Cargo claims are a critical part of the transportation and logistics industry, providing a legal remedy when goods are lost or damaged during shipment. While it might seem like a straightforward matter of responsibility, cargo claims involve a complex mix of federal law, contracts, documentation, and legal procedure. Understanding the fundamentals of how cargo claims work—who can file them, who can be held liable, and how to prove damages—is essential for carriers, shippers, and intermediaries alike.
What Is a Cargo Claim?
A cargo claim, often referred to as a freight claim, is a legal demand made by a shipper, consignee, or the owner of goods against a carrier, seeking compensation for goods that were lost, damaged, or otherwise mishandled during transport. Importantly, these claims arise from a breach of contract—not necessarily negligence. That means a carrier may be held liable even without having acted carelessly.
Cargo claims are typically brought against carriers or their insurance providers. Under federal law, brokers—entities that arrange for transportation but do not actually transport goods—are generally not liable for cargo damage.
The Carmack Amendment: Foundation of Carrier Liability
The Carmack Amendment serves as the legal backbone for most cargo claims involving interstate shipments. This federal statute governs the liability of carriers transporting goods across state lines by rail or motor vehicle. It was designed to create uniformity and predictability in how claims are handled.
One of the amendment’s key features is its preemption of state laws. That means state-level legal claims like negligence, emotional distress, or unfair trade practices are generally not applicable when cargo is damaged in interstate transport—unless the claim arises from a distinct and independently actionable harm, such as negligent hiring.
The Carmack Amendment makes motor carriers liable for the actual loss or injury to property during shipment. Unlike brokers, carriers are directly responsible because they handle the physical movement of goods.
The Bill of Lading and Liability Limits
The bill of lading plays a vital role in the cargo claims process. Issued by the carrier, it acts as a receipt and a contract of carriage. It includes essential information such as the names of the consignor and consignee, origin and destination points, freight description, and weight. It also serves as primary evidence that goods were delivered to the carrier in good condition.
While carriers cannot fully escape liability, they can limit it. To do so lawfully, they must:
Without these conditions, any limitation of liability is likely unenforceable.
Jurisdiction and Time Constraints
Time Constraints: Know Your Deadlines
When it comes to cargo claims, timing is everything—and federal law sets strict minimum deadlines to protect shippers. Carriers cannot legally give claimant’s less time than what’s outlined in the law, no matter what their contracts or policies might say.
Here’s what federal law guarantees:
Carriers are not allowed to shorten these timeframes. Any attempt to do so is legally invalid under federal law. That said, carriers can provide more time under their contracts, but never less.
Carriers must acknowledge receipt of a claim within 30 days and issue a substantive response within 120 days. If more time is needed, the carrier must provide regular status updates every 60 days.
Proving a Cargo Claim: Prima Facie Case
To establish a claim against a carrier, the claimant must show:
Interestingly, the claimant does not need to prove that the carrier caused the damage—only that the damage occurred during transit. The burden then shifts to the carrier to prove it was not at fault.
Documentation and Valuation
Effective cargo claims rely on detailed documentation, including:
Notably, claimants cannot profit from a cargo claim. If goods were purchased wholesale, the reimbursement must reflect that, not the retail value. Compensation typically reflects the market value differential—what the goods were worth if undamaged versus their value upon delivery. In some cases, consequential damages such as lost profits can also be recovered, but only if the carrier had prior notice of the special circumstances that could result in such losses.
Special Considerations
Goods of Extraordinary Value
Carriers may reduce their liability for high-value items (those exceeding $100 per pound) if these are not declared on the bill of lading. Shippers should always disclose such items to ensure full protection.
Dangerous Goods
If a shipper sends hazardous materials without informing the carrier, the shipper may be strictly liable for any resulting damages. Courts consider whether the carrier had actual or constructive knowledge of the cargo’s dangers.
Freight Charges
Pending claims do not allow shippers to withhold freight charges. Federal law requires that all shipping costs be paid before a claim is resolved.
Liability of Shippers and Intermediaries
Shippers can sometimes be held liable if their own actions, like poor packaging, cause damage. For example, a leaking container in a less-than-truckload (LTL) shipment could damage surrounding freight. In such cases, the carrier may pay other parties’ damages and then seek reimbursement from the at-fault shipper.
Transportation intermediaries, such as freight brokers, are usually not liable unless they act as carriers, accept liability by contract, or cause damage through negligence or breach of contract.
Air and Sea Cargo
Air Cargo
Domestic air shipments are governed by the air carrier’s tariff, which often limits liability to as little as $50 per pound and may require claims within 7 days. International air shipments fall under the Montreal Convention of 1999, which sets a two-year limit to file a lawsuit and requires damage claims within 14 days of delivery.
Ocean Cargo
The Carriage of Goods by Sea Act (COGSA) applies to international ocean shipments and can also apply to domestic shipments if noted in the bill of lading. Under COGSA, lawsuits must be filed within one year of delivery or the expected delivery date.
Navigating cargo claims requires a solid understanding of legal frameworks, contractual obligations, and procedural rules that govern the shipment of goods. From the Carmack Amendment’s federal oversight of carrier liability to the nuances of proving damages and observing strict time limits, each aspect of the cargo claims process plays a vital role in determining outcomes. Carriers, shippers, and intermediaries must pay close attention to documentation, disclosure, and communication to protect their rights and limit exposure. By proactively managing these elements, parties can minimize risk and resolve claims efficiently in a highly regulated and detail-oriented industry.
If you have questions about this article, please contact Natalie Lyon (nlyon@setlifflaw.com) at (804) 377-1275 or Steve Setliff (ssetliff@setlifflaw.com) at (804) 377-1261.
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