Business Advantage : Delivered

TRANSPORTATION & LOGISTICS COUNCIL / TRANSPORTATION LOSS PREVENTION & SECURITY

ASSOCIATION

2013 ANNUAL CONFERENCE

April 22, 2013

Roderick J. FracassiChief Counsel, Con-way Freight

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Con-way – at a glance

$3.4 billion revenue 9,100 tractors 25,000 trailers Nearly 300 service centers 21,000 employees

$1.6 billion gross revenue 145 warehouse locations

worldwide 4,400 employees

Less-than-Truckload (LTL) Logistics Truckload (TL)

$0.6 billion revenue 2,600 tractors 8,000 trailers 3,600 employees

BEFORE YOU START REVIEWING THE CONTRACT - IDENTIFY THE CUSTOMER

There are many types of customers:

 

Why is it important?

  It identifies who is a party to the agreement, and whether or not the person signing is the owner of the freight. Some issues that arise when the party to the contract is not the owner of the freight:

 

Who is responsible to pay Con-way?Who is responsible to prepare BOL?Who can file a claim?Who can file an insurance claim?Who do we indemnify? Who do we insure?

Shippers Brokers Freight Forwarders 3PL’s

4PL’s Shipper’s Agents Pay Agents Commission Broker

BEFORE YOU START REVIEWING THE CONTRACT - WHAT IS BEING SHIPPED?

Is there an inherent vice of the goods?

Domestic or International?

Hazardous Material, if so what class?

Could the goods be considered waste?

High value?

New or used?

** Unless you ask, this type of information is not usually provided, especially if the customer is not the actual shipper of the goods.

BEFORE YOU START REVIEWING THE CONTRACT - WHAT IS UNIQUE ABOUT THIS SHIPPER/SHIPMENT ?

Special loading requirements?

Government Contractor?

Delivery requirements (date/time specific)

Notice requirements

Security requirements

** Do not assume that if it is not in the contract that it is not important to the customer

Best Advice – TRAIN YOUR SALES TEAM

• Teach them to ask the right questions;• - who is the customer• - what are they shipping• - what is unique about this shipper

• Get them familiar with your standard contract terms and rules tariff so they can identify sticking points

• Discuss issues internally before communicating redlines back to the customer

• Consider pricing when negotiating terms in order to see if you can offset risk with premium pricing

CONTRACT BASICS

General Terms: Provisions that are not unique to any specific customer or transportation contract.1. Term (length of agreement and termination rights)2. Payment terms3. Force Majeure4. Survival5. Governing Law6. Assignment7. Merger / Entire Agreement8. Severability9. Waiver

Specifics of the Deal: Provisions which are unique to the customer and this specific contract. 10. Scope of Services11. Security 12. Customer Service13. Cargo Liability Limitations14. Insurance Requirements15. Indemnification16. Confidentiality17. Invoicing / EDI Requirements18. Personnel and Equipment19. Dispute Resolution

GENERAL TERMS (“Boilerplate”) AND THE SPECIFICS OF THE DEAL

Key Contract Terms

Most contentious contracts terms:

1.Indemnification2.Cargo Liability Limitations3.Consequential Damages4.Term (length of agreement and

termination rights)

Troublesome Trends in Transportation

Here are my top 4 shipper specific issues:

1.Export Controls

2.Food Safety Regulations

3.Compliance with Shipper’s Internal Policies

4.Compliance, Safety, Accountability

Export Controls

“Doesn’t apply to me since I only handle domestic freight”

WRONG!

Specifically Designated Nationals and Blocked Persons Lists (Page 1 or 586)

Specifically Designated Nationals and Blocked Persons Lists (Page 586 or 586)

Food Safety

FDA Good Manufacturing Practice Regulations, 21 CFR Ch. 1, Part 100

Part 110.93 Warehousing and Distribution, “storage and transportation of finished foods shall be under conditions that will protect food against physical, chemical and microbial contamination as well as against deterioration of the food and the container.”

Food Safety

Other common provisions in shipper’s contracts:

Carrier warrants and guarantees that all equipment supplied to Shipper prior to loading is in good and suitable condition for transporting food grade products, and have not transported any items that are inconsistent with good food products transportation and handling practices.

Food Safety

Due to potential contamination and adulteration factors, equipment provided by Carrier must be free from the evidence of rodents, insects, birds, feces, infestation of any kind, dirt, rust, oil, grease, visible mold, metal shavings, broken glass, nails, stones, objectionable odors, cleaning material residue, and all other types of foreign material.

Food Safety

Claims ….

What is a consignee’s duty to mitigate when they suspect that a shipment, or portion of a shipment has been subject to something objectionable?

Compliance with Shipper’s Internal Policies

The 3 most common issues that we face as a carrier are the following types of internal policies:

1. Security Requirements

2. Plant Safety Requirements

3. Company’s Ethics Policy

Compliance with Shipper’s Internal Policies

Security Requirements

SECURITY RESTRICTIONSDELIVERING DRIVER MUST BE A U.S. CITIZEN, NO DUAL

CITIZENSHIP ALLOWED. NO PASSENGERS ALLOWED. DRIVER MUST BE PREPARED TO HAND OVER ANY CELL PHONES/DIGITAL CAMERAS/COMPUTERS/OR ANY OTHER “RECORDABLE DEVICES” SUCH AS GPS SYSTEMS, TO BUYER’S SECURITY PERSONNEL. IF TRUCK IS EQUIPPED WITH A BACK-UP CAMERA, CAMERA MUST BE DISABLED PRIOR TO ENTERING BUYER’S FACILITY. ALL DEVICES TO BE RETURNED TO DRIVER WHEN DEPARTING FACILITY.

Compliance with Shipper’s Internal Policies

Plant Safety Requirements

What is reasonable?

- Report in before unloading - yes- Chock tires – yes- Stay inside cab or in a separate room during the unloading ?- Safety glasses and hard hat ?- Steel toed shoes ?- Back up alarm on the trailer ?

Compliance with Shipper’s Internal Policies

Company’s Ethics Policy

- Must be broad enough not to conflict with any other customer ethic’s policy, including your own.

- Must not give any additional rights to employees, especially rights regarding organizing

- Must not add additional governmental reporting requirements or SEC disclosures

Compliance, Safety, Accountability

What does it mean…

To a Shipper?

To a 3PL?

To a carrier?