Risks in Cargo Claims
Although the shipper can recover the full delivered price of lost or stolen articles without showing carrier negligence, portions of federal law do benefit carriers. For example, shippers are required to mitigate damages - accept a damaged or short load and take reasonable efforts to reduce the claim by repackaging and repairing damaged items. You are not required to meet particular trains or sailings, and you must provide reasonable dispatch only. Unless you are aware of and accept added responsibility for late delivery, you are not responsible for consequential or special damages such as production interruption.
Finally, as we will discuss in the next issue, a carrier under common carriage can publish its own rules in accordance with the statute and regulations in order to reduce its liability and avoid catastrophic claims.
Carriers who transport shipments by contract can, with their shippers, waive the statutes and rules in writing and determine cargo loss by written standards agreed upon by both parties. Many shippers insist on contracts as a prerequisite to handling their freight. There are several potential cargo liability traps in the standard language of most shipper-prepared contracts, however. Watch out for broadly worded clauses that require you to indemnify and hold the shipper harmless from all loss regardless of fault. Do not agree to let the shipper deduct the value of the disputed cargo claims from the freight charges he owes you. This practice, called "set-off" or "off-set," can deprive you of the right to adjust the claim and deny you the ability to recover from your own insurer.
Be pro-active whenever possible. Read shipper and broker contracts carefully! Require that your freight charges be paid without set-off. It's fine to establish a simplified cargo claims resolution method, but do not let the shipper alone decide when and how much you should pay. Don't waive the provisions of federal statutes and regulations that limit your exposure. Know the nature and value of your cargo. All too often, carriers sign load confirmation sheets without knowing whether the shipment is computers or bags of cement, used machinery or dog food. One load can be worth $10,000, the next $500,000.