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October 2008

Myth vs. Reality

Each month NPTC President and CEO Gary Petty writes a column in Fleet Owner magazine that focuses on the individuals, companies, best practices, and resources that make private trucking the force that it is in the American economy. Reaching more than 100,000 subscribers, three-quarters of whom are private fleet professionals, this column provides an excellent forum to communicate the value of the private fleet. Click here to view the archive.

Gary Petty | | Private Fleet Editor for FleetOwner Magazine
Gary Petty has more than 30 years of experience as CEO of national trade associations in the trucking industry. He has been the president and CEO of the National Private Truck Council since 2001.

Myth vs. Reality

The potential for accident liability is a fact of life for any trucking operation. Myths about liability, however, are commonly found at many corporate levels. Some believe that private fleets have a higher degree of exposure as compared to companies with outsourced corporate transportation. This impression, though generally false, may be the underlying reason for a company “not wanting to be in the trucking business.”

Outside carriers may use this myth as a selling tool. The pitch may be that operating a private fleet, per se, equates to greater liability and financial loss. Out of fear, upper management may reject the idea of a private fleet and outsource all their transportation services — comforted in the unfounded belief that they have shielded the corporation from lawsuit and liability.

As NPTC General Counsel Rick Schweitzer points out in his special report on the subject, having a private fleet does not always increase a company’s exposure to liability, nor does outsourcing to third parties necessarily eliminate or mitigate this risk. Schweitzer says that the decision to operate a private fleet should be based on whether this is the best transportation choice for the company, not on generalized and sometimes false assumptions about degrees of potential exposure to liability.

The special report provides a general discussion of the concepts of liability of shippers and carriers of goods by commercial motor vehicles. It deals with civil liability for incidents or collisions that cause personal injuries or death and that occur in the stream of commercial motor vehicle transportation; however, it does not explore theories of liability for loss or damage to cargo or other property damage incidents, nor any criminal sanctions related to such liability. This report covers principles of liability for tort actions; liability as a motor carrier; liability for leased drivers and independent contractors; shipper liability, negligence and releated issues. Schweitzer points out that the special report is not a comprehensive treatise on all legal issues affecting shippers and motor carrier operations, and that competent legal counsel should be consulted for questions which may arise out of the general principles discussed.

To see the true potential for liability, it is important to understand the current legal culture. It has become common, Schweitzer notes, for plaintiffs or their counsel to cast a wide net in selecting targets for claims or for initiating litigation following an incident. Moreover, courts have increasingly expanded the scope of responsibility for injuries and damages.

Therefore, no shipper is completely shielded from potential harms — to bottom lines and/or public image — by contractual arrangements with outside providers. At the same time, no private fleet operation, no matter how safe and well run, can escape potential liability.

Ultimately, shippers with private fleets must balance the need to control their transportation service with the acceptance of a certain degree of potential liability. Again, this liability will exist in any event if they choose third-party carrier outsourcing. Managing outside carrier contacts is not a license to operate in a legal vacuum. Shippers, just like any other corporate entity, cannot contract away their own liability. Courts and juries will “pierce” corporate entities and contracts to find parties at fault.

NPTC believes that reality, and not myths, should govern corporate transportation policy and the decision to operate a private fleet.

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