GM, brokered freight and a lawsuit

greg334 · May 2, 2010

There is a lot more to this story that is not public but there is a point about how we in this industry do get our work.

GM sues over totaled hydrogen fuel pump - The Detroit News

A not-so-funny thing happened to General Motors Co. two years ago when it tried transporting a pricey hydrogen fuel pump from Pennsylvania to California.

The semi crashed, destroying the $850,000 fuel station, which is essential to support hydrogen vehicles that produce no greenhouse gas emissions and require no petroleum.

Now, GM is suing the company hired to haul the pump, Romulus-based hauler CHAT of Michigan Inc., in U.S. District Court and wants $850,000 plus damages, costs and fees.

The crash happened when automakers, including GM, are trying to put more fuel cell vehicles on the road -- an endeavor hamstrung by high costs and a lack of refueling stations nationwide. There are only 68 fueling stations in the country, mostly in California, according to the National Hydrogen Association.

GM sued last week because the company has refused to accept responsibility for the crash and pay for the destroyed fuel pump, according to the lawsuit.

"GM has been trying for two years to recover the cost of the hydrogen refueler that was destroyed in this crash," GM spokesman Alan Adler said. "The incident delayed the rollout of Project Driveway -- the largest demonstration of fuel cell vehicles in the world -- by three to four months."

Greg Katcher, president of CHAT of Michigan, said his company did not violate the contract and has arranged transportation for several of the fuel pumps before, and after, the crash.

"I have a 21-year track record with GM, and we've never had a screw-up," he said.

GM had hired the company in February 2008 to transport fueling stations from the manufacturer in Warminster, Pa., to facilities in New York and California.

GM picked CHAT because the company "claimed expertise in transporting and in loading and unloading ... heavy equipment," according to the lawsuit. Each fueling station weighs about 45,000 pounds.

CHAT of Michigan violated the contract by subcontracting the job to a company called Landstar Ranger Inc., which subcontracted the job to a third company, Professional Trucking LLC, GM alleged.

Professional Trucking picked up the equipment April 28 and was supposed to deliver the fueling stations 2,700 miles away to a GM facility in Burbank, Calif.

But on April 30, as the semi traveled through Kingman, Ariz., about 300 miles northeast of Burbank, it crashed, according to the lawsuit.

The fueling station was destroyed.

The crash happened when the driver drove into a windstorm, which forced the semi into a canyon, Katcher said.

"Luckily, it didn't kill the driver," he said.

His company isn't liable because the crash was due to a natural catastrophe, or "act of God," Katcher said. His company is a freight forwarder, which hires other companies' planes and trucks to transport freight.

In the beginning, GM was self-insured. But for this job, GM did not want additional insurance, Katcher said.

GM also did not declare any value for the fuel station on the bill of lading.

"If you don't declare, it holds you to a lesser value," Katcher said.

GM, which has spent $1.5 billion in hydrogen fuel cell research, has a test fleet of about 100 fuel cell Chevy Equinox vehicles on the road. They've traveled about 1.3 million miles since late 2007. The fleet was supposed to end its run last year, but GM has been able to double the estimated lifespan of the vehicles.

GM is developing a second-generation fuel cell system that is lighter and half the size of the Equinox. The system is in pre-production and could be ready in 2015.

Hydrogen fuel cell vehicles have significant benefits: zero emissions, unlike gas-powered vehicles; 300-mile range, unlike electric vehicles; and a quick refueling time, unlike plug-ins. They also have 60 percent fewer parts and 90 percent fewer moving parts.

In 2002, GM said it was possible that hundreds of thousands of fuel cell vehicles could be on the road by 2010. In 2006, GM revised that estimate to 1,000 by 2010. In September, GM said it won't make that 1,000-vehicle goal, in large part because of the lack of a network of refueling stations and a high cost.

No automaker has committed to bringing a fuel cell vehicle to the mass market before 2015.

From The Detroit News: GM sues over totaled hydrogen fuel pump

Turtle · May 2, 2010

greg334 said:
The crash happened when the driver drove into a windstorm, which forced the semi into a canyon, Katcher said.

I sat at the Kingman J one day when the wind picked up. Was going to go back up and check out the dam, but the wind made it not worth it. While I was sitting there I watched a tractor-trailer be blown over while waiting in line to get fuel. That prompted me to turn the Sprinter into to the wind rather than sit there while the wind relentlessly t-boned me.

