner to all interested parties. (See Section IX CLAIMS) 6. Carrier s Obligation to Deliver Although a carrier may, in some limited cases, be able to legally assert a lien over cargo in its possession, Carriers are strongly advised to hire an attorney before refusing to deliver fresh produce, which due to its perishable nature is poorly suited for any delays resulting from the legal process of asserting a lien. An improperly asserted lien may result in the Carrier being responsible for punitive damages related to the carrier s failure to deliver. In virtually all cases it is recommended that Carriers deliver the produce in their possession and subsequently pursue any claims that may be due. 7. Handling Product for the Account of Whomever It Concerns When a buyer claims a breach of contract by the Carrier and consequently rejects the load to the Carrier, it will often make sense for the Carrier to agree to allow the buyer to sell the produce to mitigate potential losses, regardless of whether the Carrier believes it has any responsibility for problems with the load. However, consignees may be reluc- 7 of 14

8 TRANSPORTATION GUIDELINES tant to sell the produce without signed documentation from the Carrier acknowledging the load was in fact rejected (not accepted) and that the buyer is only selling the product for the account of the Carrier. Carriers, on the other hand, may be reluctant to agree to allow the consignee to handle the load for the Carrier s account. This situation can lead to an impasse that prevents produce from being sold promptly and for its full value. One way to avoid this impasse is for the parties to agree that the buyer has rejected the shipment and will handle the product for the account of whomever it concerns. An agreement to allow one of the parties, often the consignee, to handle the produce on this basis will not be construed as an acceptance of the rejection or an admission of fault or responsibility by any party. Handling the product for the account of whomever it concerns allows the parties to get beyond an impasse at arrival with the expectation that any dispute as to responsibility for the load and any damages will be determined after the product is sold. 8. Wrongful Rejection to the Carrier In situations where produce is rejected to the Carrier and the Carrier believes the rejection may be wrongful, Carriers are generally advised to take the following steps: (1) Promptly call for a government inspection certificate, gather all available temperature records, and any other relevant information. Keep records of all communications including fax transmittal pages; (2) Notify all interested parties that allegations of a Carrier problem are disputed, explaining why the allegations are disputed; (3) Ask the receiver to reconsider and accept the produce under protest; claiming damages against the carrier and/or the seller as appropriate based on the facts that develop; (4) If the impasse persists, explain, in writing, that if the receiver will not take the product, and if no one else will take responsibility, then the product will be sold in order to mitigate losses, while making it clear the claim is disputed and that full payment for the original freight and any additional expenses incurred (e.g., detention fees, reconsignment expenses, inspection fees, etc.) is expected; (5) Ask for a response within a reasonable period (e.g. three (3) hours), during which time the Carrier should begin attempting to find a buyer or commission merchant to sell the produce. It is usually not advisable to place the produce with a third party until a government inspection certificate has been obtained; (6) Actively monitor the disposition of the produce. If the produce is handled on consignment or sold without a fixed price, request a detailed accounting of sales from the thirdparty seller to support its returns; (7) Diligently work with all parties to keep communications open and settle any claims. IX. CLAIMS Claims against Carriers of fresh produce require proof of a breach of contract, and proof of financial damages resulting from the breach of contract. Detailed proof of claim should be presented to the Carrier as soon as practically possible, usually within thirty (30) days. 8 of 14 Claimants should also be prepared to show that they provided timely notice of claim allowing the Carrier the opportunity to exercise its right to inspect the product for the purpose of determining facts and preserving evidence. This is particularly important in light of the perishable nature of fresh produce. Failure to provide timely notice may undermine a claimant s proof of claim. In addition to any notation made on the delivery receipt, timely notice should be given directly to the Transportation Intermediary. Notice is timely when it is given as soon as practically possible. 9 A prima facie case is the minimum showing necessary to prove a proposition in a legal proceeding in the absence of a response from the adverse party. In the context of regulated carriage (under the Carmack Amendment s liability standard), a prima facie case against a Carrier may be established when the claimant can show the cargo was received in good order, but delivered with defects resulting in financial losses. Such a case is easy to imagine in those instances where cargo is missing at destination, or arrives with crushed or torn cartons. However, because of the perishable nature of fresh produce, establishing these prima facie elements against a Carrier is often not as straightforward as documenting damaged or missing cartons. When produce arrives with excessive levels of condition defects (those that may get worse over time, as opposed to quality defects which are more permanent in nature and could not, by definition, be caused by improper transportation) it is often not readily apparent whether the Carrier failed to maintain proper transportation conditions and thereby accelerated the microbial and metabolic deterioration of the produce, or whether the produce shipper failed to load product in suitable shipping condition. (See PACA Regulations, 7 C.F.R (j)). 10 Consequently, carrier claims based on the condition (or pulp temperature) of the produce are typically supported with proof of Carrier fault (i.e., proof the Carrier failed to exercise due care), such as a temperature report indicating improper air temperatures within the trailer during the trip. Furthermore, because the Carmack Amendment is not applicable to exempt carriage (in the absence of an express provision in the contract of carriage providing otherwise), claimants may bear the burden of proving that contract Carriers of fresh produce failed to use due care (i.e., breached the contract of carriage), and thereby caused the alleged damages. (See UCC 7-309(a) setting forth a liability standard for exempt contract Carriers.) Ultimately, parties that file a claim against Carriers of fresh produce should be prepared to prove timely notice, breach of the contract of carriage, and resulting damages. 1. Evidence The rules of evidence in some forums are very complex. However, in other forums, where juries are not used, including small claims courts, arbitrations, and administrative proceedings, the rules of evidence tend to be very informal and the issue is typically not whether a piece of evidence is admissible, but instead, how much weight a particular piece of evidence should be given. Evidence is defined very broadly and can include anything that tends to make it more likely that a fact in question

