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Freight charges - common carrier
  • Carriers must issue freight bills for every shipment that include identifying information about the freight and the charges due for it.
  • All parties are bound to the terms defined in the bill of lading.
  • Section 7 of the bill of lading determines how payment will be collected.

Every motor common carrier must issue a freight or expense bill for each shipment transported according to the regulations in Part 377.

The regulations provide deadlines for sending a freight bill:

  • “Prepaid” shipments — The time period to present the freight bill for all transportation charges is seven days, measured from the date the carrier received the shipment. This time period does not include Saturdays, Sundays, or legal holidays.
  • “Collect” shipments — On collect shipments, the carrier must present its freight bill within the time period prescribed above (seven days). There are times when the carrier lacks sufficient information to compute tariff charges at its billing point. In these situations, the carrier must present its freight bill for payment within seven days following the day upon which sufficient information becomes available at the billing point. This time period does not include Saturdays, Sundays, or legal holidays.
  • The freight or expense bill issued must include:
    • Names of consignor and consignee;
    • Date of shipment;
    • Origin and destination points;
    • Number of packages;
    • Description of freight;
    • Weight, volume, or measurement of freight (if applicable to the rating of the freight);
    • Exact rate(s) assessed;
    • Total charges due, including the nature and amount of any charges for special service and the points at which such service was rendered;
    • Route of movement and name of each carrier participating in the transportation;
    • Transfer point(s) through which shipment moved; and
    • Address where remittance must be made or address of bill issuer’s principal place of business.

Information presented to any party to the transaction about the actual rate, charge, or allowance for payment must not be false or misleading.

The shipper or receiver owing the charges must be given the original freight or expense bill and the carrier must retain a copy. (Part 379)

Credit period for payment of freight charges

Carriers are allowed to extend credit for the payment of freight charges for periods defined in the regulations. (Part 377) The credit period is 15 days and begins on the day following presentation of the freight bill. It includes Saturdays, Sundays, and legal holidays. Carriers may establish different credit periods in their published tariff rules. These credit periods may not be longer than 30 calendar days.

Rates and tariffs

A carrier without a bill of lading is poorly positioned legally to enforce the terms of its tariffs/rate schedules and its rules for such things as free time and detention, accessorial charges, special services, etc. A bill of lading contains language similar to the following:

  • “Received, subject to individual determined rates or contracts that have been agreed upon in writing between the carrier and shipper; if applicable, otherwise, to the rates, classifications, and rules that have been established by the carrier and are available to the shipper, on request, and all applicable state and federal regulations.”

As this indicates, a carrier’s rates and rules regarding the transportation being provided are part of the bill of lading contract, incorporated by reference, binding the parties to these provisions.

For-hire common carriers are required to have a written or electronic copy of the rate, classification, rules, and practices upon which any rate applicable to the shipment or agreed to between the shipper and carrier is based. They are also required by statute, and as stated on the bill of lading, to provide a copy of the tariff to the shipper upon the request of the shipper. (13710(a)(1))

Note that household goods carriers are required to give actual notice that the tariff is available for inspection in its bill of lading, or by other notice to individuals whose shipments are subject to the tariff. Without providing this notice, the carrier cannot enforce the provisions of the tariff.

“Deregulation” carriers were previously required to publish their tariffs with the Interstate Commerce Commission (ICC). This meant that the shipper-carrier relationship was significantly defined by published carrier tariffs, which had the force of law under the old “filed rate doctrine.”

Today, formal filing of tariffs with a federal regulatory agency is no longer required (except for carriers involved in non-contiguous trade); the shipper-carrier relationship is strictly contractual, which means the bill of lading is more important than ever.

Payment of freight charges — bill of lading Section 7

Bill of lading forms must indicate who is responsible for transportation charges. The charges may be either “prepaid” or “collect.”

The box on the face of the bill of lading referring to “Section 7 of conditions,” sometimes known as the “no recourse clause,” deals with the payment of freight charges. It is explained in Section 7 of the terms and conditions on the back of the bill of lading. It basically provides that the shipper/consignor is primarily responsible for payment of the freight and other lawful charges, unless the shipper stipulates in writing (in the space provided on the face of the bill of lading) that the carrier must not make delivery without requiring payment of the charges, and the carrier makes delivery without requiring the payment.

Shippers who leave the Section 7 area blank or unsigned are effectively telling the carrier that if they do not, or are unable to, collect the charges from the consignee, the carrier may default to the shipper/consignor for payment of the freight charges, even though the terms for payment of freight charges on the bill of lading are collect on delivery.

Execution of Section 7 has a direct impact on the carriers’ ability to collect freight charges from the consignor when the charges are due from and uncollectible from the consignee.

Section 7 contains other provisions relating to the payment of freight charges; carriers may require prepayment or guarantee of freight charges. Generally, it is the option of the shipper to determine who will pay the charges and at what point.

If the carrier finds that the articles shipped are not those described in the bill of lading, the freight charges must be paid upon the articles that were actually shipped.

When the consignor or the consignee provide incorrect information that results in the shipment being reconsigned or diverted to a location other than the location identified in the original bill of lading, the consignor and/or consignee are liable for the additional charges. The respective liability of the consignor and consignee for these additional charges are pursuant to 13706.