IACCM Contract Management Forum

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2016-05-24 16:05:39

Freight Forwarder's Liability for Cargo Loss

We are currently negotiating a contract for international freight forwarding services and would appreciate suggestions and feedback regarding liability for cargo loss/damage. Will freight forwarders agree to assume such liability and, if so, how much? And will they agree to provide cargo insurance? We understand there are international conventions and laws governing this matter which tend to limit the freight forwarder's liability, but we also understand that parties are free to contract differently if they so choose. What we don't know, are the industry norms. Any advice you may have would be greatly appreciated.
 •   2016-05-24 20:30:19
The phrase "everything's negotiable" comes into play with this question. Nearly every freight forwarder will take on the risks that you mention...at a price. So much of the answer depends on the myriad of factors that are in play on a given project. The best advice here is to understand the incremental costs associated with each of the risks you raise, and then determine whether the risk avoidance justifies the incremental costs. In most instances, this assessment can only be conducted in a competitive market situation.
 •  Deutsche Post DHL - Global Business Services  •   2016-05-25 05:44:19
The industry norm is that freight forwarders operate standard conditions incorporating the conventions. However, depending upon the size and complexity of the customer and their requirements, freight forwarders may be prepared to enter into negotiations on amended contractual terms.

Freight forwarders can arrange all risks cargo insurance on behalf of the exporter/shipper, i.e. sell cargo insurance to the exporter/shipper.
An alternative would be for the exporter to arrange their own cargo insurance programme.

The respective conventions are as follows:

For air freight:
Montreal Convention i.e. the Convention for the Unification of Certain Rules for International Carriage by Air signed at Montreal, Canada, on 28 May 1999.
or the Warsaw Convention the Convention for the International Carriage by Air signed at Warsaw, Poland, on October 12, 1929, as amended and supplemented by applicable protocols and supplements.

For road transportation:
Within Europe:
Convention for the International Carriage of Goods by Road (CMR) which provides a limit of 8.33 Special Drawing Rights per kilogram

Domestic transportation:
Usually the national road transportation regulations e.g. in UK: RHA

For ocean freight:
Hague - Visby Rules i.e. the 'International Convention for the Unification of Certain Rules of Law relating to the Bills of Lading', amended by the Brussels Amendments (officially the 'Protocol to Amend the International Convention for the Unification of Certain Rules of Law relating to Bills of Lading')
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