Container damage liability
2020-02-07 - Blog
Monitor the shipments for disproportionate impacts that cause damage to your container and determine who had custody of the goods
Damage liability according to The Carmack Amendment
A significant feature of The Carmack Amendment is that the freight carrier, by default, is liable for damage to the goods. It is the responsibility of the freight carrier to deliver the consignment in good condition and should be un-damaged. The shipper needs to ensure that the shipped items were in usable condition when the carrier collected them and that the goods were damaged before they were received. Further, the number and extent of damages must be quantified and documented. There are exemptions to when the carrier is held responsible for damage claims due to factors such as an act of God, the occurrence of war or terrorism, or if it can be proven that the company shipping goods has been negligent in the packing or labeling of the goods.
Manufacturers shipping their products experience damaged freight due to several factors. Most typically, goods are dropped while being moved by a forklift. The most common reason that a forklift mishandles items is due to operator inexperience and lack of training. In the United States and other countries, workers must be 18 years or older to operate a forklift. Employers are required to train and certify their forklift operators properly. Many times, due to staff shortages and time constraints, operators receive minimal training or none at all.
Containerization of freight, also known generally as ISO containers or shipping containers, are used to ship cargo across the ocean from one country to another. It is estimated that 90% of non-bulk freight is shipped in containers. The goods inside a container can be damaged when they are dropped at various stages of transport. Loading at the customer site, loading/unloading at the ocean port, and road transportation to and from the ocean port are situations where a container may be dropped. Dropping of a container at the ocean port is caused by several factors such as poor handling by the heavy-lift crane operator or malfunction of the heavy-lift equipment. Other factors leading to dropped containers are when a container is over the weight limit or if the cargo inside is not evenly distributed within the container. When a container is being transported by road or rail, the damage will occur along with accidents on the road or rail due to adverse weather conditions or driver/conductor error.
According to UK P&I Club, an insurance business serving ocean freight carriers, insurance claims due to physical damage are 28% of the incidents they receive. Other types include; claims related to refrigeration (reefer) malfunction (15%), lost containers overboard the vessel (11%), and moisture damage (9%) among others.
Freight carriers protect themselves from the cost of damage claims by paying for an insurance policy. There are two basic levels of freight insurance; Carrier liability Insurance and Freight Insurance (sometimes also known as cargo insurance or goods in transit insurance). Carrier liability insurance is a basic level of protection that automatically covers any shipment. The class of products defines the value of insurance coverage, and most often, the amount of the coverage will not exceed the value of the goods. With carrier liability insurance, a claim must be made within nine months of the delivery, and the delivery receipt must include a notice that damage has occurred. In this instance, the carrier has 30 days to acknowledge the claim, and a response is required within 120 days. Freight insurance is a higher level of protection and covers a specific amount defined value by the shipper before the shipment takes place. A mandated 30-day claim process is much faster than Carrier Liability Insurance, and you will not need to verify that the carrier was at fault.
Simplify the insurance claim process
The use of impact recorders is a conventional method to monitor shipments for excessive impacts that cause damage. These devices will measure the extent of impacts and define thresholds at which the transported goods will become damaged. Impact recorders will help identify specific GPS locations in the transportation chain where damage occurs. These devices will determine who had custody of the goods when they were damaged and will define who are the responsible parties. Using impact recorders with GPS tracking functionality will simplify the insurance claim process and will mean less time administering claims when they happen.