By Henry E. Seaton

February 2004
Reprinted from

Q We have been awarded a nice contract to transport shipments from the United States to Mexico providing through trailer movement in conjunction with a Mexican carrier at the border. Can you provide me with a suitable interline agreement?

A I can certainly provide you with an interline agreement, but I am not at all certain that is what you want or need. “Interlining,” or providing “joint line” service, is a term of art that relates to a partnership between two or more carriers for the through movement of traffic from a point of origin to an ultimate destination. In interlining, the origin carrier accepts joint and several liability for the safe delivery of the shipment, may be sued for a loss in transit and in turn has the right of indemnity or recompense from its joint line partner if the loss occurred while the other carrier was in possession and control of the goods. Interlining is an established practice in the United States with respect to less-than-truckload carriers, but there are many practical problems involved when shipments moving to or from Mexico are involved.

In the truckload Rules Circular, which our firm recommends to clients, Item 220 provides:

“Carrier does not accept liability for loss or damage to shipments under transport in the Republic of Mexico. Carrier participates in international shipments originating or destined to Mexico on a combination of rates basis notwithstanding any arrangements for through trailer movements. Shippers are advised that liability for cargo loss in the Republic of Mexico differs from U.S. law (49 U.S.C. 14706) and the special arrangements with the Mexican carrier participating in any transborder movement is not the carrier’s responsibility.”

As a starting point, language like this should be introduced into any contract involving shipments having a prior or subsequent movement to or from Mexico by a Mexican carrier. Although it is the intent of the North American Free Trade Agreement to make movements between the two countries seamless, we are not there yet. In the United States, carriers are generally liable for the full actual value of any shipment lost or damaged in transit under the Carmack Amendment, 49 U.S.C. 14706. If a shipment is lost or damaged in the Republic of Mexico, the carrier’s liability is a few pesos per pound, and few carriers accept responsibility for full value losses or have the insurance necessary to make good on an indemnity.

So in the absence of very careful arrangements, a U.S. carrier should not cavalierly “interline” shipments with a Mexican carrier, issue through bills or accept joint liability for loss or damage that is beyond its control. Unfortunately, several courts have held U.S. carriers liable for losses arising in Mexico where a through bill of lading was issued even though the U.S. carrier had intended to accept no liability for the shipment past the border. For this reason, a small carrier is best served using its own bill of lading and consigning the shipment to the shipper’s agent at the border.

Rather than “interline” shipments for through movement to Mexico, many carriers enter simple “Interchange of Equipment” agreements that allow the Mexican carrier to use the U.S. trucking company’s equipment in movements beyond the border. Such an agreement allows for the Mexican carrier chosen by the shipper to use your trailer, either with or without compensation, provided it is returned, ordinary wear and tear excepted. Importantly, an “Interchange of Equipment” agreement does not make the U.S. carrier liable for loss or damage to the shipment beyond the U.S. border. If the shipper retains the Mexican carrier for the movement from the border into Mexico, the Mexican carrier signs your delivery receipt at the border as evidence that your job has been completed.

With the implementation of NAFTA, Mexican carriers will extend their service into border states, and U.S. carriers will become increasingly involved in transborder traffic. But at least for now, the distinctions between “Trailer Interchange” and accepting “Joint Line” or “Interlining Partner” responsibility are important. Take great care not to accept liability inadvertently under U.S. law (the Carmack Amendment) for uninsured and unindemnified losses occurring in Mexico while being transported by another. Unless you are certain the Mexican partner is obligated and sufficiently insured to meet the full value liability standards set by U.S. law and otherwise to fully indemnify you, I would not advise you to enter an interline or “through bill” agreement.
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