Update for furniture retailers on balance overcharges and new state regulations. Also covered are LTL rate hikes scheduled for 1996.
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Furniture transportation issues of current interest
BALANCE HARASSMENT CONTINUES: Despite three Courts of Appeals affirming the exemption of "small businesses" from liability for balance due claims with out-of-business truckers, the collection agencies fight on. At long last, small businesses are winners in the states of North Dakota, South Dakota, Nebraska, Minnesota, Iowa, Missouri and Arkansas because the Supreme Court rejected a petition by the trustee of a trucking company to extend the time period for appeal. Collection agencies are expected to appeal adverse rulings by the 7th and 9th Circuits... to the Supreme Court. In the meantime, the collection agencies have a new tactic of sending out about 15 page documents challenging whether you are indeed a small business and demanding detailed information. A simple letter you could send back in reply is shown on the this page. Please also note the list of additional SIC Codes shown opposite.
The dunning letters of the collection agencies are meant to make you give up and settle. While you are not required to answer these dunning letters, I recommend that you do. If you are sued, you must respond within the required time frames or face a default judgment.
Many of these aggressive letters are coming to shippers that used Superior Fast Freight, Inc. There is no record in the National Motor Freight Classification from 1979 through 1994 that shows them as a participating common carrier. Previous cases have denied collections when the carrier was not a participant in the tariff. It's another good defense against Superior if you are sued by their collection agency.
CALIFORNIA PASSES UNDERCHARGE LAW: Patterned along the lines of the Negotiated Rates Act covering interstate shipments, California now has its own law covering intrastate balance due claims. It also exempts small businesses and permits settlements for 15-20 per cent of the difference between the rate paid and the filed rate. It does one thing the federal law doesn't do... provide penalties to carriers that violated the rules in filing with the PUCO. The biggest current case affected is Industrial Freight System but there are lots more.
LTL TRUCKING RATES GOING UP: A number of tariff bureaus and individual trucking companies have announced rate increases of about 5% effective in January 1996. With the continued excess capacity in the industry and the aggressive growth of the regional and super regional LTL carriers, additional discounts are expected to erode most of the price increases. You will also want to compare rates between carriers on the same lanes, because some of the carriers offering high discounts have base rates as much as 50 percent higher than other carriers. You cannot purchase transportation without verifying the real net bottom line price after all discounts and allowances. Our audits typically show that any retailer can add two points to their bottom line profits by understanding and managing inbound freight.
To: Collection Agency
From: Overcharged Retailer
This letter is in response to your inquiry regarding our status as a small business finder the Code of Federal Regulations (Title 13, Section 121.401.) This establishment is a Furniture Store under SIC code 5712 and our sales are under $3.5 million dollars .We do not exercise a controlling or major influence on a national basis in a kind of business activity in which a number of business concerns are primarily engaged.
I certify that these facts are correct. Your timely cancellation of these balance due bills will be appreciated.
Daniel Bolger, P.E. provides warehousing, transportation and logistics consulting to home furnishings retail clients throughout the USA. Questions or comments can be directed to FURNITURE WORLD Magazine at firstname.lastname@example.org.
Contributing editor Dan Bolger of The Bolger Group helps companies achieve improved transportation, warehousing and logistics. See many other articles by Dan in the Operations Management article archives on the furninfo.com website. You can send inquiries on any aspect of transportation, warehousing or logistics issues to Dan Bolger care of Furniture World Magazine at email@example.com or call him direct at 740-503-8875.
View all articles by Dan Bolger