You know who Microsoft hates? No, not Apple. It really hates DHL. Apparently, the delivery service has hit the folks in Redmond where it hurts: in the Xbox. It seems that 21,600 consoles were totally messed over by “impact damage, wetting, pilfering and shortage” when one of the company’s freight trains derailed en route to Long Beach, California. The big M claims that DHL refuses to compensate for the lost goods, and has filed a complaint at a US District Court in Seattle, calling for $2 million in damages and stating that the shipper “negligently breached its duties as a common carrier, handler, bailee, warehouseman, agent, or in other capabilities.” Harsh words, but really, who’s to blame for this mess? Next time we suggest going with G.O.D.
The Xboxes were en route from a Microsoft office in McAllen, Texas, to Long Beach, California, for eventual delivery to Hong Kong at the time of the loss, which occurred on Oct. 13, 2007, according to court papers. Flextronics Industrial in Hong Kong was the intended recipient.
My guess is that these are some of the Xbox’s being sent back for re-work after bieng returned for the “Red Ring of Death” - i.e. someone at MS messed up with thermal design and a significant fraction of Xbox’s ended up failing after a short time in the customers’s hands.
This does not surprise me, having used DHL as a third party shipper for my company we took a million dollar account and gave it to FED EX. DHL has serious issues with getting things where they are supposed to go if not losing them altogether.
I’m assuming you’re asking who this immediate court action will find legally obligated to make Microsoft whole. My layman’s guess is that it’s DHL, who’s defense will be that they’re the innocent victim of the railroad, in which case they should make a counter claim against the railroad. I expect the railroad would in turn make some claim against whatever party they feel they can prove caused the derailment.
How do you connect this railroad derailment with DHL’s general serious issues? although I can see that DHL is responsible for deciding to ship via rail, I don’t see how this derailment was DHL’s fault.
I had the red ring of death pop up on me. I sent the thing to McAllen, and they sent me a refurb promptly. Then that one died, and they sent me another refurb. I thought that they did the repairs in McAllen, but appearantly not.
I don’t feel bad for DHL, though they are not having the easiest time of things and have had to cut back a lot. Why do I know this? My close friend who works for them is losing his job at the end of the week because the customer service center he works for is being closed. And not a good economy to be going through this either.
If the items were given to DHL to ship wouldn’t it make them liable in the first instance, because DHL were the principal contractor in this case. If they then sue the railroad then that’s up to them.
Same here. I heard this horror story from a friend:
DHL missed picking up a time-sensitive shipment of 500 packages two days in a row, finally picking it up on the third day. It finally arrived four days too late, making it worthless. Then DHL (Deliver However Late) sicced its lawyers on the shipper, threatening to sue because it refused to pay the normal, full price for the shipment as was being demanded – even though it was delivered four days late.
They also had the stones to tell the shipper “If you read the fine print, there is no guarantee of on-time delivery.” But DHL’s ads sure imply that, don’t they?
Presumably this was an intermodal movement - not very likely to be in a box car, right?
So, Microsoft tenders the load to DHL. DHL has most likely a standard limit of coverage for loss, unless MS negotiated a different limit. That limit is most likely predicated on the coverage provided by the underlying carrier. So who is the underlying carrier. Couple options there. I’ve never seen a DHL Logistics trailer / container on a train, which means that they most likely used either a free running box from UP, hired an IMC to use an EMP or contracted an intermodal provider to do it (ie Pacer, Schneider, JB Hunt, etc.). That carrier has a coverage a limit. Most likely $100K-250K. That carrier’s limit is predicated on what the underlying RR is covering. Usually $250K.
If this was a $2M load, someone was VERY fooling for tendering it intermodally. Should have moved with a team of drivers to keep it moving and secure. Since this came out of McAllen, and since UP serves Laredo - Long Beach, you might assume it was with them. It might have been Pacer or an EMP user. Again, probably on a $250k limit.
Then you have the one potential, final kiss-of-death. If the derailment was caused by an act of God (i.e. weather, etc.) which happens far more often than you’d think - you are totally S-O-L. No coverage - again, unless your contract has an act of God exclusion and you don’t likely get one of those.
So the RR and the IMC will likely cover $250K - maybe less and MS is holding the bag on the rest. Again - depends on MS’s contract w/ DHL. That’s just life in the world of transportation.
Simply linking the fact that DHL has serious issues with service. Evidenced by the fact that they are now “dead in the water” as a company. It is my understanding that a carrier accepts the responsibility of safely delivering the product they are paid to deliver. If Microsoft contracted with DHL, then DHL would have the assumed burden of safe delivery. Although, they may have been damaged in a derailment, DHL would still have to be responsible I would expect. If you pay me to take your dog to the kennel and pay me to do so, and I sub that job out and your dog does not make it, I am the one who you contracted and I am on the hook.
If you publish limits of coverage, or establish them contractually, and they are below the amt claimed by the customer, to bad, so sad, the lawyers may get rich, but its buyer beware.
See example from DHL express, item 5. They publish a limit of $100. (most likely per parcel).
I think these consoles may have already been defective before the trainwreck and were being sent back for credit. If that’s the case, then this trainwreck situation throws a wrench into determining who should get credit for what because it will be difficult to ascertain which defects were a result of the crash and which defects were a result of workmanship errors by Flextronics.
Well, as usual, it isn’t quite that simple, that the limit is $100 per shipment or $250,000 or whatever, and never any more than that, etc. From Doublestack’s DHL “Terms and Conditions of Service” contract link (above) - note the emphasized portion (below):
"5. DHL’s Liability
Unless Shipper requests and pays for Shipment Value Protection, and makes a special declaration of value as described in Section 7 at the time of shipment, DHL’s liability for loss or damage to any Shipment or any portion thereof is limited to the lesser of (i) $100.00 or (ii) the actual cash value of the article(s) lost or damaged." [emphasis added - PDN.]
In other words, if you want loss coverage above this nominal minimum, you have to ask & tell & pay for it - no “freebies” here. Looks like either somebody goofed and missed doing that. Or, took a calculated risk that “Nothin’s gonna happen, so we’ll save the premium costs - and if something does happen to the shipment, then we’ll sue anyway, and do our trademark MicroSoft 800-lb. gorilla act to force them to capitulate”, etc. That happens often enough in the insurance business. One particularly appropriate result is called the “co-insurance” requirement or clause (if I recall correctly) - if the building’s owner tries to get cheap and doesn’t insure it for at least 80% of its value, then the payment on a loss is reduced in proportion to the extent of the under-insurance. This often seems to happen in suspected arson-for-insurance cases, too . . .
Finally, these examples (above) would have had John G. Kneiling laughing out loud. He often said, “Common-carrier transport is a disaster”, and would then proceed to prove his point with stories like these - 30 and 40 years ago ! With computers and ins
The webpages with terms and conditions cited are for single parcel shipments where Microsoft is the shipper and DHL is the carrier. I would bet that in this case DHL is a contract logistics provider to Microsoft (3PL) and no Microsoft employee ever touches the Xbox consoles. Everybody at the McAllen warehouse is a DHL employee, they receipt the defective units from Microsoft customers and ship replacements back out as per Microsoft orders. DHL decides when and how the consoles are shipped back to China for refurbishing, probably when there is enough to fill one container. As such DHL and Microsoft should spell out each parties liabilities and obligations in the contract. Contract logistics has been around long enough now that there really shouldn’t be any surprises.