Freight forwarder wins contract suit over trucker
USA Truck ordered to pay close to $5 million for violating deal with All-Ways Logistics
Dave Hannon -- Purchasing, 10/2/2009 3:51:09 PM
What are your logistics strategies for 2010?
A deal's a deal. And in this case, the deal was that All-Way Logistics, a freight forwarder in Greenville, S.C., would receive a 5% commission on any freight it solicited for its trucking partner USA Truck, a truckload carrier out of Van Buren, Ark. And the deal worked nicely and brought USA Truck some big clients, including WW Grainger and Rheem Manufacturing.
But according to court documents, in March 2002, USA Truck informed All-Ways that it would stop paying commissions on the Rheem account because USA Logistics, a logistics division of USA Truck, had begun contracting directly with Rheem to arrange for USA Truck to meet Rheem's transportation needs. Then in 2005, USA Truck stopped paying commissions on business with Grainger because Grainger would now deal directly with USA Truck.
A District Court jury awarded All-Ways nearly $3 million, plus about $583,000 in prejudgment interest, $18,000 in costs, and $1 million in attorney fees. And this week, an appellate court upheld that decision.
The decision comes at a difficult time for USA Truck. While there are signs that truckload demand is improving, it has been a rough year for carriers. In its most recent earnings statement, the carrier reported a net loss of more than $1 million. In its report, USA Truck officials said "the collapse of the automotive industry, along with the downturn in other manufacturing industries, created a significant network imbalance between available trucks and available loads in the Midwest. There has been considerable disruption to our freight network nationwide as shippers have repeatedly rebid and re-awarded lanes to capitalize on truckload pricing competition. The effect of that disruption led to a constantly changing mix of lanes for carriers as they win or lose lanes in the bidding process."
Now Playing: 
