Due Diligence and Your Chemical Shipments
What is Due Diligence?
According to Wikipedia, "Due Diligence is a term used for a number of concepts involving either the performance of an investigation of a business or person, or the performance of an act with a certain standard of care. It can be a legal obligation, but the term will more commonly apply to voluntary investigations. In transportation terms, did you do a reasonable investigation on the carrier you used to transport your shipment BEFORE you gave him the load?
Here are a couple of horror stories that involved due diligence:
An Illinois jury awarded a $23.7 million judgment against freight broker C.H. Robinson Worldwide and other defendants for an interstate collision that killed two people and injured five others in April 2004.
This is a direct result of another precedent setting case involving C.H. Robinson where a U.S. District Court in Schramm v. Foster in 2004 where the Judge did not hold that C.H. Robinson was negligent, but rather held that there were some facts present in the case upon which a jury could permissibly find that C.H. Robinson had been negligent in selecting the carrier. These facts included the Safestat scores of the trucking company and the fact that it did not have a “satisfactory” U.S. DOT safety rating.
These cases clearly establish that the person(s) selecting the carrier have duty and a standard of care to ensure they are selecting a SAFE carrier. Otherwise, they could be the subject of lawsuits and judgements if the carrier gets in an accident.
As a shipper, what are you to do to ensure you've done your due diligence:
1. Keep a file on each carrier used containing a record of all the safety checks you've done.
2. Make sure the file contains a copy of carriers license, insurance and authorities.
3. Ensure that you've investigated a carrier's safety rating on SAFERSYS. You should think twice about using a carrier with a conditional safety rating.
4. If a carrier has no safety rating, you should conduct your own safety audit.
5. Check the carriers SEA on Safestat. It should be below 75 to be acceptable.
6. Files must be monitored and kept current.
As a shipper you must ask yourself, are you doing all your due diligence? If not you are seriously exposing your company to liability risk.
Here at DSN we do all of the above and more. We've got a custom designed software program that tracks all of this important information. It regularly goes to the FMCSA website and downloads the most current carrier ratings. If any carrier in our system fails to meet the satisfactory minimum, then they are automatically disqualified in our system from receiving shipment tenders. This is an excellent fail-safe and demonstrates due diligence to help protect us and our customers from Schramm type lawsuits.
And think of all the time you'll save keeping all these files!