confidential and proprietary information of tucker consulting, inc. shipper liability and csa: an...

Confidential and proprietary information of Tucker Consulting, Inc.

Shipper Liability and CSA:An Overview

Tucker Consulting, Inc.Cherry Hill, NJ

www.QualifiedCarriers.com


• Benefits of World Class Carrier Qualification:– reduced accidents and injuries, safer highways– good corporate citizenship – in reality and in public

image and community relations– carriers who are good on compliance tend to be great

on service– improved compliance to Sarbanes-Oxley and other

“transparency” requirements – reduced exposure to liability


Shipper Liability Milestones

• 2004: Federal court finds freight brokers may be liable for conduct of motor carriers

• 2004: Insurance industry reduces auto liability protections available to freight brokers

• 2006: State supreme court finds shippers may be liable for conduct of motor carriers

• 2007: TIA drafts industry guideline for “due diligence” and “reasonable care” in carrier screening and selection

• 2009: Liability in single case reaches nearly $25M• 2010: USDOT (FMCSA) launches CSA


Reducing Exposure to Legal Liability

• Vicarious Liability– What is it?– How does one avoid it?

• Negligent Hiring Liability– What is it?– How does one avoid it?


Understanding Torts• Negligence is a Tort.• What is a Tort? Basic Sources of Law:– Codified (Statute/Regulation/Ordinance/Criminal Code)

• rights and duties defined by the State and enforced by the State (city, state and federal agencies, law enforcement)

– Contract• rights and duties defined by private parties and enforced by the

parties (litigation, arbitration, liquidated damages)

– Tort• rights and duties defined by common law (court decisions), and

enforced by the parties (filing suit)


Vicarious Liability

• Elements of Carrier Negligence:– Duty (operate competently and safely)– Breach (failure to do so)– Injury (bodily harm, death, property damage)– Causation (Carrier’s failure to operate safely caused injury)

• Vicarious Liability = within scope of agency …– Carrier’s duty becomes Shipper’s duty; Carrier’s breach becomes

Shipper’s breach– Carrier’s negligence becomes Shipper’s negligence


Shipper’s Independent Tort LiabilityThis is not Vicarious Liability.

Principal, Agent, Scope of Agency, are irrelevant here.

Recall, negligence is a tort.Recall, negligence = Duty + Breach + Injury + CausationShipper’s …

Duty = Reasonable Care/Due Diligence in Selecting Competent Carriers Breach = Failure to be “Reasonable” and “Diligent” Injury = Bodily Harm, Death, Property Damage caused by Carrier

Tort of Negligent Hiring: Shipper is liable for breaching (i.e., failing to meet) Shipper’s own independent duty under the common

law to select a “competent” carrier

Vicarious Liability v. Negligence


The Tort of Negligent Hiring

• Shipper’s Independent Duty — Defined– Hire a Carrier who demonstrates competence to perform

safely– Conduct Due Diligence before selecting Carrier– Exercise Reasonable Care in selecting Carrier– Monitor Carrier to ensure Carrier remains competent to

perform safely• This duty is non-delegable


Due Diligence and Reasonable Care

• The most common RISKS for Shippers:– No system to track and respond to carrier safety data– No system to ensure carrier files are valid, current, legible,

complete … and easy to find– A standard of care (SOC), or standard operating

procedures (SOPs), with no follow-up to verify that carriers are compliant

– No centralized carrier risk management --- the left hand doesn’t really know what the right hand does, but assumes the right hand has everything under control


Tools of Risk ManagementData Management• Established Risk Tolerance Thresholds• Data Collection and Analysis• Real Time Alerts when Thresholds are Reached• Data-Driven Corrective Action and Decisions

Document Management• Collection (including re-collection of expired documents)• Document Review and Verification• Indexing• Secure Storage and Retention


Tools of Risk Management:Managing Carrier Data

• Safety Evaluation Area (SEA) Scores• Four (4) SEA Categories:

– Driver (DRSEA)– Vehicle (VHSEA)– Accident (ACSEA)– Safety Management (SMSEA)

• SEAs published by FMCSA (except ACSEA)• SEAs derived from state inspection data• SEAs change month to month


• Simple graph comparing four carriers’ DRSEA July to June– Anderson Van Lines– Bestman Trans– Cordozzo Company– Truck and Tire Inc.

SEA scores are accurate, as reflected in FMCSA publicly-available records; however, carrier names have been changed.

Tools of Risk Management:Managing Carrier Data


Carrier Self-Assessments • Compliance with Shipper Expectations• Compliance with Legal and Regulatory Standards• Compliance with Industry Best Practices:

Freight Handling and Storage Safety in Transit Equipment and Maintenance Security and Loss Prevention Personnel: Screening, Training, Management

Tools of Risk Management


Verification Audits• Experienced, Knowledgeable Audit Inspectors• Eyes-on Review of Carriers

Policies Procedures Records Evidence of Training Evidence of Management Control

• Post-Audit Corrective Action

Tools of Risk Management


How to Succeed under CSA

• The current FMCSA regime– How does it work?– How does a Shipper protect itself?

• The coming CSA regime– How will it work?– How will a Shipper protect itself?


The Current FMCSA Regime

• Safety Ratings– Satisfactory, Conditional, Unsatisfactory– Ratings go stale (quickly), but remain for years– Only about 1-2 % of motor carriers are ever rated

• SEA Scores– Driver (DRSEA)– Vehicle (VHSEA)– Safety Management (SMSEA)– Accident (ACSEA) – available only to CARRIERS


The Coming FMCSA Regime:CSA (2010)

Comprehensive Safety Analysis – 2010Now … Compliance, Safety and Accountability Behavior Analysis and Safety Improvement Categories


CSA : Seven BASIC Scores

• Unsafe Driving– speeding, improper lane change, careless driving, etc.

• Fatigued Driving– Hours of Service (HOS), operating while fatigued / ill, etc.

• Driver Fitness– no valid CDL, endorsement, medical certificate, etc.

• Out of Service and Improper Loading/Cargo– load securement & shifts, HazMat, and overweight

• Controlled Substances/Alcohol• Vehicle Maintenance• Crash Indicator


Impact of CSA

• Safety Rating no longer determined by Compliance Review (CR), with a years-long shelf life

• Safety Determination (data-driven); may change month to month, depending on data, and will include all carriers (not 1 to 2%)

• Using a carrier with a Safety Determination of “Unfit” or “Marginal” – or a “high” BASIC score – could be extremely costly and damaging


Success under CSA

• A Solution for Shippers– A defined process, consistently followed– Tools to gather, analyze, and use carrier data• online data-tracking tools• carrier self assessments• verification audits

– Data-driven corrective and preventive action– Tools to gather, verify, and store carrier documents,

e.g., authority, insurance, hazmat

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