For those of you celebrating the Christmas holiday, we hope Santa brought you everything you were asking for. Christmas in the middle of the week really throws everything off and the general consensus from those we have spoken to is that it becomes a two week lull. Hopefully the New Year will put us all back on track. It was a fairly quiet month this December as the country, expect for those dealing with all of the weather issues throughout the country, settled in for the winter break. We hope you fared well if you are located in one of those hard hit areas.
There is great interest in our webinar training sessions. So in January we will again offer our CAB Basics session, which is an hour long and will include an overview of our new features as well as a refresher of the features and navigation of the CAB website. We will also offer a focus session in December and this month the subject will be using the CAB Report to understand the area of operations of a motor carrier. We would like your feedback on topics for future focus sessions or any other comments on our training options. Please email us by clicking here with the topics you would like us to cover or other comments. To register for this month’s sessions click on the following:
Jan. 14th 3:00 EST – CAB Basic: https://www1.gotomeeting.com/register/864655784
Jan. 15th 3:00 EST – CAB Focus: https://www1.gotomeeting.com/register/882729089
OPERATION QUICK STRIKE – The FMCSA announced that 52 companies and 340 vehicles were ordered out of services following Operation Quick Strike, an eight-month intensified effort to shut down unsafe motorcoach companies. The enforcement campaign began in April and concluded in November. This was part of a 3 phrase program to raise safety standards. The agency reported that:
• 214 top-to-bottom compliance investigations were completed (More than 30 companies had since transitioned to intrastate-only service, which FMCSA does not regulate, or had gone out of business, the release noted. Be careful because you still insure that exposure);
• 20 motorcoach companies were immediately shut down for violations and posing an imminent hazard to the public;
• 32 companies were issued “Unsatisfactory” safety ratings and shut down after failing to remedy critical and acute violations;
• 28 companies took corrective action to fix the safety violations investigators uncovered to avoid being shut down; and
• 340 vehicles, of the more than 1,300 vehicles that were inspected during the investigations, were put out of service for safety and maintenance violations.
BROKER BONDS – The increase to $75,000 for broker bonds has gone into effect and the FMCSA is moving quickly to address brokers with inadequate limits. We expect an increasing number of out of service orders this month for brokers not in compliance with the $75,000 requirement.
DRIVER TURNOVER RATES – The ATA reports that the annualized driver turnover rate at large truckload fleets dipped two percentage points to 97 percent in the third quarter of this year. Turnover at truckload fleets with less than $30 million in annual revenue dropped eight points to 74 percent, its lowest level since the first quarter of 2012. Turnover at less-than-truckload fleets jumped seven percentage points to 13 percent in the quarter – the highest level since the first quarter of this year.
COMMODITY FLOW SURVEY – American manufacturers and related industries shipped almost 11.7 billion tons of goods valued at more than $13.6 trillion in 2012. The BTS released its 2012 Commodity Flow Survey this month. Trucking handled 70 percent of that, not including the additional amounts which were part of multi-modal transport. This was approximately 8 billion tons in shipments valued at $10 trillion. Multiple mode shipments using more than one type of transportation, including parcel shipments, were second to trucking in shipment value, at $1.8 trillion for a share of more than 13 percent of total freight value. These multiple modes carried only 347 million tons or 3.0 percent of total freight weight. Of all multiple-mode shipments, parcel represented the most by value ($1.6 trillion or 11.6 percent of total freight value) while truck-rail combination carried the most weight (224 million tons or 1.9 percent of total freight weight).
Shipments totaling 6.4 billion tons, over half of the total weight of all shipments captured by the CFS, moved less than 50 miles, while shipments traveling less than 250 miles represented more than 60 percent of value recorded in the 2012 CFS. Shipments of less than 50 pounds traveled an average of 695 miles while shipments of 50 to 99 pounds traveled an average of 361 miles. More than 71 percent of total shipment value captured by the 2012 CFS is represented by shipments weighing over 1,000 pounds. More than 92 percent of the tons are represented by shipments of more than 10,000 pounds. The preliminary reports, broken down in categories, can be viewed here.
ATA CSA SURVEY – The ATA report on the reliability of CSA scores generated much buzz this month. ATA examined data and research on the connection between CSA scores and crash risk, as well as how they perceive that problems with the data and methodology produce an imperfect and unreliable measure of a carrier’s safety record. According to research cited by ATA, scores in at least three of the system’s measurement categories don’t bear a positive correlation to crash risk. Even in those categories that generally have a positive correlation to crash risk, the paper points out that there are tens of thousands of real-world “exceptions,”; carriers with high scores and low crash rates and vice-versa. This report is being used by many industry groups to argue that the use of this data is more harmful than helpful. On the whole however, drilling down into the data, something routinely done by CAB, will always allow for a deeper understanding of a motor carrier’s operations. You can reach your own decision by viewing the paper here.
