Beware what you sign with brokers: Freight-payment offsetting of cargo claims a ‘sucker’s game’

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Updated Nov 30, 2022

Carriers would do well to avoid it happening to them. Unfortunately, it may be too late for the owner of a Florida-based three-truck fleet, whose case is detailed in this the latest edition of the Overdrive Radio podcast.

Small fleet owner Marta Vidaurreta reached out about what she saw as the strange treatment of a couple loads the company hauled earlier this year for broker Bennett International Group, the second as yet unpaid. Transportation attorney Hank Seaton describes brokers’ “right to offset” clauses in contracts that should be avoided — they give the broker the ability to hold freight payments to offset the cost of any cargo claim, and such clauses he believes are intolerable given appropriate cargo insurance. In the worst cases Seaton’s seen, with even a whiff of a cargo claim, brokers with such clauses in place feed subsequent loads to the carrier with no intent to pay.

Avoid agreeing to cargo claims offsetting like the plague, he says.

As for remedies to cases like Vidaurreta’s, in which the broker withheld payment a second load moved after a cargo claim on the first, unfortunately in many cases, as a carrier you’re “hung by what you sign,” Seaton says. His recommendations on how to deal with offsets on the front end in the podcast.

Also there: Plenty on Seaton’s view of safety ratings and how they could be prioritized over the data-based scoring approach en vogue at present. Seaton presented at the National Association of Small Trucking Companies’ annual meeting early last month on a variety of issues related to the Motor Carriers for Regulatory Reform coalition’s call for desktop audits conducted every two years with intent to give a basic fit/unfit rating to every motor carrier in the nation. Take a listen:

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