QUESTIONS?
The 2nd U.S. Circuit Court of Appeals, in a case of first impression, has shocked the railroad and motor carrier industry by deciding that the Carmack Amendment applies on the inland portion of an import shipment on a through bill of lading, to the exclusion of The Carriage of Goods by Sea Act’s (COGSA) limitation. Sompo Japan Insurance Company of America, v. Union Pacific Railroad Co., 2006 U.S. App. LEXIS 17385 (2nd. Cir., July 10, 2006).
Negotiating ocean marine contracts requires a great deal of expertise and differs greatly from negotiating with other modes of carriage. However, there are a few issues and techniques that should be addressed during negotiations as these issues often result in disputes with carriers and substantial losses to cargo owners.
There are many unconscionable practices taking place in the cargo liability field, but the one that takes the cake is the limitation found in cartage and drayage companies’ bills of ladings that limits liability to $50 per shipment.
Why shippers entrust these cartage companies with goods worth $1 million per container or more, particularly when the goods are at high risk of theft, is a mystery. And so is the answer frequently heard: “We have our own insurance.”
In view of the fact that the United States is the largest trading nation in the world, it is easy to be complacent about the law and make cargo liability decisions based upon U.S. law or what we believe the outcome should be based on U.S. law. Occasionally, however, one may discover that a cargo movement is governed by a local law that differs substantially from U.S. law.
If a shipment originates in that foreign nation, it will be governed by the laws of that nation. Transportation laws are no exception. Transportation laws of a nation may provide a different definition of a carrier, a forwarder, or other entity than applies in the U.S.
Much has been written and spoken about security in transportation since 9/11, and Congress and the Administration have acted quickly and responsibly in response to terrorists’ threats and actions.
However, it is time to pull back from the legislative response to this crisis and take a closer look at the flaws in our transportation and distribution network that could result in serious damage by terrorists. At the same time, we may see an improvement in safe delivery of the nation’s goods.