FMCSA DATA CHANGES – The FMCSA is seeking comments on announced changes to the agency’s Motor Carrier Management Information System that will allow the FMCSA to upload the results of associated adjudicated state citations for roadside inspection violation data. The proposed changes will allow for the acceptance of adjudication information concerning a citation associated with a violation that was dismissed or resulted in a finding of not guilty; resulted in a conviction of a different or lesser charge; or resulted in conviction of the original charge, improving roadside inspection data quality.
QUARTERLY FINANCIAL REPORTS – The FMCSA has done away with the requirement that carriers file quarterly financial reports. Motor carriers that haul property or household goods now are subject to the rule if their annual gross transportation revenue exceeds $3 million. FMCSA is eliminating that requirement effective Jan. 14, although annual filings will remain mandatory. We continue to urge you to monitor a motor carrier’s financial stability and use the financial data to fully understand your insured’s operation. Our staff of analysts is available to all of our subscribers and can provide you with a timely analysis of the carrier’s operation and the CAB Financial Rating, which has long been the benchmark in the industry for evaluating the safety of motor carriers.
FUEL COST – Updated projections for U.S. energy markets through 2040 indicate costs may not increase as much as expected and use of natural gas is expected to grow. A new report from U.S. Energy Department’s Energy Information Administration, known as the Annual Energy Outlook 2014 (AEO2014) Reference case, says with lower crude oil prices and lower gasoline demand projected, the real end-use price of gasoline in the U.S. declines to $3.03 per gallon (2012 dollars) in 2017, then rises to $3.90 per gallon in 2040, compared to $4.40 per gallon in 2040 from a projection a year ago. Diesel fuel in the transportation sector is forecast to follow a similar pattern dropping to $3.50 per gallon in 2017 and then rising to $4.73 per gallon in 2040, compared to $5.03 per gallon in last year’s outlook. The Reference case projections from the Early Release Overview of the AEO2014 are available here. The full AEO2014 report, including projections based on differing assumptions regarding world oil prices, domestic hydrocarbon resources, the rate of economic growth, the characteristics of new technologies and alternative policy scenarios, will be released in early 2014.
TRANSPORT CAPITAL SURVEY – According to a recent Transport Capital Survey, the steady growth of the economy is producing increasingly positive expectations from carriers. Since the fourth quarter of 2012, positive volume expectations have risen to 61% from 29%, according to a survey by Transport Capital Partners. The majority of carriers expect rates to climb this year.
CARGO THEFT – The most recent Freightwatch report states that the number of cargo theft incidents is down 8 percent but the average loss value is up nearly 50 percent compared with the previous quarter. The latest report covers cargo thefts reported between September and November of this year. In this quarter, FreightWatch recorded a total of 222 thefts in the United States, with 85 thefts in September, 67 in October, and 70 in November. The average loss value per incident during the period was $244,604. The September data overlaps both quarters.
Food and drinks were once again the most commonly stolen type of load, with 55 thefts reported in the quarter. These thefts composed 25 percent of all incidents from September to November. The electronics industry experienced 37 thefts, 17 percent of the total, mainly consisting of televisions, computers and computer accessories. The Home and Garden category saw 21 thefts, or 9 percent of the total, largely targeting appliances, decorations and miscellaneous home products, according to the report. California remained the state with the most thefts with 81 reported incidents, accounting for 36 percent of all incidents in the quarter. Florida and Texas tied for the second spot with 30 thefts each.
OUT OF SERVICE REPORTS – Los Angeles, CA based passenger carrier John Andrew Ciego dba Its Good Promotion (DOT # 1518915) was ordered to immediately cease operations by the FMCSA after the agency found that the company was endangering the traveling public by failing to ensure the safety of its vehicles and drivers. Investigators also found that the carrier improperly allowed at least four other unsafe bus companies, previously shut down by FMCSA, to continue doing business using vehicles with the registration markings of “Its Good Promotion.”
