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July 9 2018

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52 The Journal of Commerce | July 9 2018 By Colin Barrett Q&A Q A Liability: How 1+1 equals 0 We recently moved a load from Pennsylvania to Texas, a full truckload with pieces of machinery. It was also a cross-border move. The load got to the customs broker facility in Texas, and the customer decided not to inspect the cargo. The paperwork was processed, and the cargo was moved by a second carrier from Texas into Mexico. When the load got to the plant in Mexico, some pieces of machinery were down, and there was some damage. With the little I know, my opinion is that customer can't file a claim against the US carrier because the load wasn't reviewed when it was delivered in Texas; the fact that a sec- ond carrier moved the load is transferring the responsibility to the second and last carrier making the delivery. Am I correct? NOT ALTOGETHER, BUT you've got the basic idea. The responsibility isn't "transferred" to anybody in this scenario; I'm afraid it's pretty much obliterated by the circumstances that you've described. You aren't talking about a single movement here. So far as I can make out, there were two separate moves, evidently documented independently by separate bills of lading. There was one move (and one B/L) from the Pennsylvania origin to the customs broker facility in Texas, where the shipment came to rest. At that junc- ture, a separate B/L was cut for an entirely independent move (via a different carrier) from the customs broker facility to the Mexican destination. In other words, this doesn't seem to have been a single-factor interline shipment across the border, but rather two distinct shipments contractually indepen- dent of one another, which leaves your customer in what amounts to an impossible situation legally. To support a claim, your customer needs to prove that the damage occurred while an identifiable carrier had custody of the goods. Trouble is, although your customer may be certain that the damage happened at some point between the shipment's departure from Pennsylvania and its arrival in Mexico (and very likely can prove that much), it can't pinpoint things any better than that. The idea of a claim is for the claimant to show, first, that intact goods were tendered to the carrier at origin and, second, that they were delivered at destination in damaged condition. But here we have separate sets of origins and destinations. Let's start with the first move from Pennsylvania to the customs broker facility in Texas. You say nobody examined the machinery at that facility, so the second of these two requirements — proof that the goods were delivered in damaged condition — isn't satisfied. Then we come to the second leg of your shipment's journey, the move out of the Texas broker's facility on to the Mexican destination. If there were a claim here, it would be complicated by the international nature of the move; this probably could be smoothed out by the fact that the move took place under a US bill of lading. The thing is, though, that there isn't a claim. There's no evidence that the machines were intact at this point in their travels, so the first of the requirements I out- lined isn't met. This sort of situation often comes up in international commerce, although more frequently for a different rea- son. In particular, "through" international movements often involve maritime service for some portion of the trip and motor or rail service onward from the port of arrival to the goods' final inland destination. Because the carrier liability regimes governing these modes are pretty dramatically different, a claim often may depend on the claimant's ability to identify just where the dam- age occurred. (In many cases, shipping agreements spell out exactly how such claims are to be processed.) Here, we don't have any modal disparity between the carriers handling the different legs of the movement. But we also don't have any semblance of a single "through" movement. There was no interline service involved, so there can be no shared liability among the participating carriers for the damage that occurred. I'm sorry to have to tell you that your customer's rather cavalier dismissal of its obligation to arrange for at least a cursory check of the shipment's condition on its arrival in Texas is fatal to its chances of recovering compensation for the damage. If it's not going to set up through moves for these cross-border shipments, it needs to be more careful in the future. JOC Consultant, author and educator Colin Barrett is president of Barrett Transportation Consultants. Send your questions to him at 5201 Whippoorwill Lane, Johns Island, S.C. 29455; phone, 843 559 1277; email, Contact him to order the most recent 351-page compiled edition of past Q&A columns, published in 2010. In order to support a claim, your customer needs to prove that the damage occurred while an identifiable carrier had custody of the goods.

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