Working in shipping means you’re always dealing with risk. Risk with how your supply chain is set up, risk with the carriers you are working with, and mostly commonly – risk of damage to shipments. It sucks, but it happens frequently.
In the case of a damaged shipment, the first step of a shipper is to put those who fingerprinted their cargo on notice of demand for payment. But knowing how much each person is going to pay you isn’t always that easy.
“Carrier Legal Liability” determines the extent to which your carrier is responsible for damage inflicted on your cargo while in transit.
Carrier Legal Liability
Carrier Legal Liability refers to the amount that your carrier may be required to pay in the instance of cargo damage. In other words, it’s not money that you are guaranteed through insurance, but rather money you have a chance at receiving from the carrier if sufficient proof is brought that they were responsible for the damage.
However, keep in mind that carrier legal liability is often very low. In the instance of ocean freight, your carrier may only be responsible for paying up to $500 per standard TEU shipping container (we’re assuming you’re shipping a lot more than $500 worth of cargo in that container.)
Here are a few of the basics of carrier legal liability:
Burden of Proof
The “burden of proof” lands on you – the shipper – when it comes to carrier legal liability. In other words, no one is going to go through the work for you of finding and demonstrating proof of the carrier’s responsibility for cargo damage. That responsibility lands on you during the cargo claims process.
You will need sufficient proof and documentation that demonstrate why the carrier is at fault. This is where pictures, details of transit, type and location of cargo damage, and all other details surrounding the scenario need to be thoroughly explored.
If that sounds a bit daunting to manage, we’ve set it up in an easy online tool to make the process simple: GCA (Global Claims Assist).
As we mentioned before, ocean carriers are often only legally liable for $500 per shipping unit, which they will argue is a full shipping container. In other words, you may end up getting a maximum of $500 from the carrier for an entire 20ft container of completely damaged cargo… Not that great of news.
Air shipping legal liability limitations are a bit different, but still rather underwhelming. They come in around roughly $30 per KG.
Why are these limitations so low, and who is responsible for setting and enforcing them? Well, these limitations are in place to essentially keep all carriers from going out of business. Can you imagine if carriers were paying in full to every single shipper who’s damaged cargo was fingerprinted at one point or another by them during a shipping process?
These limitations are put into place by a variety of organizations – sometimes international conventions and governing bodies, sometimes treaties, etc. Rules will vary depending on the mode of shipping used and whether it’s domestic or international.
Exclusions are, as you probably guessed, factors that cause liability to fall out of the hands of the carrier. In certain circumstances depending on the type of damage, time of occurrence, and reason for damage, the carrier may get away scotch free with absolutely no liability. Perhaps the most common exclusion seen is if damage is caused due to “An Act of God.”
How to Get Payment for Damaged Cargo?
It’s super frustrating dealing with the claims process and trying to hold your carriers accountable for a damaged shipment. Even in the instance of winning a claim against a carrier, it may not even be remotely worth your time if you’re only getting $500 per shipping unit.
The best thing you can do as of this moment is to put all carriers who fingerprinted your damaged cargo on notice for your demand of payment – that’s what we’ve developed our Global Claims Assist (GCA) to do.
The best thing you can do for future avoidance of claims issues and cargo damage is to insure your cargo. It is way more affordable than most shippers think and it safeguards you from paying for your cargo twice over every time a carrier damages it and fails to take accountability.
If you have questions about cargo insurance or cargo damage and would like to speak to someone, please don’t hesitate to reach out to one of our team members! We would absolutely love to help you and your team find a solution to the issues you’re encountering or questions you have!