CASES:
CARGO:
The Eastern District in California invalidated a carrier’s limitation of liability this month. The Court concluded that the carrier’s tariff was ambiguous in that it did not specify how a “collect” shipper could increase valuation. The Court also determined that there was no evidence that the rate was dependent upon the value of the goods a requirement for a limitation under Carmack Amendment. (UPF Corp. v. Old Dominion Freight Lines, 2013 WL 6512869)
A trucking company was unsuccessful in its efforts to fight jurisdiction after the plaintiff completed its case in chief. The Eastern District in Pennsylvania held that there was sufficient evidence to conclude that the plaintiff was the true owner of the cargo and entitled to bring suit on the bill of lading, even if it was not named on the bill of lading. (Consolidated Pipe & Supply, v. Rowe Transfer, 2013 WL 504744)
The Eastern District of New York granted summary judgment to a transportation broker who was sued for a cargo loss. Where the evidence, which was undisputed, showed that the broker never touched the cargo and in fact hired a motor carrier to perform the transportation, there was no basis for a claim against the broker under the Carmack Amendment. (Olympus Dairy USA v. Pavil Associates, 2013 WL 6493482)
Is a broker responsible to the motor carrier when it tenders a shipment valued in an amount greater than the carrier’s insurance? We will not get to find out the answer to that question in the District of Maryland. The Court held that the motor carriers claim against the broker was not a true third party action and dismissed it as part of the main cargo claim suit against the motor carrier. Hopefully we will see some movement on this issue in the coming months. (AIG Europe Limited v. General System, Inc., 2013 WL 6654382)
The 4th District Court of Appeals withdrew a decision that it filed in October (see our October Bits and Pieces for the prior decision). The Court replaced it with a new decision, continuing to hold that the claims against UPS for fraud, unauthorized use of an artist’s name, and conversion for the loss of an interstate shipment of art work which was later found by the carrier and auctioned as lost goods, was still preempted. This time the Court acknowledged that there was an issue as to whether the sale was a post transportation issue and therefore not subject to the Carmack Amendment, but concluded that it was not a post transportation event. The Court acknowledged this was a conflict with another Florida circuit, paving the way for yet further litigation. (Mlinar v. UPS, 2013 WL 6244191)
AUTO:
In the Eastern District of Missouri the court held that violations of statutory requirements regarding speed and safe traveling distance can constitute negligence per se. The court did, however, dismiss all causes of action for negligent hiring and retention, negligent supervision and training where there was no factual support for such allegations against the trucking company. (Braxton v. DKMZ Trucking, 2013 WL 6592771)
The fact that a truck and/or a driver should likely have already been placed out of service is insufficient to establish automatic liability in Mississippi. The Court held that the plaintiff was still required to show that violations of safety regulations were a proximate cause of the loss. The Southern District of Mississippi also excluded the testimony of Dane Maxwell who planned to testify that an out of service order should have been in place. The Court held the testimony irrelevant because there was no proximate cause. (Raglin v. MSJ Trucking, 2013 WL 6617651)
A rare decision finding no negligence on the part of both vehicles involved in a fatal accident. In the Appellate Court in Illinois the Court held that neither the trucker nor the passenger vehicle which collided in a snow storm were negligent. The Court also held that the trial court was not required to advise the jury that one of the vehicle operators had to be found negligent. (Egan v. McCullough, 2013 WL 6504831)
The Middle District in Pennsylvania dismissed a claim for punitive damages against a trucker where the plaintiff has obtained relief from a bankruptcy plan only to the extent of the insurance policy, which did not allow recovery for punitive damages. The Court also dismissed any direct claim for negligent entrustment, instruction, supervision, monitoring and hiring when the motor carrier has already admitted that the driver was an employee of the carrier at the time of the accident. The Court held that such claim could only be pursued if there was a basis for a punitive damages claim against the carrier. (Sterner v. Titus Transportation, 2013 WL 6506591)
U-Haul’s efforts to ensure that its lessees agree to arbitrate any matters related to the rental contract failed in the Supreme Court of Appeals in West Virginia. The Court held that U-Haul’s attempts to incorporate a rental contract addendum into the main contract were insufficient to make it part of the contract. For the technically challenged this decision is also interesting as it goes through the new standards and buzz words for what you are accepting on web sites when you agree to terms and conditions. (State of West. Va. v, Zakaib, 2013 WL 6224331)
Simply having a satellite trucking office in Louisiana is insufficient to establish jurisdiction over an interstate trucker in Louisiana. In addition, the Middle District of Louisiana held that when an accident did not occur in the state, and a policy to the trucker was issued in another state, the Louisiana direct action statute did not permit a direct action against the insurer. (Holden v. BAH Express, Inc., 2013 WL 6199229)
What exactly are the obligations of a primary insurer? The Eastern District of California, while ultimately concluding that there was a question of fact, concluded that under California law, the duty of an insurer to settle requires more than doing nothing while waiting for a formal demand. The insurer must act in good faith in responding to reasonable opportunities to settle. (Travelers Indemnity Co v. Arch Specialty, 2013 WL 6198966)
The Southern District in Texas refused to remand an action back to state court where there was evidence that the truck driver had moved to another state before the suit was filed. It was interesting to note that the Court considered the transient nature of truck drivers in concluding that the failure of the driver to quickly sever all ties with the state of Texas after moving was part of the nature of his business. (Nymtsu v Melgar, 2013 WL 6230454)
The Appellate Division in New Jersey held that the simple fact that Penske was an interstate carrier would not trigger its insurer’s MCS-90 obligations when there was no interstate connection to the accident. Penske had leased a vehicle to a local individual under a rental agreement which provided coverage only for minimum limits. The Court held that was all that was available when there was no interstate transportation involved. (Allstate New Jersey Insurance Co. v. Penske Truck Leasing, 2013 WL 6223381)
Summary judgment was granted to both a shipper and a broker for claims arising from a personal injury action. The Court held that neither party could be vicariously liable for the actions of the trucking company driver when there was insufficient evidence of substantial control exercised by either party. This is a good decision on the various levels of control exercised by shippers and brokers over routine transportation services. (Scheinman v. Martin’s Bulk Milk Services, 2013 WL 6467525)
Again, we wish you all a Happy & Healthy New Year. Enjoy the holiday.
