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The NASSTRAC Transportation Corner -- North American Bill of Lading

At its May 2006 meeting, the National Classification Committee (NCC) of the U.S. National Motor Freight Traffic Association, publisher of the National Motor Freight Classification (NMFC), adopted a measure of considerable interest to shippers and carriers operating across the northern and southern borders of the United States. Effective July 22, 2006, the NMFC includes a bill of lading specifically for for cross-border shipments. This document is called the North American Uniform Through Bill of Lading or NABOL.

by Chris Norek and John Cutler

NABOL Challenge for Shippers: Cargo Loss and Damage Claims

The NABOL is not actually new. It was developed over several years of negotiations between representatives of shippers and motor carriers. Since the NABOL represents a compromise with the trucking industry, it contains features that may raise concerns for shippers. The principal area of controversy concerns cargo loss and damage and the need to address the different liability levels under the laws of the United States Canada and Mexico. The NABOL provides that, absent a separate written agreement to the contrary, the controlling liability will be that of the "first country in which the first Performing Carrier takes physical possession of all or any part of the Goods."

As a result, if part or all of a shipment comes into the first carrier's possession in:

Important note: This arrangement appears to be controlling for the shipment as a whole even if most of the goods in a shipment are added later in another country, and even if most of the distance traveled is in another country or if the loss or damage plainly takes place in another country.

Rationale

The argument for this arrangement is that universal application of the most generous liability regime would unduly favor shippers, while universal application of the least generous regime would unduly favor carriers. Thus making the controlling regime depend on where goods are first shipped is more objective. However, if a U.S. shipper's freight is predominantly inbound from Canada or (especially) Mexico, there may be adverse impacts from use of the NABOL.

Even shippers whose freight is predominantly outbound to Canada or Mexico need to be careful about limitations of carrier liability in classifications and tariffs. The NABOL was designed to put shippers on notice of these limitations. However, it could also complicate attempts by shippers to recover claims. The NABOL has now been made a part of the NMFC in order to increase awareness and utilization. Notably, the NABOL explicitly provides that it is the contract of carriage between the parties, unless the parties agree otherwise. Certain NMFC Items now require use of the Uniform Straight Bill of Lading or the NABOL for shipments transported subject to the NMFC. Many shippers pay too little attention to bills of lading, even though courts may treat them as contracts of carriage.

NASSTRAC objected to aspects of the NABOL dealing with cargo liability limitations, both on substantive grounds and because of the belief that these issues should not be decided by carriers acting collectively with antitrust immunity. The Carmack Amendment provides "No discussion, consideration or approval as to rules to limit liability under this subsection may be undertaken" by carriers acting collectively under the Interstate Commerce Act. The NASSTRAC objections were rejected by the NCC.

The NABOL also specifies notice deadlines of which shippers should be aware. For example, notice of visible damage is to be provided within one working day after delivery, and notice of delay is to be given one working day after the date scheduled for delivery. In addition, notice of concealed damage is due within one working day after expiration of a 15-day period following delivery.

In addition, the fine print that accompanies the NABOL is not identical to the fine print accompanying the Uniform Straight Bill of Lading that also appears in the NMFC. Some of the additional terms are needed to address cross-border issues, but there is also important language affecting aspects of the shipper-carrier relationship that are not related to international shipments.

All shippers should therefore familiarize themselves with the NABOL, which has more features than can be covered in detail in a short article like this one. Shippers who would like different liability provisions can and should protect themselves through appropriate contracts with motor carriers and brokers.

NASSTRAC, also known as the National Shippers Strategic Transportation Council (and formerly known as the National Small Shipments Traffic Conference), has expanded its coverage to include all modes of transportation. NASSTRAC will deliver to this larger constituency what it has brought to members since 1952, assistance in the areas of education, advocacy, and networking. Education is addressed via programs at the annual Spring conference and supported by additional seminars and webinars. Advocacy includes legislative, regulatory and judicial support on issues affecting national transportation and supply chain issues. For example, NASSTRAC has worked to ensure that the pending hours of service rules are acceptable to the shipper community as a whole. NASSTRAC has often worked closely with carriers with respect to security, health, environmental and operational issues. NASSTRAC also has strong involvement and support from carrier members that take advantage of networking opportunities to increase efficiency and balance their own needs with those of their customers. Non-member shippers have also benefited from NASSTRAC involvement for over 50 years as the organization looks out for the best interests of all.

In addition to representing the organization in advocacy issues, NASSTRAC's legal counsel, John Cutler of McCarthy, Sweeney, and Harkaway, also provides legal advice to all NASSTRAC members in good standing. For example, if a member desires to have a transportation contract reviewed, the legal counsel can be contacted for advice and support.

For more information, please contact NASSTRAC.