Using a Freight Forwarder – Know your rights!

The rights of consumers in the retail sector are very well known, but when it comes to buying International freight and shipping services for your business the laws and international conventions are very different. 

This article tells you what to expect if you are using freight forwarding services and something goes wrong with the shipment and it is either lost or damaged.

One mistake that a lot of people make is to assume that the international carrier, shipping company or freight forwarder or Airline is simply obliged to refund them the full value of whatever goods may be lost or pay for the damage to be repaired.  After all, if your shoes fall apart the day after you buy them, you would expect to take them back to the shop and get a replacement pair, or a full refund!

This simple ‘like for like’ relationship does not work in the area of international transport and forwarding.  If every freight forwarder had to pay out in compensation the full value of the goods they transported, most of them would go out of business in a very short space of time.  That’s because you - as a customer - are usually paying only a very small proportion of the value of the goods for their forwarding services.  

Freight charges are based on the greater of the weight or volume of the goods which is known as the chargeable weight. The Freight cost is not usually related in any way to the actual value of the consignment being carried.

As international trade has developed, so have a number of statutes and conventions which LIMIT the liability of the carrier to pay compensation to the goods owner.  There are different conventions relating to different modes of transport such as air, sea and road, but they all have one thing in common; the compensation which the carrier (or their insurer) is obliged to pay out, is based on the WEIGHT ONLY of the lost or damaged goods. 

For example cargo carried by road between countries that are signatories to the CMR Convention on the Contract for the International Carriage of Goods by Road (Convention Marchandises Routiers in the original French) will be subject to specified limits of liability for compensation where the carrier is proved to be at fault.

The CMR Convention will in fact apply even if a road freight movement takes place between two countries and only one country is a signatory. In the United Kingdom it is incorporated into national law by The Carriage of Goods by Road Act 1968.

This is expressed in SDRs per kilo.   A Special Drawing Right is an International currency unit created by the International Monetary Fund and conversion rates are published regularly in the financial press or alternatively can be found on the Financial Times website. The conversion rate on the 31st December 2008 was .9368 of an SDR equals one GBP

Some customers express outrage at this – but the truth is that this limitation of liability applies in some way to all international transport provision; it is not imposed randomly by rogue freight forwarders who are just trying to be awkward.

There will be further articles about Freight liability and Marine insurance to follow.

Stephen Willis is Managing Director of RW Freight Services, http://www.rwfreight.co.uk a UK based freight company, established in 1971 and operating worldwide freight forwarding services http://www.rwfreight.co.uk/Freight-Forwarding.html