Brokers and Independent Agents must do their due diligence to protect themselves, their company, as well as their customers. Ensuring you do business with reputable carriers is important in protecting yourself and your livelihood. Reviewing your partners, the trucker, is important to minimize exposure to unauthorized and illegal carriers as well as possible criminal activity. Ensuring a carrier maintains the proper qualifications to move freight protects against possible damages ranging from loss of life, to loss of revenue and livelihood.
Wikipedia provides the following definition for "Due Diligence". "Due diligence is a term used for a number of concepts involving either an investigation of a business or person prior to signing a contract, or an act with a certain standard of care. It can be a legal obligation, but the term will more commonly apply to voluntary investigations."
Avalon Risk Management's recent publication, The Quest - June 2012 Issue 72, provides a great example of what could happen if a broker/independent agent does not do their due diligence, cuts corners and partners with a non-qualified carrier.
"In a key decision against a transportation broker for negligent selection, an Oregon jury awarded a $5.2 million settlement, including punitive damages, to the family of a man killed in a truck accident.
The case, Linhart v. Heyl Logistics LLC, et al., was brought about after a truck driver fell asleep at the wheel while under the influence of crystal methamphetamine and slammed into another driver. Linhart, also a truck driver, was killed while inspecting his vehicle on the side of the road.
During litigation, the plaintiff's attorneys argued that Heyl Logistics did not properly investigate the motor carrier and was liable for negligent selection. The carrier, Washington Transportation, did not have insurance and its operating authority was revoked for failure to conduct drug testing on drivers, among other violations. The plaintiffs asserted that Heyl Logistics should have discovered these facts when hiring the carrier.
According to industry attorneys, the case is the first time punitive damages were awarded against the transportation broker for a negligent hiring claim.
Transportation brokers arrange to move surface cargo domestically, but licensed motor carriers physically move the cargo on their vehicles under their bill of lading and have primary liability for bodily injury and third-party property damage as well as for loss of or damage to freight. The current case (as well as several others, see Sperl v. Henry et al.) has developed into a legal trend that third-party logistics providers or even shippers can be held liable for the acts of motor carriers that they hire."
To protect your livelihood one must make the effort to perform due diligence. Taking short cuts, not verifying your partners, will eventually cost money. Usually through claims, but even worse, they can ruin a good customer relationship. Good customer relationships take time and effort to attain and sustain. One bad carrier can ruin years of hard work as well as loss of future earnings. Like the example above, a $5.2 million verdict against a truck broker not only loses a customer, but can put a company out of business. A few simple checks can protect yourself and your livelihood. Somerset's Brokers/Agents verify carriers using systems such as Internet Truckstop's Carrier Performance Rating (CPR), SAFERWEB system and Transcore's Carrier Watch, as well as our internal Freight Management System. These research systems greatly diminish the chances of partnering with undesirable carriers. Somerset prides itself on performing due diligence to only partner with the most qualified carriers. If you are a professional and want to be with an organization that does their due diligence then please visit our website www.somersetlogistics.com.