Billing Disputes with Transportation Vendors: The Clock May Be Ticking!

Auditing transportation vendor invoices is a critical function for the any company that ships goods. Although you should have written agreements in place with your transportation vendors, it is important for shippers to understand the default time limits to make claims against those vendors.

In my experience in handling billing disputes over the years, I have found that shippers often do not have: (1) adequate written agreements in place detailing their invoice audit rights; and/or (2) routine audit procedures in place to timely catch over-billing or duplicate payments.

The 180-Day Presentment Limitation Period to Motor Carriers

Pursuant to federal law (49 U.S.C. § 13710(a)(3)(B)), shippers have 180 days to present a claim against a motor carrier for billing disputes related to overcharges and/or duplicate payments. Congress created this 180-day limitation to provide certainty and finality in freight transactions involving motor carriers. Carriers and shippers benefit from knowing that billing disputes will be raised promptly, rather than years after payment. This encourages faster resolution of errors and disputes, improves financial predictability for carriers, and holds shippers accountable for timely reviewing their freight invoices.

NOTE: This statute applies to motor carriers, not freight brokers (addressed below).

This 180 day “presentment” limitation is important: you have to present the billing dispute to the motor carrier within 180 days from your receipt of the motor carrier’s freight bill (invoice). If you do not present the motor carrier with the claim within the 180-day time period, you can be barred from bringing the claim (including via litigation) after the fact.

The 18-Month Limitation to File a Lawsuit Against a Motor Carrier

Federal law (49 U.S.C. § 14705) requires a shipper to bring a lawsuit against a motor carrier for overcharges within 18 months “after the claim accrues” (i.e., after the shipper is billed for the transportation charges). So, assuming you present your billing dispute claim within the 180-day time period, you only have 18 months to file a lawsuit regarding the billing dispute.

What About Freight Brokers?

Importantly, freight brokers are not subject to the 180-day presentment limitation or the 18-month statute of limitations for filing a lawsuit. So, if you are in a billing dispute with a freight broker, you will have to either: (1) look at your shipper-broker agreement for any contractual limitations; or (2) rely on state-law statute of limitations (typically 6-8 years for contractual agreements).

Transportation Agreements

In the Shipper’s Corner, you will routinely see this advice: You need to have solid form transportation vendor agreements in place. Doing so will help you manage your risk and protect your profits. If you do not have written agreements in place, you may be subject to federal law requirements, or the motor carrier’s tariff (I’ll have another article on tariffs, which are not the trade tariffs you’re seeing news about every day).

For your motor carrier agreements, shippers should ensure there is a provision detailing the parties’ waiver of the rights and remedies contained in Title 49, Subpart B of the U.S. Code. If this waiver is non-existent or not sufficiently drafted, any purported billing dispute limitations may not apply and would be “preempted” by federal law defaults.

Additionally, in both motor carrier and freight broker agreements, shippers should negotiate rights and limitations periods that match their internal procedures and timelines for auditing invoices. I have often found that shippers do not regularly audit their transportation vendor invoices within 180 days from receipt. If that’s the case for your company, you should negotiate longer periods in which you can present a billing dispute.

Shipper’s Corner Practical Takeaways

• Review Invoices Quickly:  Have procedures or internal controls in place to audit invoices shortly after they are received.

  
  

• Track Deadlines: Know your deadlines to present disputes and file lawsuits! These deadlines may either be based on federal law or your applicable underlying transportation vendor agreement.

  
  

• File Disputes in Writing: While federal law does not mandate a particular form for billing disputes, it is critical to file billing disputes with your transportation vendors and maintain the dispute documentation.

  
  

• Maintain Written Transportation Vendor Agreements. This is critical to a well-managed transportation vendor program. With respect to billing and invoicing, ensure any time limitations periods match your actual auditing procedures.

About Shippers Interest Consulting: Shippers Interest Consulting is focused on helping shippers mitigate risk and protect profits related to their transportation and warehousing vendors. Shippers Interest Consulting is owned and operated by Tyler Biddle, a transportation attorney and consultant who has spent years working with shippers, freight brokers, motor carriers, and warehouses on transportation and warehousing-related issues.  You can learn more about Shippers Interest Consulting at www.shippersinterestconsulting.com and by following us on LinkedIn.