Liability Limits… ?
Check Your Carrier’s Liability Limits (Before You Ship)
Before you allow a carrier to move your freight, you need to understand the liability limit that applies if cargo is lost, damaged, or delayed. Do not assume you will be reimbursed 100%—even when the carrier is at fault.
A key point many shippers miss: carrier liability is not cargo insurance. Liability is usually capped by law (international conventions) and/or by contractual terms, and claims are typically subject to strict notice periods, exclusions, and proof requirements.
Why this matters
Carriers and logistics providers can legally limit exposure in many situations. In international transport, limits are often defined by conventions using SDR (Special Drawing Rights)—a unit published by the IMF and converted into currency at the applicable rate on the settlement date. As of early February 2026, 1 SDR ≈ USD 1.37 (indicative). (IMF)
If your cargo value per kilogram is high, the gap between actual value and recoverable compensation can be severe.
Typical liability caps (high-level, for awareness)
These are common reference points in international freight (details depend on corridor, contract, and role: carrier vs forwarder, agent vs principal):
- Air (Montreal Convention): cargo liability increased to 26 SDR/kg (effective 28 Dec 2024). (OACI)
- Road (CMR): commonly 8.33 SDR/kg (subject to protocol status and exceptions such as wilful misconduct). (iru.org)
- Ocean (Hague–Visby): typically 666.67 SDR per package/unit or 2 SDR/kg, whichever is higher. (bifa.org)
- Rail (CIM): commonly 17 SDR/kg. (cit-rail.org)
Business interpretation: ocean claims can be constrained by a per-package ceiling; road/rail/air are usually per kilogram. This drives very different risk profiles by mode.
A practical example (where the cap hurts)
Imagine a 1,000 lb / 450 kg shipment with a commercial value of USD 250,000 (high-value components):
- Under international air rules, the ceiling is roughly 450 kg × 26 SDR/kg = 11,700 SDR (converted at IMF rate), meaning recoverable compensation can be a small fraction of cargo value if the shipment is totally lost. (OACI)
Even when the carrier is liable, the cap is the cap unless you have declared value mechanisms or separate cargo insurance.
How “per piece / per package” limits work against you (common in sea freight and some domestic regimes)
Let’s assume you ship 10 boxes totaling 1,000 lb / 450 kg, with a total value above USD 10,000. One box contains a critical high-value part and gets lost.
If a regime applies a per package ceiling, your recovery may be limited to a capped amount for that single box, regardless of the shipment’s total value—unless the shipping document clearly reflects the number of packages and the value protection strategy.
Ocean conventions commonly cap at 666.67 SDR per package (or 2 SDR/kg, whichever is higher). That can create a dramatic mismatch for high-value pieces packed in one “package.” (bifa.org)
Consultant takeaway: packaging strategy and how “packages” are declared on the transport document can materially impact recoverability.
What forwarders typically do (and what you should insist on)
Most professional freight forwarders ask for the cargo value to:
- identify which liability regime likely applies,
- flag what is not covered in practice,
- and recommend the right protection approach: declared value (where available) and/or cargo insurance.
By knowing the exposure in advance, you can protect yourself by:
- buying appropriate cargo insurance, or
- selecting a carrier/service with more suitable terms for your cargo profile, or
- restructuring the shipment (packaging/unitization, mode choice, routing, service level).
Shipper checklist
Before shipping, confirm in writing:
- Which party is liable (carrier vs forwarder as principal vs agent)
- Which regime applies (air/road/sea/rail; international convention vs domestic contract)
- The exact liability limit (per kg, per package, per shipment, exclusions)
- Declared value option (is it available, cost, and documentation required?)
- Cargo insurance decision (who buys it, insured value, exclusions, claims process)
- Packaging + “package count” accuracy on the shipping document
- Claims deadlines (notice periods and time bars) and required evidence
Bottom line: do not buy freight solely on rate. Buy freight with a clear view of service + liability exposure + insurance strategy.
