How a Parcel or Freight Audit Can Help Clarify Shipping Liabilities Author: akecskes
July 13, 2011

The global economy has increased trade across borders and many businesses have outsourced production to other countries. This has increased the demand for international transport services. While transport safety has improved over the years, goods can still be damaged during transport. Bearing the brunt of this liability is the carrier performing international transports. To avoid liability, a carrier must prove that he and his agents took all reasonable measures to avoid the occurrence and related consequences of a loss. A freight audit can help determine if such measures were taken. It can also help reduce shipping costs.

Transport liability issues have traditionally fallen under the purview of international law and conventions. Such conventions set up different liability groups for various types of transport. For example, the Hague Rules and the Hague-Visby Rules specify international rules on ocean carriage. Similarly, the Warsaw Convention and its follow-up, the Montreal Convention outline international air carriage rules. A parcel or freight audit can reveal which aspects of these rules apply to your shipment. Many shippers have also used these audits to reduce shipping costs.

Ocean transport and air transport conventions have been implemented worldwide because both modes of transport are widely used around the world. However, the rules for inland carriage (road and rail) vary by land region and between the U.S. and Europe. To reduce shipping costs and help clarify inland transport issues, many shippers have turned to freight audit companies.

The Hague/Visby rules emphasize that a carrier's liability begins with loading of the ship, and ends with discharge from the ship. After discharge, local laws govern liability and a freight audit can both help to determine where the liability lies and reduce shipping costs. A contract for the carriage of goods by sea can be breached three ways: by losing or damaging the goods; by delivering the goods short of their destination, or by a delay in carriage. While the carrier is liable for any loss or damage to goods, there is some debate as to whether such loss includes a reduction in the value of the goods due to delay.

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