CONTRACT
OR TARIFF
What’s
The Problem Anyway?
The problem is this: If the contracts you believe govern your shipments aren’t valid according to federal standards, you could be setting your company up for what’s known as “Balance Due”, or leaving your firm's logistics operations unprotected. Before 1980, when congress relaxed the most restrictive trucking regulations and cleared the way for industrywide competition, there were very few contract motor carriers in comparison to a multitude of common motor carriers. Contract carriers could haul only over specific routes for a limited clientele while common carriers were available to the public. Contract carriage was governed exclusively by contracts and common carriage was governed exclusively by tariffs approved by the Interstate Commerce Commission. When operating authority became available upon application, filed tariffs were no longer required and, for the general case among smaller carriers, they were gradually discontinued. Now almost all carriers hold both common and contract authority as well as brokerage authority.
Shipments under contracts (motor contract carriage) require federally valid contracts and common carriage (motor common carriage) are made either under tariffs or some form of pricing agreement. Such agreements are common in specialized hauling such as upstream oilfield logistics and almost never rise to the level of federally valid contracts for motor carriage. Problems can arise when carriers which base their pricing under tariffs bankrupt or undergo other transformations such as mergers or acquisitions. During the eighteen month statute of limitations, shippers which have not attended to federal motor carrier contract requirements may find their shipments were performed under the rules of common carriage, at higher tariff rates. When shipments are made between Carriers which do not provide tariffs and Clients which do not employ valid contracts, little or no overcharge or operational standards protection is available for clients. Many Clients require Carriers to execute what are commonly known as “Master Service Agreements”, to which may or may not be incorporated a Carrier’s pricing information. Even when incorporated, we have yet to review an MSA that satisfies the requirements of a federally valid contract for motor carriage.
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When
Is A Contract Not A Contract?
It is set out at Pub. L. No. 103-180, 170 Stat. 2044 and at 49 CFR 1053.1 in the Code of Federal Regulations. Congress intended that contracts provide the basic requirements for effective governance of motor carriage. Contracts must :
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be "bilateral",i.e., clearly define the parties to the contract and their mutual responsibilities.
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be in writing and in force prior to the service of transportation.
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be retained on file for a period of at least two years after the contract is terminated.
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contain a commitment of the shipper to tender, and the carrier to transport, a "series of shipments."
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specify the rates and prices that will be charged and paid.
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demonstrate either a Carrier’s commitment to furnish hauling equipment for the exclusive use of a Client over a period of time, or demonstrate that the services provided meet “distinct needs of the shipper”.
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Who Furnishes The
Contract?
Regular route, scheduled carriers furnish comprehensive, federally valid contracts. Specialized, or "oilfield" carriers furnish documents a shipper should have reviewed by their attorney before executing. Contracts furnished by Industry Express Group, Inc. are fully comprehensive documents that incorporate all federal requirements. Since 1986 and more than a million loads, no Client of IEX has ever been “balance dued”.
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REGARDING
TERMS OF PURCHASE
IEX
analysts are occasionally called upon to review transactions which
demonstrate that purchasing personnel did not clearly understand
the function of freight “terms of purchase”. These terms define
the responsibilities of seller and buyer in regard
to scheduling and paying for logistics involved in a transaction.
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CONTACT
US
