Are There Limitations on What International Freight Forwarders Are Able to Transport?
The carrier's liability, and that of the forwarder's, when it comes to loss and cargo damage is limited by various international agreements, conventions, and protocols, which include but are not limited to:
For Air Freight:
The Hague Protocol and The Warsaw Convention that limit the forwarder's liability to an amount that's no greater than two hundred fifty (250) Francs or 19 SDR per gross kg of the cargo damaged or lost.
For Road Haulage:
The CMR Convention limits the forwarder's liability to an amount that's no more than 8.33 SDR for every gross kg of the damaged or lost cargo.
For Sea Freight:
The UN Convention on the Carriage of Goods by Sea limits the liability of the carrier for damage caused to 2.5 SDR for every kg of gross weight of the damaged or lost cargo or 835 SDR per package. Take a look at freight forwarders UK to find out more.
For Rail Carriage:
The Convention concerning International Carriage by Rail (COTIF) sets the limit for the liability of railways in Europe at 17 SDR per kg of gross weight of the damaged or lost cargo.
Limitations of Liability of Third Parties
Third parties may be involved by the freight forwarder to organize shipment of a particular cargo. The third parties could be customs authorities, cargo agents, port authorities, warehouse employees, ground handling agents, among others.
Third party liability for cargo damage or loss is limited by the local laws of the countries in which the damage or loss of cargo occurred and the third parties offer services.
The Role of the Forwarder in the Supply Chain
One of the important players in the supply chain is the forwarder. The forwarder is responsible for organizing all processes relating to the storage, loading, marking, packaging, movement, handling, or unloading of cargo.
It is also the forwarder's responsibility to choose the most suitable routes and mode of transportation, finding a suitable carrier, preparation of shipping documents, taking care of cargo insurance and customs declaration, etc.
Depending on the responsibilities the forwarder takes on, they can act either as a Principal or Agent, which defines the limitations of their liability. When the Freight Forwarder provides services via third parties to perform its duties, it is acting as an Agent.
The Forwarder may also act as a Principal when it provides services using its own resources when it does the following:
- It issues its own transport document such as an airway bill with its own prefix.
- It mobilizes its own employees to provide logistics services.
- It uses its own equipment - hardware, vehicle fleet, etc. - thus directly assuming the carrier's liability.
Limitation of the Freight Forwarder's Liability
Customers dealing with a freight forwarder need to understand that in case of an incident (damage, loss, theft, delay, cargo seizure), it isn't possible to hold the freight forwarder fully liable for all damages since it plays more of the role of an aggregator of a variety of logistics services as opposed to a direct supplier. The forwarder's liability is usually limited by the same international conventions that apply to carriers.
The forwarder is also liable for damage or loss of cargo along with the related costs if the forwarder's direct fault is established in the provision of services as principal (for instance, negligence).
It is also important to note that the freight forwarder isn't responsible for the actions or inaction of the third parties it hires, if it practices proper due diligence in instructing, choosing, or controlling them.
The Standard Terms and Conditions and/or forwarding agreement, as a rule, contain a clause on the limitations of the liability of the freight forwarder.
The forwarder doesn't assume either direct or indirect liability for any damages where:
- The fault of the customer or their representatives is established
- Packing or labeling is either missing or incorrect
- The customer or their representatives provide incorrect information
- Force majeure situations come into force
How Can You Protect Your Cargo from Risks in the Supply Chain?
Due to liability limitations of players in the supply chain, you need to understand the risks involved and protect your cargo adequately.
A qualified forwarder proactively takes the steps required to minimize all the possible risks in the supply chain. A forwarder will never throw you or your cargo under the bus no matter what happens and will even go the extra mile to ensure that any problems that arise are solved.
A surefire way to protect your assets throughout the whole journey is using cargo insurance. Insurance helps minimize potential material losses for the owner as well as the rest of the players in the logistics chain.
The safety of your cargo also depends on the quality of the packing and labeling, which helps in protecting the cargo against all kinds of damage and/or loss during handling and shipment. Packing is required to comply with international standards and ensure shipping that's safe and reliable.