A Texas motor carrier scored a legal victory against Amazon in a lawsuit highlighting the e-commerce giant’s sometimes testy relationship with the trucking industry.
Waco-based Central Freight Lines, which has 1,651 power units according to the Federal Motor Carrier Safety Administration, won a $2.4 million jury verdict against Amazon at the end of October.
Central Freight Lines first began hauling less-than-truckload (LTL) freight for Amazon in 2011. But Central Freight said the relationship with Amazon started going south by 2016 as it “attempted to wield its economic power to force through billing and procedure changes that Central Freight never agreed to” the carrier’s complaint said.
Amazon’s economic power over trucking has been on full display this year. The “onerous” contract terms it puts on carriers were said to be one factor in the demise of New England Motor Freight. FedEx similarly ended its ground-delivery relationship with Amazon due to low yields on the business. XPO Logistics lowered its 2019 revenue outlook as its largest customer – believed to be Amazon – took its business away.
In its lawsuit, Central Freight Lines said Amazon began tendering eight-pallet shipments, which did not qualify for the agreed-upon LTL rates due to their size.
Instead, Central Freight Lines quoted Amazon a spot rate that was 30% higher than the LTL rate, plus a fuel surcharge for the eight-pallet shipments.
After an oral agreement, Central Freight amended its written contract with Amazon to reflect the new spot rate. While Amazon paid the agreed-upon rate, it “neglected to sign by the addendum,” Central Freight said.
By June 2016, Amazon was disputing any contract was in place to bill eight-pallet shipments at the new rate. It subsequently audited Central Freight’s Invoices and demanded that the carrier reimburse Amazon for shipments that did not receive the volume discount over the 2012 through 2016 period.
In addition to disputing the agreed-upon rate, Amazon made other demands on Central Freight that were not agreed to in the original contract.
Amazon wanted Central Freight to reimburse for issuing separate bills of lading for each shipment, even though “custom and practice in the LTL shipping industry is that each bill of lading is a separate shipment and is invoiced separately, even if the shipment is for the same day and the same destination.”
Amazon also began requiring that carriers match shipments against Amazon’s internal tender identification numbers, even though Central Freight said it had previously picked up shipments without tender identification.
Any shipment without the tender identification was to be refused or sent back to the vendor. But Central Freight said its original agreement with Amazon never included this term.
“This would lead to situations where Central Freight would incur – through no fault of its own – the costs of going to pick-up shipments that would not leave the dock. It would also lead to situations where Central Freight’s drivers would get into disputes with irate vendors incensed at Central Freight’s refusal to pick up the Amazon shipment.”
Central Freight said Amazon tried to direct its other carrier partners including Estes Express Lines, XPO Logistics, New England Motor Freight, Dayton Freight Lines and AAA Cooper Transportation, to agree to the same terms.
An August 2016 letter from Amazon demanded that Central Freight reimburse $2.8 million that Amazon said it was owed for overages on the eight-pallet shipment invoices and for Central Freight not following Amazon’s procedures.
Amazon subsequently reduced the demand amount to $1.3 million. But it added that Central Freight would have to reimburse the amount if it was to be awarded any business during its 2017 bid season.
After Amazon Fulfillment Services ended its LTL business, a separate division, Amazon Truckload Services, approached Central Freight for trucking services.
Central Freight agreed to work for Amazon Truckload Services. But Central Freight said this was a “ruse” as Amazon Truckload withheld payment as an offset for the amounts claimed by Amazon Fulfillment.
“Amazon first breached its contract with Central Freight, and then used its economic power and dominance to fraudulently induce Central Freight to perform additional services for Amazon for payment, when all the while Amazon had no intention of paying Central Freight for such services,” the lawsuit said.
Central Freight declined to comment on the verdict.
Renay Kristapher
Reading some of the comments I have to wonder where in the mustard seed you guys sprouted from. And when!!! The ELD has already cost 100 times the lives it was promised to save. And trust me when I say YOU ARE NOT SAFE traveling the highways and byways of this country. I’m not safe and I’ve been driving truck 35years verifiable! Plus at least 10 on tractors heavy machinery on the farm growing up. Get a real clue about the trucking industry or get the Sam Hill out. The FMCSA has NEVER done anything to improve or enhance safety!!! The manage to destroy every safe thing we had accomplished before their creation. I’m sorry but they are a complete waste of space, money, AND time.
Richard Presley
I will repeat this statement, ONE MORE TIME. HOW, I REPEAT, HOW, can people setting in an office of the DOT, who have never driven a truck, loaded a truck, owned or operated a truck that delivers our nations needs to survive 27/7, come up with rules and regulatons that Drivers and Companies have to abide by legally, be allowed to take part in developing laws or rules that we have to obode by. These are the people who are responsible for all of these semi accidents now being caused by ELD’s, because they force drivers to speed in order to meet their schedules, they are forced to drive sick or sleepy and to drive in unsafe weather conditions, or be faced with losing their jobs, because Employers say they are not doing their jobs. ELD Logs need to be abolished and the entire DOT in Washington needs to be replaced with real, experienced road proven drivers with no less than a million miles of cross country driving behind them. Not lobbyists for some company, but real True Proven Drivers.
Renay Kristapher
Absolutely, Richard.
Edward Senclair
There has been more deaths in the trucking industry do to ELDS. In the old day’s if you were sleepy you just park now they are forcing you to drive and it’s 11 hours and before the 8th hour you need to take a 30 minute break. So there’s a lot more deaths now then the old day’s when we used paper logs.
Glen
So Amazon didnt want to pay their own way.
The stockholders never have enough.
Your word means nothing.get it on paper.
Renay Kristapher
And even then you may get screwed
The Mp Group Inc.
BRAVO..within the hollowed halls of the transportation industry there has always been,even amongst heated competitors the embracing of respect for your competitors, and business partners.
Since we ALL , prior to “de-regulations”, WALKED and TALKED the same, that sadly now within our respected profession there is a bohimith of a power that feels as though they can push past the nature of our business platform, that of “service” and intentionally disrupt our daily abilities to effectivly function by withholding operating revenues to support not only its employees but effectivly distort ones ability to provide “services” for its existing and new customers requirements. That’s why is called a “PARTNERSHIP”.
Tom
It is about business, the “end and around” with the truckload business was BS and not professional. They should be held accountable. But if they need to update or change a process for their business and shareholders – that is what has to happen. Can’t complain about how others are supporting their own business. You can simply walk away from it if it isn’t something acceptable.
Renay Kristapher
It’s about thievery! Not business unless you consider not keeping their end of the deal and in effect bending companies and independents over sideways and leaving them broke!!!
Maynor Merida
Got a call from Amazon years ago asking if I wanted to haul for them. They said they’ll call back and never did, sooooooo glad I don’t do business with them.
Vince
Same type of BS that killed the corner hardware store. Home Depot, Lowe’s and (to a similarly regional degree) Menards made neighborhood businesses disappear overnight. Amazon is taking no prisoners in every marketplace it touches.
While I have faith in the American entrepreneurial spirit for creating opportunity where publicly held monsters have laid waste to mom & pop alternatives, there is nothing about the LTL Trucking industry that requires empathy for having to deal with Bezos. In fact, they deserve each other.