Using a Freight Forwarder - Why Their Contractual Liability is Limited

I have explained in an earlier article that a freight forwarder or shipping company is in a privileged position; if the shipper's goods are proven to be lost or damaged in transit, the carrier does not have to compensate for the full value of the goods. There are historical reasons for this. One of them is that the small islands of the United Kingdom have for centuries been dependent on international trade for wealth creation and for providing raw materials for industry, and foods which could not be grown in a temperate climate. This meant that merchants and ship owners were often influential and wealthy men, who were able to influence government policy. In 1786, a group of ship owners presented a petition to Parliament, as they were worried that the size of claims against them for lost or damaged goods would be sufficient to put them out of business. The government passed the Merchant Shipping Act, which limited the owners' liability to the value of the vessel and its equipment, plus any freight due for the voyage. Since then, methods of moving freight have changed considerably; containerization means that goods are more difficult to steal, and modern ships are less likely to sink. Freight on international journeys can travel long distances by road, and airfreight carries goods at a speed those eighteenth century ship owners could never have imagined. However, the concept of limiting liability for loss had been established, and since then has been developed to encompass all the modern transport methods.

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