In 1935, Congress passed legislation to help prevent carriers from being subject to unqualified cases of fraud and freight loss claims. Previously, carriers were held liable for any damage that occurred to a shipment while in their possession. However, this meant that carriers were on the financial hook even when damage was not their fault. Over time, the Carmack Amendment has been interpreted to provide additional protections to carriers through the Federal Motor Carrier Safety Administration (FMCSA). But, the age of the Carmack Amendment has led many to wonder how it applies to modern shipping practices. So, let’s take a moment for a brief refresher.
Carriers cannot automatically be held responsible for damage that occurs outside of their control. Now, this is not to say that carriers employing unsafe drivers or other possible sources of negligence get a free pass on damage claims. Carriers also have a duty to actively reduce their level of negligence as defined by the Carmack Amendment, reports Lisa Terry of Inbound Logistics. Yet, carriers are held liable for damage without proof of negligence unless it can prove otherwise. In other words, carriers and shippers alike must understand more about the Amendment and when it applies.
Carriers have one path to avoiding freight loss liability under the terms of the Carmack Amendment. If the carrier can provide proof that it was not negligent and that one of five exceptions caused damage, it can avoid being responsible for freight damage. These exceptions include the following:
The exceptions laid out by the Carmack Amendment protect carriers from the burden of liability when they are not able to control events that may contribute to spoilage or damage of freight. More importantly, damaged freight is not a valid reason for withholding payment to freight forwarders or carriers under the terms of the Carmack Amendment. In other words, you should never withhold payment while a freight loss claim is being filed or processed. If the carrier is unable to prove its lack of negligence or defense under one of the exceptions, you may be reimbursed for the freight loss costs minus the value of the damaged goods.
By taking the time to understand what the law says with respect to holding carriers liable, you can help ensure your customers receive their packages appropriately and file claims when necessary. Next, we will take a closer look at how the Carmack Amendment impacts the claims’ filing process and third-party logistics providers.
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