Salvaging a Rejected Load
Careful Attention to Regulations Helps Protect Your Interests
By Henry E. Seaton
May 2000
Reprinted from

Consignees are refusing shipments with increased frequency. For various reasons - the consignee claims the shipment was partially damaged or that it arrived too late, for example - you may be stuck with a shipment for which you have no use, and the failure to deliver may not even be your fault. Most small carriers don't have established procedures for handling rejected shipments and often make the situation worse with sloppy salvage handling.

Some carriers assume that, because they are responsible for the count and must pay for any shortage, an overage is theirs to keep; they deal with a claim only if one is filed. This can be risky. Although the regulations technically allow you to sell salvage after reasonable notice to the shipper, your status is that of a warehouseman, not the owner of the salvage. At least one small carrier has been indicted for criminal conversion for selling a valuable overage and failing to pay the proceeds to the rightful owner. That carrier's downfall was sloppy shipper notification procedures.

Although a criminal conviction for sloppy salvage procedures is not likely in the absence of aggravating circumstances, civil liability is. The shipper or beneficial owner may demand the full value of its goods. On the distressed market, even undamaged goods can bring drastically lower prices. You owe the shipper the duty to mitigate any loss by making a reasonable attempt to obtain the best price. Be prepared to justify any lower sales price as your maximum liability in the event you must compensate the owner.

Proper disposition of overage and salvage involves three issues - notification, inspection, and sale.

Notification. Regulations require "due notice." The uniform bill of lading requires you to notify the shipper by telephone or fax notice and to follow that with an on-hand notice and notice of a sale. You also should put your notification procedures in your tariff. When you face a salvage situation, start working the case early. By phone and by fax, notify the shipper and consignee of any wrongful rejection and try to get the consignee to accept the load.

You can - and should - send to both the shipper and consignee a formal written notice identifying the shipment and providing for the storage and detention charges you will assess if neither party arranges for immediate disposition of the load. If the consignee will not accept the load and the consignor will not reconsign the shipment and pay your lawful charges, place the shipment in storage and send a second round of notifications.

Inspection. Before disposing of the goods, inspect the shipment and document any possible damage. If there is potential for a claim, have your insurance adjuster examine the shipment. Independent expert evaluations are wise, particularly if perishable commodities, rust or moisture damage are involved. Based upon your inspection report, you should once again notify the shipper and consignee, specifying the extent of any damage and re-emphasizing their duty to accept undamaged articles and make use of repairable items.

Sale. Under the terms and conditions of the uniform bill, if you don't receive disposition instructions within 48 hours of the second written notice, you can advertise the shipment in a newspaper of general circulation. If you still have no instructions for disposal, you can auction the goods after 10 days notice to the shipper or its designee.

If your shipment moved on a uniform bill, read the back side of the bill carefully. If you have no other tariff provisions, comply with these rules. This approach may not bring the best price, however. If the newspaper/auction procedure won't maximize the returns, notify the shipper of your plans for disposing of the goods and the reason why you are choosing this approach.

If you adopt strong salvage handling procedures, the shipper can't successfully claim that it lacked notice. And the burden is on the shipper to file and process a claim in a timely manner. When cargo damage is not an issue, you can legally recoup your costs from the sales proceeds and tender only the balance to the shipper.
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