Have you ever been in a situation when your or your customer's freight has been held hostage? If so, then you're not alone. In an ideal world, every carrier completes shipments, and brokers pay them the total amount when they say they will. However, nothing is perfect, and payment problems occur between brokers and carriers. With nothing perfect, brokers have reasons not to pay the total amount. Some examples include damaged freight or, to the extreme, a broker who went out of business and can't pay any of the money back.
A hostage load scenario is stressful and unpleasant for all the parties involved, and the resolution might be very time- and energy-consuming.
Being prepared and aware of the potential risks is the best way to try and avoid these situations as much as possible. This blog dives into what freight hostage is and what you can do to prevent it from happening in the future.
Holding freight hostage can mean two different things for businesses. The most common occurrence is when a carrier doesn't deliver a shipper's items in their possession during delivery until the shipper can pay the transportation debt to the carrier. Another scenario that isn't as common is when a third-party logistics (3PL) company requests that the carrier holds the items hostage because a 3PL hasn't received the payment from the shipper. In both cases, the reason why freight becomes held hostage is because of delayed payments.
The carrier has either not received payment for a previous load and demands proper compensation before delivering the load in question or previously faced significant deductions and demands payment before delivering the load.
The original destination has changed after the carrier picked the load up, and the carrier is looking for a rate increase for the extra miles or having to cancel their planned reload.
The carrier is looking for higher compensation than initially agreed upon for hauling a different load than originally discussed. Changes may be weight increase, dimension change, temperature, and more.
Detention occurs when the carrier is held at the shipper for an extended period and refuses to deliver a load until a guarantee of payment is received or receive payment with a detention charge.
The carrier is aware of a potential claim or back-charges on the load they are hauling and refuses to deliver a load until they are sure they will get paid in full.
In a double-brokerage scenario, the actual carrier might have a problem with the 'originally contracted' carrier and hold the load hostage until the latter meets their demands. In this case, taking care of the issue might get even messier.
What can you do to prevent this?
Both the carrier and the shipper/broker have reasons to stand their ground – the carrier is afraid they will not receive any payment for hauling the load if they trust their opponent and deliver it. Their counterpart is worried about paying upfront and never having the shipment returned. Arriving at a consensus might be challenging, and there are constant disputes about the best strategies you can use. Sometimes the easiest way to resolve it is to provide a legal guarantee of the payment once the load is successfully delivered.
At PLS, we want to ensure that you don't have to deal with the hassle of hostage freight. We strive to make the broker and shipper relationship an easy one for you! Get a quote with us to discover how we can help you in the future! If you'd like more information about PLS and how we can help you deal with hostage freight and legal issues, contact us today!