When Freight Is Damaged: Cargo Claims and Where Broker Liability Sits

The call comes on a Friday afternoon. Two pallets arrived crushed, the receiver has signed for them, and your customer wants to know what you are going to do about it.

What you do about it is largely decided by things that already happened: what the bill of lading says, what your carrier agreement says, and whether anybody noted an exception at delivery.

Who is liable when freight is damaged?

The motor carrier, under the Carmack Amendment, which makes an interstate carrier liable for loss or damage to the goods it accepted. A broker arranges transportation rather than performing it, so it is not a carrier and Carmack does not run to it, unless the broker held itself out as the carrier or took on liability in its own contract.

That second clause is the one that catches brokerages. Language in a customer agreement promising delivery, or accepting responsibility for the freight, can move liability onto you regardless of what your authority says. Read your own customer contracts as carefully as you read a carrier agreement.

The deadlines

Federal rules require a carrier to allow at least nine months from delivery to file a written claim, and at least two years from the date the claim is denied to bring suit. Those are minimums that appear in the bill of lading terms; the claim-processing rules are in 49 CFR Part 370.

Nine months sounds generous and is not. Documentation goes cold, drivers move on, and the facility that loaded the pallet has no memory of it by month four. Treat the deadline as the outer limit and the first week as the real one.

What decides a claim

1. The exception noted at delivery. A receiver who signs clean has made the carrier’s case for them. Damage noted on the delivery receipt, in writing, at the time, is the single most valuable document in the file.
2. Photographs at the point it was found. Of the pallet, the trailer, the load pattern and the seal. Taken before anything is moved.
3. The bill of lading. What was tendered, in what condition, in whose count, and whether shipper load and count was marked.
4. The value of the goods. An invoice, not an estimate. Claims are settled on actual loss and a number nobody can evidence stalls the file.
5. The written claim itself. Identifying the shipment, asserting liability, and stating a specific amount. The rules are specific about that last part.
6. Mitigation. What the parties did to limit the loss, including salvage. A claim for full value on goods that were sold at a discount will be reduced to the real number.

What the carrier can defend on

Carrier liability is broad but it is not absolute. The recognised defences are narrow and specific: an act of God, an act of the public enemy, an act of the shipper itself, an act of public authority, or the inherent vice or nature of the goods. Shipper load and count, improper packaging by the shipper, and produce that was already at temperature when it was loaded all live under that third heading.

A limitation of liability on the bill of lading can also cap the amount, if it was lawfully agreed. That is why the paperwork the carrier issued matters as much as the paperwork you did.

How a broker should run the process

• Acknowledge fast and in writing. Silence is what turns a claim into a complaint about you rather than about the freight.
• Get the file together the same day. Rate confirmation, bill of lading, delivery receipt with exceptions, photographs, and the commercial invoice.
• Notify the carrier and their insurer in writing. The carrier agreement should already say how long they have to respond.
• Do not admit liability on the phone. Be helpful about process without accepting a position you do not hold.
• Check your own contract before you promise anything. If your customer agreement moved the liability onto you, that is the fact that decides the call.

None of this replaces the check that avoids most claims: knowing who is on the load. How to vet a carrier sets out the insurance and safety checks, and what belongs in a carrier packet covers the cover itself.

Insurance worth carrying

• Contingent cargo. Responds where the carrier’s cargo insurer denies and your customer still looks to you.
• General liability. Standard in most shipper agreements regardless of freight.
• Errors and omissions. For the claim that is about your process rather than the freight, which is the exposure a broker actually has.

The bottom lineLiability sits with the carrier; the process sits with you. Get the exception noted at delivery, get the file together the same day, and read your own customer contract before you tell anybody what you will cover.