Motor Carrier Contracts Annotated, THIRD EDITION

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Overview of Motor Carrier Contracting:

A motor carrier’s Bill of Lading typically incorporates by reference the carrier’s Terms and Conditions which are drafted by the carrier and in favor of the carrier. An individually negotiated contract such as those in this text allows the shipper to “contract away” from one-sided, and often onerous, Terms and Conditions drafted by the carrier.

Prior to 1980, virtually all transportation provided by motor carriers moved according to the terms and conditions of the Uniform Bill of Lading as contained in the National Motor Freight Classification. This is why the Bill of Lading was often referred to as the “contract for carriage.”

NEW! Shipper-Provider Contract Template.

As MAP-21 went into effect and the industry became aware of it, large, national transportation providers would add language into the shipper-carrier contract saying, “We reserve the right to use our brokerage authority for the shipments tendered to us pursuant to this contract.” While this would satisfy the legal obligation of the providers, simply adding this language to a shipper-carrier contract does not adequately address the many issues relating to using as a broker.

This all gave rise to a need for another contract template which would provide for one shipper to contract with one corporate entity who held licenses both as a motor carrier and as a broker. In Motor Carrier Contacts Annotated, Third Edition it is called a Shipper-Provider Contract Template.

NEW! Shipper-Provider Contract Including Intermodal Template.

When an intermodal service is offered by a regulated motor carrier, it can do so by issuing a through bill of lading from origin to destination. When this is done by regulated motor carriers, it is often referred to as “substituted service”.

In 1977 the Interstate Commerce Commission (ICC) used the authority granted to it by Congress to exempt intermodal services. This gave rise to a new type of provider known as Intermodal Marketing Companies or IMCs. However, it is important to note that companies that customers think of as being a motor carrier or truck broker will also offer these exempt or unregulated services without using their motor carrier or truck broker license to do so.

The template titled “Shipper-Provider Contract Including Intermodal for Transportation by Motor Carrier AND Brokerage of Motor Carrier Transportation” is drafted to cover these service variations.

"Just one of the reasons you need to have a contract" The late payment trap... and how it can be avoided Most medium and large size trucking companies quote their rates in terms of a discount off of their standard rates. In today’s market, these discount ranges are typically in the range of 60%, 80%, or even higher. When there is no individually negotiated contract between the trucking company and its customer, the transactions are governed by the carrier's standard trading conditions and tariffs. These tariffs typically provide that when a payment is “late”, that is, not received by the trucking company within 30 days, there is a late payment penalty imposed of the loss of discount. For example, if a company had an 80% discount with its carriers, had an annual freight spend of $1,000,000 and paid all of its invoices 31 days or more after receipt, it would have a contingent liability of $4,000,000! This liability can be imposed whenever the carrier chooses to impose it. For instance, if your company were to take its business to another carrier or if the trucking company went into bankruptcy. With a properly drafted individually negotiated contract in place between your company and the trucking company, such late payment penalties can easily be negotiated away and replaced with commercially reasonable service charges.