Intercorporate hauling

Tags: Glossary

A private carrier hauls the goods of a subsidiary and charges the subsidiary a fee. This is legal if the subsidiary is wholly owned (100%) or if the private carrier has common carrier authority.

What is Intercorporate hauling?

Intercorporate Hauling: Streamlining Logistics within a Corporation

In the vast world of logistics, intercorporate hauling plays a crucial role in ensuring the smooth movement of goods within a corporation. This practice involves a private carrier, which is a transportation company owned by the corporation, transporting goods on behalf of its subsidiary. The subsidiary, in turn, pays a fee to the private carrier for its services. However, it is important to note that this arrangement is only legal under specific circumstances.

One key requirement for intercorporate hauling to be considered legal is if the subsidiary is wholly owned by the corporation. In other words, the corporation must own 100% of the subsidiary. This ensures that the transportation of goods between the two entities is considered an internal operation rather than a commercial transaction. By utilizing a private carrier, the corporation can maintain control over the transportation process and optimize efficiency within its supply chain.

Alternatively, intercorporate hauling can also be legal if the private carrier possesses common carrier authority. Common carrier authority refers to the legal permission granted to a transportation company to transport goods for hire to the general public. This authorization allows the private carrier to offer its services to external entities, including the corporation's subsidiaries, while adhering to the regulations and standards set by the transportation industry.

Intercorporate hauling offers several advantages for corporations. Firstly, it enables them to leverage their existing transportation infrastructure and resources to efficiently move goods between different locations within the organization. This consolidation of transportation operations can lead to cost savings and improved coordination.

Additionally, intercorporate hauling allows corporations to maintain a higher level of control and visibility over their supply chain. By utilizing a private carrier, they can ensure that their goods are handled with care and transported according to their specific requirements. This level of control can be particularly beneficial for industries with sensitive or specialized products.

However, it is important to recognize that intercorporate hauling is subject to legal and regulatory considerations. Corporations must comply with transportation laws and regulations to avoid any potential legal issues. It is advisable for corporations engaging in intercorporate hauling to consult legal experts or logistics professionals to ensure compliance with all relevant regulations.

In conclusion, intercorporate hauling serves as a valuable logistics practice for corporations to efficiently transport goods within their organization. Whether through wholly owned subsidiaries or private carriers with common carrier authority, this approach allows corporations to optimize their supply chain, reduce costs, and maintain control over their transportation operations. By understanding the legal requirements and seeking expert guidance, corporations can effectively leverage intercorporate hauling to enhance their logistics capabilities and drive overall operational success.

Ready to Get Started?

Cargoz provides solution for all your storage needs

Share this Article