In this case, it sure looks like GM screwed the pooch by not obtaining additional insurance, and then by not declaring the value of the freight.

CharlesD · May 2, 2010

CHAT of Michigan violated the contract by subcontracting the job to a company called Landstar Ranger Inc., which subcontracted the job to a third company, Professional Trucking LLC, GM alleged.

Who wrote this article? CHAT is a freight forwarder, not a carrier. Moving freight on another company's trucks is what they do. If GM didn't know that, whose fault is that? Shouldn't the cargo insurance of the hauling carrier cover this? I just fail to see how a freight forwarder can be said to have violated a contract by giving the freight to a carrier.

Turtle · May 2, 2010

Depends on the contract. Some will let freight forwarders broker the load to one carrier, but it cannot then be subsequently brokered out to another subcontractor.

As for the actual carrier's cargo insurance, many if not most BOLs state a maximum value of a really small dollar figure for claims unless a declared value is on the BOL. If the value is declared and the amount is higher than the insurance of the carrier will cover, then additional insurance is required to be purchased by someone, usually the customer.

For example, most BOLs state no special or consequential damages will be paid, and that the carrier's liability for damage is the shipper's actual cost of the freight that is lost, damaged or destroyed, and that it shall not exceed $50,000 per truck load unless the shipper specifically requests a higher declared value in the "Declared Value" box on the BOL. When that happens, the rate is usually about 65 or 75 cents for each $100 of additional declared value above $50,000.

Jefferson3000 · May 3, 2010

Turtle said:
Depends on the contract. Some will let freight forwarders broker the load to one carrier, but it cannot then be subsequently brokered out to another subcontractor.

As for the actual carrier's cargo insurance, many if not most BOLs state a maximum value of a really small dollar figure for claims unless a declared value is on the BOL. If the value is declared and the amount is higher than the insurance of the carrier will cover, then additional insurance is required to be purchased by someone, usually the customer.

For example, most BOLs state no special or consequential damages will be paid, and that the carrier's liability for damage is the shipper's actual cost of the freight that is lost, damaged or destroyed, and that it shall not exceed $50,000 per truck load unless the shipper specifically requests a higher declared value in the "Declared Value" box on the BOL. When that happens, the rate is usually about 65 or 75 cents for each $100 of additional declared value above $50,000.

CHAT of Michigan has no control over what Landstar does once the load is booked. CHAT has freight forwarding authority and NO interstate motor carrier authority, meaning they run no trucks across state lines. For Landstar to broker it then is not "double brokering." Here are part of the Terms and Conditions from CHAT's website:

" Liability Limitations of Third Parties. The Company is authorized to select and engage carriers, truckmen, lightermen, forwarders, custom brokers, agents, warehousemen and others as required, to transport, store, deal with and deliver the goods, all of whom shall be considered as the agents of the Customer, and the goods may be entrusted to such agencies subject to all conditions as to limitation of liability for loss, damage, expense or delay and to all rules, regulations, requirements and conditions, whether printed, written or stamped, appearing in bills of lading, receipts or tariffs issued by such carriers, carriers, truckmen, lightermen, forwarders, custom brokers, agents, warehousemen and others. The Company shall under no circumstances be liable for any loss, damage, expense or delay to the goods for any reason whatsoever when said goods are in custody possession or control of third parties selected by the Company to forward, enter and clear, transport or render other services with respect to such goods."

You are correct about the declared value. According to there terms, GM would be entitled to $50. Period! That issued bill of lading is a binding contract. Unless there be some liberal interpretation of liability based on emotional outrage, I doubt GM has a leg to stand on.

jelliott · May 3, 2010

I am not sure what operating authority they have but I do know they have at least one curtainside tractor trailer that they operate.

greg334 · May 3, 2010

Actually there is a bigger question.

Is GM entitled to actually filing a law suit for damages?

This happened before the bankruptcy, not after and because all bad assets and debts were shifted to the old GM in order for them to 'start fresh', this should have gone with the old GM and that from all reports it did. So the old GM doesn't care about recouping the losses but the new GM wants to make money off of something they no longer have a claim on - business as usual at GM.

Not only that, GM has used Chat in the same capacity for other high value shipments. They knew what the procedures were, they got lax in their shipments and the people who didn't put a value on that BOL should be the ones who pay the price, no one else.