What Retailers Should Know About

Posted in Legal Alerts on January 23, 2023

The surge in online shopping has changed the face of shipping throughout the country. Both delivery schedules and customer service considerations have led to a surge in “last mile” shipping. The increasing use of this delivery model has forced retailers and shippers to consider new avenues for potential liability once goods are shipped.

Many Carriers Rely on Someone Else to Make the Final Delivery

After a customer orders a product from a retailer, it will contract with a shipping company to make the delivery to the customer. However, the shipping company is not always the one that completes the delivery process to the customer's doorstep. Oftentimes, the shipper will contract with another company to deliver the product the "last mile" to the customer's doorstep. These final delivery personnel are traveling through residential areas on their way to the customer, which can be the portion of the journey most fraught with risk. That’s because the closer the product gets to the customer's home, the higher the risk of an accident or injury to someone else based on crowded streets and the number of other drivers, pedestrians, and cyclists.

The Carrier May Face a Number of Risks on Several Fronts

The motor carrier that ships the product sits in the middle, and they can be on the receiving end of claims from multiple parties. The problem is that the shipper has contracted with a third party, and they could be liable for the actions of the last mile carrier without having any ability to control them. They could also be liable when someone sues the retailer, having been required to indemnify the retailer in their shipping contract.

Shippers May Be Sued When the Last Mile Carrier Has an Accident

Amazon is a prime example of a company that utilizes last mile carriers to complete deliveries. The retailing giant contracts with numerous logistical contractors to deliver goods to its customers' doorsteps. The company faces many lawsuits filed by motorists that have been injured in a collision with a driver delivering its products to its customers.

The usual rule is that the last mile shipper is an independent contractor, and the original shipper should not be sued. However, plaintiffs have come up with many creative arguments that attempt to hold the original shipper liable for the conduct of the last mile shipper. For example, one motorist who was injured in an accident with a vehicle belonging to a logistics provider is suing Amazon, claiming that the company imposed unrealistic delivery deadlines that caused the driver to drive fast, causing the delivery vehicle accident.

Customers May Also Sue the Shipper or Retailer

There are other potential claims that can be filed against a motor carrier for the actions of a last mile shipper. When a customer orders an appliance and the last mile carrier installs it, the company may be liable for any errors in installation. This is just one of many types of claims companies can face when a driver interacts with the public or enters a customer’s home.

In addition, the shipper may also be liable for claims filed by the actual delivery personnel who are injured on the job. Although the delivery personnel cannot sue their own employer, they may try to find a way to sue a third party by bringing a negligence lawsuit.

Effective Contracting Can Lessen But Not Eliminate Risk

Shipping companies face a variety of risks they must manage through the contracting process. The first crucial step a shipping company must take to protect itself is to thoroughly vet the last mile carrier before entering into any contract. It may be difficult for the shipping company to completely protect itself, so it must know exactly who it is trusting to make its deliveries. In addition, the last mile carrier’s actions can also impact the reputation of the shipper because the ultimate customer may not know of the contracted arrangement. A customer may think any issues or wrongdoing stemming from the delivery or installation of a product are the fault of the shipper.

The shipping company must have an enforceable contract that protects it from risk. Without one, it may be forced to assume liability for the actions of the last mile carrier. However, no contract can be completely airtight, no matter how much language is introduced to protect the shipper. One can assume that Amazon has a litany of contract protections, yet the company is still facing over 100 lawsuits due to the actions of last mile carriers.

Shippers Must Stay on Top of Contract Performance

In addition, a shipper must also act to enforce a contract with a last mile carrier once it is signed. There is no such thing as signing a contract and simply hoping that it protects the company when something goes wrong. The contracting department must stay on top of things in order to ensure that the last mile carrier is living up to its obligations. However, the shipping company must take care not to be seen as directing the last mile carrier excessively because that could make the shipping company liable in a lawsuit by being deemed to have control over the carrier.

When its last mile carrier is involved in an accident, a shipping company should devote its own resources to investigating what happened. It cannot assume it will not be on the hook and that the liability and damages are someone else's problems. Moreover, there are limited insurance options that would protect a shipping company by covering damage caused by a last mile carrier. Insurance companies will not want to write policies that insure against actions by someone other than their policyholders.

Word of Advice: Companies Can Rely on Last Mile Services, But Should Be Careful

None of this is to say that a shipping company cannot and should not use last mile carriers to complete its deliveries. There are definite benefits to this arrangement, and there is a reason why companies use last mile carriers.

However, the fact that these risks exist means that shipping companies need to be careful and proactive in mitigating and minimizing future risks. The failure to do so could make the use of last mile carrier services inefficient and too risky for a shipping company to regularly use.