Liability Issues for 3PL Customers
The third party logistics industry is fast growing as many retailers are entrusting these companies to get their merchandise from point A to B and beyond. This link in the supply chain is hugely important because 3PL's are ultimately held responsible for ensuring all stock is moving as it should on schedule and to the right locations. It's important to note that with this level of responsibility, comes liability. These are huge demands to fill and when a 3PL signs on to successfully deliver inventory, they are responsible for those items as soon as they are received into their care.
One of the easiest ways a 3PL company can find out what all it will be held liable for is by reading the contract. Any responsibilities and expectations should be clearly defined in this document so that both parties acknowledge and agree to the terms of this engagement. If there are any concerns, these should be addressed with the provider of the inventory before signing the contract, as any violations by the signee that occur after the signing of the contract are punishable. Once these concerns have been cleared up, they can be written into the contract as a clearly stated expectation on which the third party logistics company can sign on.
Unless stated in a contract, if you are a transport carrier contracting delivery services to a 3PL, and the 3PL fails to deliver the specified inventory, they are not held responsible for the cost of finding another provider to ship those items. That cost would be passed back to the transport carrier, who after paying the 3PL, would have to pay again for another contractor to pick up the failed delivery services. In order to decrease this liability, make sure you and the 3PL thoroughly discuss the financial responsibilities that could arise should an issue come up as inventory is moving through the supply chain process. With so much going on, the law of averages states that at some points, hiccups will occur. But proactively discussing these things and putting provisions for them into the contract can help cut down on the confusion and thoroughly mandate who is responsible for what.
If the transport carrier and third party logistics company fail to hold these discussions before signing over any inventory, then if an issue arises and questions of liability come into play, that judgment is made by the courts. And similarly, if any of the wording or content in the contract is questionable, the parties involved will likely have to go to court or some form of mediation to get the issue involved.
Having a decision like this left to a court judge can be time consuming and costly, therefore it's best to make sure your contract is clearly written, both parties have agreed to the terms and everyone understands who is responsible for what should a problem arise. Working with a third party logistics provider is a great, an efficient way to move inventory where it needs to go. Just be sure to outline expectations and responsibilities in a contract in order to make the process go more smoothly.
One of the easiest ways a 3PL company can find out what all it will be held liable for is by reading the contract. Any responsibilities and expectations should be clearly defined in this document so that both parties acknowledge and agree to the terms of this engagement. If there are any concerns, these should be addressed with the provider of the inventory before signing the contract, as any violations by the signee that occur after the signing of the contract are punishable. Once these concerns have been cleared up, they can be written into the contract as a clearly stated expectation on which the third party logistics company can sign on.
Unless stated in a contract, if you are a transport carrier contracting delivery services to a 3PL, and the 3PL fails to deliver the specified inventory, they are not held responsible for the cost of finding another provider to ship those items. That cost would be passed back to the transport carrier, who after paying the 3PL, would have to pay again for another contractor to pick up the failed delivery services. In order to decrease this liability, make sure you and the 3PL thoroughly discuss the financial responsibilities that could arise should an issue come up as inventory is moving through the supply chain process. With so much going on, the law of averages states that at some points, hiccups will occur. But proactively discussing these things and putting provisions for them into the contract can help cut down on the confusion and thoroughly mandate who is responsible for what.
If the transport carrier and third party logistics company fail to hold these discussions before signing over any inventory, then if an issue arises and questions of liability come into play, that judgment is made by the courts. And similarly, if any of the wording or content in the contract is questionable, the parties involved will likely have to go to court or some form of mediation to get the issue involved.
Having a decision like this left to a court judge can be time consuming and costly, therefore it's best to make sure your contract is clearly written, both parties have agreed to the terms and everyone understands who is responsible for what should a problem arise. Working with a third party logistics provider is a great, an efficient way to move inventory where it needs to go. Just be sure to outline expectations and responsibilities in a contract in order to make the process go more smoothly.
