Dock to Dock

The Problem: Rejection following delays at shipping point and a breakdown en route.

The Key Point: Carriers are expected to deliver without delays resulting from mechanical breakdown.

The Solution: Assess damages resulting from the carrier’s breach of the contract of carriage.

QUESTION:  We are a truck broker with offices in the United States and Canada.  We recently hired a truck to load on Monday in Delaware for delivery on Wednesday in Mississippi.  Unfortunately, however, the shipper was not able to fully load the truck until Tuesday, so we rescheduled delivery to Thursday.  Everything was okay at this point, but then on Wednesday the truck broke down en route.  The carrier sent another truck to repower the load but did not make it to the receiver’s location until Saturday when the receiver was closed.  Now the product was four days late on Sunday when the receiver opened and rejected the load.  Can this be claimed against the carrier?

ANSWER:  We would consider the delay caused by the mechanical breakdown to be a breach of the contract of carriage, which would entitle the receiver to reject and claim damages.  Yes, the shipper also caused a portion of the delay, but it sounds like the receiver agreed to accept the product on Thursday, when it would have arrived if not for the carrier’s breach.  We see no way the carrier can use the shipper’s delay to escape responsibility for the subsequent delay caused by its breakdown.

However, because the truck was detained for one day at shipping point, the truck would be entitled to a credit for its detention fees.  If not specified by contract, our Transportation Guidelines provide for detention fees of $400 per day if no refrigeration was needed during the delay; $500 per day if the reefer is running.

Things could get a little more complicated if the receiver was notified of the plans to repower the load for a Sunday delivery, and yet failed to reject en route.  In that case the question becomes, why didn’t the receiver reject en route when it was notified of the further delay caused by the breakdown?  By not rejecting en route, the carrier could potentially argue that the receiver caused it to incur unnecessary expenses related to the repower to destination and further delay at destination due to being closed on Saturday, where it was going to be rejected anyway.

If the receiver can be shown to have acted unreasonably, it is possible damages would be reduced in an amount equal to these expenses.  But if there was no notice, or if the repower was supposed to happen in time for a delivery on Friday, then in either case this would appear to be a clean rejection for the full destination market value of the rejected product (on Thursday when the product would have delivered had the truck not broken down), less any detention fees incurred at shipping point.

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