Refrigerated carrier due diligence

A buyer who has signed a letter of intent for a refrigerated carrier should test what the seller has said before closing. One order is: regulator records come first, then the food-safety and temperature files, then equipment, then registry searches for liens. Each finding should end in a decision: fix it before closing, price it, or walk. For the general checklist that applies to every carrier, see trucking business due diligence. This guide covers what a cold-chain operation adds.

Regulator records

Ask the seller to order the records the carrier alone can get. In Ontario, the Level 2 CVOR record is available to the carrier only and gives detail on collisions, convictions and inspections over a five-year period, according to the Government of Ontario, which also says a carrier can review its CVOR record online at any time for free; ask the seller to walk you through it. For Alberta, ask for the current Safety Fitness Certificate and any commercial carrier audit results. Under the National Safety Code, Transport Canada says there are 16 standards, ranging from commercial driver licence requirements to carrier facility audits, and describes the code as minimum performance standards applying to all persons responsible for the safe operation of commercial vehicles, so ask which have been audited. A record that does not match what the seller described is a finding. Write it down, ask the seller to explain it in writing, and decide whether the explanation changes the price or the structure.

Food licence and temperature files

Ask for the food licence if there is one, and the scope of its activities. The Regulations require an operator to run its establishment so that any conveyance used to convey a food to or from it, and loaded or unloaded there, is capable of maintaining temperature and humidity at levels appropriate for the food and, if necessary to prevent contamination of the food, is equipped with instruments that control, indicate and record those levels. Request the logs those instruments produce. Check that they exist for loads across the whole period, not selected weeks, and read them for gaps. Compare a sample of load dates against the logs and against the delivery paperwork. Missing logs do not prove a problem, but they remove the evidence that there was none. Ask who reviews the logs, how an alarm is handled, and where a driver records a load that was rejected at the dock.

Claims and shipper audits

Get every temperature-excursion or product-loss claim, open and closed, with the cause, the amount paid and who paid it. Ask for the insurer’s loss record as well. Then request each shipper’s latest audit report and any corrective-action letter. Treat a claim still in dispute, or an audit finding that was never fixed, as something to resolve before closing. Where the same unit or lane appears in several claims, trace it to a root cause before you accept any explanation.

Equipment and maintenance

Inspect the reefer units, not only the tractors and trailers. The Heating, Refrigeration and Air Conditioning Institute of Canada advocates servicing by qualified professionals, so ask for service invoices that show who did the work. Have an independent technician examine a sample, including the oldest units, and confirm unit serial numbers against the list the seller gave you. If a large share of compressors is due for overhaul at once, price the work before you agree on the figure. Check, too, that monitoring equipment is working and that its records are retained. If a unit cannot show its history, ask how the carrier would answer a shipper’s claim.

Liens, leases and findings to resolve

Ask your lawyer to search the personal property security registry in each relevant province for registrations against trailers and units, and match them to the financing the seller disclosed. Read equipment leases for transfer limits. Findings to resolve before closing include an unresolved spoilage claim, an unremedied audit failure, a fleet needing simultaneous overhauls and revenue resting on a single account. Have the purchase agreement name the specific findings, so a later dispute turns on what was disclosed rather than on memory. Keep a dated index of every document received, because that index becomes the record of what the buyer knew.

• Regulator records the carrier alone can obtain, ordered by the seller and delivered to you.
• Food licence scope and conditions, plus instrument temperature logs for loads across the full period.
• Every open and closed claim with cause, payment and any dispute still running.
• Shipper audit reports and corrective-action letters.
• Registry search results matched to the financing and leases the seller disclosed.