Blue Book Services recently launched the “New Hire Academy,” an online training program designed to help new hires learn the fundamentals of the produce industry and avoid costly setbacks. The program consists of five sessions covering:
(1) trading customs and rules, (2) the Perishable Agricultural Commodities Act (PACA) trust, (3) sales and account management, (4) Blue Book ratings, and (5) transportation customs and rules.
In this article we recap some of the key points related to the transportation of fresh produce by motor carriage from the “Transportation Customs and Rules” session. Similar articles recapping both the “Trading Customs and Rules” and “PACA Trust” sessions appeared in earlier issues of Blueprints. Each video session in the New Hire Academy series is available for online viewing at www.producebluebook.com.
I. Fresh Produce is Exempt from Federal Economic Regulation
The motor carriage of fresh produce is generally exempt from U.S. federal economic regulation because 49 USC § 13506(6)(B) provides that “agricultural or horticultural commodities (other than manufactured products thereof)” are not subject to the Interstate Commerce Act, which includes the Carmack Amendment. So when you hear about the Carmack Amendment, or operating authority, or the “strict liability” of common carriers (where carriers must prove both freedom from negligence and one of the five common law defenses to liability, e.g., ‘inherent vice of the cargo’) it is important to step back and remember that these concepts are not usually applicable to the transportation of exempt commodities, such as fresh fruits and vegetables, unless the parties have specifically agreed to include them in the transportation contract—which, in the Blue Book’s experience, is not typical in the produce industry.
Of course, produce shipments are subject to federal safety regulations, as opposed to federal economic regulations. Safety regulations such as the CSA (Compliance, Safety, Accountability) and hours of service regulations are fully applicable, and carriers and brokers alike are required to register with the Federal Motor Carrier Safety Administration.
II. Liability Standards
If the Carmack Amendment and its “strict liability” standard does not set the liability standard for carriers, what does? If you’re thinking the Uniform Commercial Code (UCC), you are correct.
Section 7-309(a) of the UCC provides that “A carrier…shall exercise the degree of care in relation to the goods which a reasonably careful person would exercise under similar circumstances. This subsection does not affect any statute…or rule of law that imposes liability upon a common carrier for damages not caused by negligence.”
In other words, carriers that are not subject to federal economic regulation must be shown to have failed to use due care to establish a breach of the contract of carriage in support of a claim. This standard of care is similar to what is often referred to as a “warehouseman’s standard of liability” and requires the claimant to show a breach of duty and resulting financial damages.
