We featured a little “how-to” blog post about avoiding cargo claims, but an important part of cargo claims is understanding the Carmack Amendment, so here is a basic FAQ sheet regarding the good ol’ Carmack Amendment. You can read the amendment here in its entirety, if you are in the mood for some light reading.
Okay… maybe it isn’t the easiest thing to read. Let’s break it down a bit.
First of all… what is the Carmack Amendment?
The Carmack Amendment came to be in 1935 when Congress passed a law with the purpose of achieving uniformity over rules that govern interstate shipments. It covers liabilities, duties and rights of shippers and carriers regarding cargo loss.
What does Carmack say?
According to Carmack, a freight carrier is held liable for damages to shipped goods unless they can prove they were not negligent or one of the below exceptions applies.
Act of God - this means the freight was damaged by a tornado, flooding, extreme winds knocking over a trailer, etc. (Ordinary inclement weather doesn’t apply here).
Public enemy - this sounds a bit outdated but… if we are in wartimes on American soil and the freight is damaged by enemy troops the carrier is not liable.
Act or default of shipper
Public Authority - loss of freight through government intervention.
Inherent vice or nature of the goods transported - if the product spontaneously combusts during transport that is not the fault of the carrier.
How much is the carrier liable for?
A carrier’s liability is limited to actual loss or damage. Value is primarily based off of market value, not production value, because market value is what is lost. However, a carrier is not liable for other costs incurred due to the damage or loss.
For example, say a factory needed a part delivered to keep their production going but the part was delivered damaged. The carrier will not be responsible for lost profit the factory incurred during the time they were forced to be shut down due to the damaged part.
One key factor: A carrier can limit liability through contracted rates or their tariff.
Be sure to consider these when negotiating contracts with your carriers.
Want a better way to take control of your carrier network? Freightview doesn’t handle claims, but we can provide the reporting that allows you to hold your carriers accountable. Give us a try here.