Mark Solomon joined DC VELOCITY as senior editor in August 2008, and was promoted to his current position on January 1, 2015. He has spent more than 30 years in the transportation, logistics and supply chain management fields as a journalist and public relations professional. From 1989 to 1994, he worked in Washington as a reporter for the Journal of Commerce, covering the aviation and trucking industries, the Department of Transportation, Congress and the U.S. Supreme Court. Prior to that, he worked for Traffic World for seven years in a similar role. From 1994 to 2008, Mr. Solomon ran Media-Based Solutions, a public relations firm based in Atlanta. He graduated in 1978 with a B.A. in journalism from The American University in Washington, D.C.
The incident was horrific. The fault, in the eyes of the jury, was not in doubt. The monetary award was staggering. If upheld, the trucking industry could find itself confronting a new economic standard for juries meting out punishment in verdicts where a carrier is found at fault for a catastrophic accident.
On Feb. 6, a state appeals court in New Mexico upheld a January 2015 jury verdict that awarded $165 million to a New Mexico family, two of whom were killed in June 2011 when a tractor-trailer operated by FedEx Ground, the ground-delivery unit of Memphis-based FedEx Corp., slammed into a small pickup truck that was stopped or moving at a very slow speed along Interstate 10. The pickup's driver, Marialy Morga, died in the accident, as did her 4-year-old daughter Ylairam. Morga's 19-month-old son, Yahir, was seriously injured. The tractor-trailer driver, Elizabeth Quintana, also died. Quintana, who drove for the firm that FedEx contracted for delivery services, was driving at 65 mph when the vehicles collided, according to court documents.
Virtually all of the $165 million award, considered by several legal experts as an astounding figure in a case of this nature, compensates the Morgas for "non-economic" damages such as pain and suffering, physical impairment, and "loss of consortium." The latter is roughly defined in tort law as depriving the survivors the means of carrying on a future relationship.
Unlike "economic" damages, which cover such costs as medical claims and lost wages, and which can be calculated using established formulas, the amount of compensatory damages is, with a couple of exceptions, limited only by a jury's discretion. For example, the size of the award cannot, in legal parlance, "shock the conscience." Nor can a jury be influenced by passion, prejudice, the financial status of either party, or other elements that might conflict with a vetting of the evidence at hand. The jury did not award punitive damages in the case.
The appellate court ruling upholds a 2015 district court decision affirming the verdict and denying FedEx Ground's request either for a new trial or a reduction in the size of the award. The lower court rejected the company's argument that the amount was excessive and its size unsupported by the evidence, and that the jury was unjustly swayed by "improper factors" unrelated to the facts at hand.
The three-judge appellate panel ruled that the family's attorneys "presented sufficient evidence to support the jury's right to perform its unique function—award all compensatory damages, including any non-economic damages for pain and suffering and loss of life" incurred by the family.
In its appeal, the company was requesting that the appellate court "establish a threshold or an absolute financial limit on the value of life, despite the district court's and the jury's efforts to fulfill their assigned duty to quantify something that is legally unique, intangible and difficult to measure," the judges wrote. "We refuse to implement such a legal threshold or limit."
In a brief statement, FedEx Ground said that it is weighing its options, and that it disagreed with the appeals court ruling. Should the company pursue the case through the legal system, the next step would be an appeal before the New Mexico Supreme Court. The lead attorney for the plaintiffs, James Scherr, partner in the El Paso-based firm ScherrLegate, did not respond to an e-mail request for comment.
The award's amount stunned several legal observers. Robert Moseley, who oversees the transport practice at the law firm Smith Moore Leatherwood LLC, said he's unaware of any case of an appellate court upholding an award this vast. Moseley called the amount an "outlier" and the case a "poster child" for why states need to impose monetary caps on jury awards. Moseley said the amount clearly meets the "shock the conscience" criterion that courts warn jurors to be mindful of when they weigh the degree of monetary damages.
Brené W. Primus, a long-time transport attorney who runs his own practice, said in an e-mail that the award "does indeed raise the stakes for liability for accidents on the highway," and that it "underscores the need for shippers, brokers, and any other entity hiring motor carriers to use the utmost diligence in selecting, using, and monitoring the carriers they hire."
Primus added, however, that the panel may have believed the award was excessive, but that under the state's statutes was bound to uphold the verdict. The language used in the ruling leaves the "door wide open" for the state Supreme Court to reduce the award's amount, he wrote.
Perhaps in an effort to allay shipper and broker fears that the case could become a litmus test for other truck liability issues, Primus said the ruling did not herald any new or novel liability theories. It also does not involve "vicarious liability," where a party is held liable in the event of an accident even though it wasn't directly involved in the crash, he said.
Cases involving vicarious liability have been hot-button issues for shippers and freight brokers because they center on whether those parties should be held liable due to their alleged inability to vet the driver they chose.
Editor's note: The original story incorrectly referred to the venue as federal appeals court. DC Velocity regrets the error.
The number of container ships waiting outside U.S. East and Gulf Coast ports has swelled from just three vessels on Sunday to 54 on Thursday as a dockworker strike has swiftly halted bustling container traffic at some of the nation’s business facilities, according to analysis by Everstream Analytics.
As of Thursday morning, the two ports with the biggest traffic jams are Savannah (15 ships) and New York (14), followed by single-digit numbers at Mobile, Charleston, Houston, Philadelphia, Norfolk, Baltimore, and Miami, Everstream said.
The impact of that clogged flow of goods will depend on how long the strike lasts, analysts with Moody’s said. The firm’s Moody’s Analytics division estimates the strike will cause a daily hit to the U.S. economy of at least $500 million in the coming days. But that impact will jump to $2 billion per day if the strike persists for several weeks.