9 is true. However, the strongest forms of evidence presented in produce transportation claims tend to be (1) written documents produced contemporaneously with the transaction, (2) tangible evidence such as temperature tapes, (3) evidence from disinterested third parties such as the USDA or CFIA, and (4) admissions against self-interest. Because produce disputes are not typically presented in a forum where cross examination is possible, the personal credibility of witnesses will not usually be given consideration. Written documents produced contemporaneously with the transaction would include bills of lading, confirmations of oral notice or agreement, load or sales confirmations, invoices, and any other documentation produced during the course of the transaction. Documents produced after the transaction is completed and with an eye toward litigation will not typically be given much, if any, evidentiary weight. Tangible evidence such as temperature reports and photographs can be pivotal in some cases. It should be noted, however, that photographs usually do not quantify the extent of the damage to the produce as well as a third party inspection certificate. It is typically advisable to obtain a third party inspection certificate to go along with any photographs that will be provided as evidence. Evidence from disinterested third parties includes any evidence from parties that do not have a personal or financial stake in the outcome of the case. A government market price report or inspection certificate are examples of presumably unbiased and therefore disinterested evidence. A mutually agreed upon private inspection certificate would also qualify as disinterested evidence between the parties to the agreement. Admissions against self-interest include factual statements made by one party to the dispute that support some element of an adverse party s position. For instance, if a Transportation Intermediary can be shown to have stated that the truck had a mechanical malfunction causing a twenty-four (24) hour delay in transit, this admission, even if contradicted by later statements or other evidence, may be strong evidence supporting the truth of this statement. It should be remembered, however, that settlement offers are not considered admissions against self-interest and may not be properly considered as evidence of any fault on the part of the party making the offer. It is well known that settlement offers are often made not because the offeror feels they were at fault, but to avoid a protracted dispute resolution process with an uncertain outcome. 2. Inspection Certificates A government inspection certificate quantifying the extent of damage to the produce is often required to prove the amount of financial damages resulting from a temperaturerelated breach of contract. A government inspection certificate may also help prove a breach of the contract of carriage (e.g., a certificate might show that freezing likely occurred after packing and in present location). Inspections performed by independent nongovernment entities may be necessary overseas (or perhaps even in remote places in the U.S. and Canada), but the firm selected to perform the inspection or survey should be agreed to by the interested parties. 11 In-house inspections performed by an interest- TRANSPORTATION GUIDELINES ed party are not sufficient to establish the condition or pulp temperature of produce. The party that applies for the inspection certificate pays the inspection fees, but may recover this cost as damages. An inspection should be ordered as soon as practically possible after produce is tendered for delivery. If an inspection cannot be obtained within a forty-eight (48) to seventy-two (72) hour period, the value of the inspection certificate as evidence may be reduced or even nullified. Inspection results must be communicated to the interested parties immediately after the inspection is completed to allow for any follow-up or appeal inspection of the produce. The absence of timely notice of inspection results risks voiding the force and effect of the inspection certificate. 3. Burden of Proof To prevail on a commercial claim, the relevant facts typically must be proven by a preponderance of the evidence. A fact is proven by a preponderance of the evidence when, in light of all the evidence, the trier of fact is persuaded that the fact at issue is more likely true than not true. The trier of fact is the person or persons responsible for deciding which facts are proven by the evidence. This could be a judge, a jury, or an arbitration panel. This, however, does not mean that the side with the highest quantity of evidence wins. A party does not carry its burden of proof simply because it has more witnesses or more affidavits than the other side. It is the quality of the evidence presented that matters. When the trier of fact determines that the evidence presented on a given factual issue does not favor one side or the other, the party with the burden of proof loses as to this factual issue. For example, when any party claims a contract was formed or modified, that party, as the proponent of the claim, bears the burden of proving the alleged contract formation or modification. 4. General Damages Following a breach of contract or other duty, the aggrieved party is (generally) entitled to recover resulting damages from the breaching party. 12 The amount recoverable equals an amount that reasonably and objectively places the aggrieved party in the same position it would have been in had the breaching party properly performed its duty. In other words, the aggrieved party is entitled to be made whole. The aggrieved party s right to be made whole is not curtailed by the limits of the breaching party s insurance policy. The breaching party may be held liable for damages in excess of its insurance coverage. Proof of financial damages is commonly shown with (1) a government inspection certificate showing the extent of damage to the produce caused by the breach of contract; (2) a detailed and auditable account of sales showing the gross proceeds realized by the defective produce; (3) a USDA Market News Report showing the market value of the commodity in question during the relevant time period; and (4) receipts showing any incidental expenses resulting from the breach of contract (usually limited to inspection fees and dump receipts). Base Formula When a produce buyer receives produce on an f.o.b. 9 of 14