The immediate cost of the strike can be seen in rising surcharges and rerouting delays, which can be absorbed by most enterprise-scale companies but hit small and medium-sized businesses particularly hard, a report from Container xChange says.
“The timing of this strike is especially challenging as we are in our traditional peak season. While many pulled forward shipments earlier this year to mitigate risks, stockpiled inventories will only cushion businesses for so long. If the strike continues for an extended period, we could see significant strain on container availability and shipping schedules,” Christian Roeloffs, cofounder and CEO of Container xChange, said in a release.
“For small and medium-sized container traders, this could result in skyrocketing logistics costs and delays, making it harder to secure containers. The longer the disruption lasts, the more difficult it will be for these businesses to keep pace with market demands,” Roeloffs said.
The British logistics robot vendor Dexory this week said it has raised $80 million in venture funding to support an expansion of its artificial intelligence (AI) powered features, grow its global team, and accelerate the deployment of its autonomous robots.
A “significant focus” continues to be on expanding across the U.S. market, where Dexory is live with customers in seven states and last month opened a U.S. headquarters in Nashville. The Series B will also enhance development and production facilities at its UK headquarters, the firm said.
The “series B” funding round was led by DTCP, with participation from Latitude Ventures, Wave-X and Bootstrap Europe, along with existing investors Atomico, Lakestar, Capnamic, and several angels from the logistics industry. With the close of the round, Dexory has now raised $120 million over the past three years.
Dexory says its product, DexoryView, provides real-time visibility across warehouses of any size through its autonomous mobile robots and AI. The rolling bots use sensor and image data and continuous data collection to perform rapid warehouse scans and create digital twins of warehouse spaces, allowing for optimized performance and future scenario simulations.
Originally announced in September, the move will allow Deutsche Bahn to “fully focus on restructuring the rail infrastructure in Germany and providing climate-friendly passenger and freight transport operations in Germany and Europe,” Werner Gatzer, Chairman of the DB Supervisory Board, said in a release.
For its purchase price, DSV gains an organization with around 72,700 employees at over 1,850 locations. The new owner says it plans to investment around one billion euros in coming years to promote additional growth in German operations. Together, DSV and Schenker will have a combined workforce of approximately 147,000 employees in more than 90 countries, earning pro forma revenue of approximately $43.3 billion (based on 2023 numbers), DSV said.
After removing that unit, Deutsche Bahn retains its core business called the “Systemverbund Bahn,” which includes passenger transport activities in Germany, rail freight activities, operational service units, and railroad infrastructure companies. The DB Group, headquartered in Berlin, employs around 340,000 people.
“We have set clear goals to structurally modernize Deutsche Bahn in the areas of infrastructure, operations and profitability and focus on the core business. The proceeds from the sale will significantly reduce DB’s debt and thus make an important contribution to the financial stability of the DB Group. At the same time, DB Schenker will gain a strong strategic owner in DSV,” Deutsche Bahn CEO Richard Lutz said in a release.
Transportation industry veteran Anne Reinke will become president & CEO of trade group the Intermodal Association of North America (IANA) at the end of the year, stepping into the position from her previous post leading third party logistics (3PL) trade group the Transportation Intermediaries Association (TIA), both organizations said today.
Meanwhile, TIA today announced that insider Christopher Burroughs would fill Reinke’s shoes as president & CEO. Burroughs has been with TIA for 13 years, most recently as its vice president of Government Affairs for the past six years, during which time he oversaw all legislative and regulatory efforts before Congress and the federal agencies.
Before her four years leading TIA, Reinke spent two years as Deputy Assistant Secretary with the U.S. Department of Transportation and 16 years with CSX Corporation.
As the hours tick down toward a “seemingly imminent” strike by East Coast and Gulf Coast dockworkers, experts are warning that the impacts of that move would mushroom well-beyond the actual strike locations, causing prevalent shipping delays, container ship congestion, port congestion on West coast ports, and stranded freight.
However, a strike now seems “nearly unavoidable,” as no bargaining sessions are scheduled prior to the September 30 contract expiration between the International Longshoremen’s Association (ILA) and the U.S. Maritime Alliance (USMX) in their negotiations over wages and automation, according to the transportation law firm Scopelitis, Garvin, Light, Hanson & Feary.
The facilities affected would include some 45,000 port workers at 36 locations, including high-volume U.S. ports from Boston, New York / New Jersey, and Norfolk, to Savannah and Charleston, and down to New Orleans and Houston. With such widespread geography, a strike would likely lead to congestion from diverted traffic, as well as knock-on effects include the potential risk of increased freight rates and costly charges such as demurrage, detention, per diem, and dwell time fees on containers that may be slowed due to the congestion, according to an analysis by another transportation and logistics sector law firm, Benesch.
The weight of those combined blows means that many companies are already planning ways to minimize damage and recover quickly from the event. According to Scopelitis’ advice, mitigation measures could include: preparing for congestion on West coast ports, taking advantage of intermodal ground transportation where possible, looking for alternatives including air transport when necessary for urgent delivery, delaying shipping from East and Gulf coast ports until after the strike, and budgeting for increased freight and container fees.
Additional advice on softening the blow of a potential coastwide strike came from John Donigian, senior director of supply chain strategy at Moody’s. In a statement, he named six supply chain strategies for companies to consider: expedite certain shipments, reallocate existing inventory strategically, lock in alternative capacity with trucking and rail providers , communicate transparently with stakeholders to set realistic expectations for delivery timelines, shift sourcing to regional suppliers if possible, and utilize drop shipping to maintain sales.