Liability Limitations of Freight Forwarders

In international transport and freight forwarding, liability refers to the legal responsibility of a carrier or agent to compensate shippers or customers for cargo loss, damage or delays when contractual obligations are not fulfilled. However, a freight forwarder’s liability is not unlimited. It is regulated by international conventions, transport regulations and local laws that set clear limits on compensation.

These liability limitations are designed to create balance across the global supply chain, ensuring that no single stakeholder, be it a shipper, carrier or forwarder bears the full financial burden of unforeseen events. For shippers, understanding these liability rules is crucial for making informed shipping decisions, managing risks and ensuring cargo protection.

Freight Forwarder’s Liability Explained

The liability of a carrier, and accordingly a freight forwarder, for loss, shortage and/or damage to cargo is limited by international conventions, agreements and protocols, including but not limited to:

• For air transport: The Warsaw Convention and the Hague Protocol, where the freight forwarder’s liability is limited to an amount not exceeding 250 francs or 19 SDRs per kilogram of gross weight of lost or damaged cargo.

• For road transport: The CMR Convention, where the freight forwarder’s liability is limited to an amount not exceeding 8.33 SDRs per kilogram of gross weight of lost or damaged cargo.

• For sea transport: The UN Convention on the Carriage of Goods by Sea, which limits the carrier’s liability for damage to 835 SDRs per package or 2.5 SDRs per kilogram of gross weight of lost or damaged cargo.

• For rail transport: The Convention concerning International Carriage by Rail (COTIF), which sets the maximum liability of European railways at 17 SDRs per kilogram of gross weight of lost or damaged cargo.

Clear understanding of logistics liability regimes is essential for effective risk management in your supply chain. By analyzing contractual obligations and applicable legal frameworks, shippers can protect their cargo, secure the right freight insurance and build resilience against delays, damages or unforeseen disruptions.

Limitations of Third Party Liabilities

A freight forwarder may engage third parties such as port authorities, customs brokers, warehouse operators or ground handling agents to fulfill certain parts of the shipment. Their liability is determined by the laws of the country where they operate and where the loss or damage occurred. Reliable freight forwarders exercise due diligence in selecting and instructing such partners, but cannot be held liable for their actions or inaction if all reasonable care was taken.

While freight forwarders play a central role in coordinating shipments, third parties like cargo agents, customs brokers, warehousemen, port authorities and ground handling agents introduce additional layers of liability that fall outside freight forwarders’ direct control. By partnering with trustworthy providers and adhering to due diligence practices, forwarders mitigate risks, but shippers must remain aware of these limitations and consider supplementary protections such as comprehensive insurance to ensure full coverage.

Forwarder’s Role in the Supply Chain

A freight forwarder is one of the key links in the supply chain, acting as the organizer of all processes related to the movement, storage, packaging, labeling, loading, unloading, or handling of cargo. The forwarder is also responsible for determining the optimal route and mode of transport, selecting a suitable carrier, preparing shipping documents, customs clearance, cargo insurance, and more.

Depending on the format of logistics services provided, the forwarder may act either as an agent or as a principal, which defines the extent of their responsibility. The forwarder acts as an Agent when engaging third parties to fulfill their obligations.

The forwarder may also provide services independently, acting as a Principal, if they:

• issue their own transport document, for example, an air waybill with their own prefix

• use their own equipment – vehicles, machinery, etc. – thereby assuming the responsibility of a carrier

• mobilize their own personnel to provide logistics services

  
  

Common Liability Exclusions

In international logistics, not every loss or damage falls under a freight forwarder’s liability. Most forwarding agreements and Standard Trading Conditions (STCs) clearly define situations where the forwarder cannot be held responsible. These liability exclusions are designed to protect forwarders from risks outside their control and highlight the importance of adhering to the best shipping practices, compliance, and proactive risk management for shippers. The most common liability exclusions include:

• Inaccurate or incomplete information provided by shipper

• Improper, insufficient, or missing packaging/labeling

• Actions or negligence by the customer or their appointed agents

• Force majeure events, such as natural disasters, political instability, strikes, or war

By understanding the limits of a freight forwarder’s liability, businesses can take smarter precautions, strengthen contractual agreements and secure comprehensive cargo insurance to cover potential gaps. Ultimately, being aware of these exclusions reduces disputes, enhances supply chain resilience and helps maintain smoother shipping operations.

How to Protect Your Cargo From Supply Chain Risks

In global trade, even the most reliable logistics networks face uncertainty. Because liability limits in freight forwarding rarely guarantee full compensation, shippers must take proactive steps to safeguard their cargo and reduce financial exposure. Key strategies to protect shipments include:

• Purchasing cargo insurance: Extends protection beyond standard liability limits and ensures compensation in case of loss, theft or damage

• Declaring a higher value for carriage, which establishes a higher limit for the carrier's liability if the goods are lost or damaged during transit

• Ensuring proper packaging & labeling: High-quality, compliant packaging protects goods from transit-related risks and minimizes disputes

• Partnering with a professional freight forwarder: Experienced forwarders identify risks early, ensure compliance and implement preventive measures across the supply chain

By combining these supply chain risk management strategies with the expertise of a trusted freight forwarder, shippers can pre-empt many of the typical issues encountered in the journey of their shipment. This proactive approach not only safeguards cargo but also protects business continuity, supports financial stability, and builds greater confidence in international shipping operations.

Why Work With Delta Global Solutions?

At Delta Global Solutions, we combine our industry expertise with hands-on operational control to ensure your cargo moves securely and efficiently, from origin to destination. From route planning and carrier selection to customs compliance and risk management advisory, our team goes beyond basic forwarding — we proactively protect your interests at every stage of the journey.

Contact our logistics experts today to secure your cargo and minimize risk — your supply chain deserves nothing less.

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FAQ:

1. What is a freight forwarder’s limitation of liability?

A freight forwarder’s liability is restricted by international conventions, contracts and local laws. These rules cap compensation amounts and limit responsibility in cases like force majeure, poor packaging or incorrect information from shippers.

2. Why do freight forwarders have liability limits?

Liability limits ensure forwarders are not fully responsible for risks outside their control, such as force majeure events or third-party errors.

3. How can shippers minimize supply chain risks?

By using proper packaging, ensuring accurate documentation, purchasing cargo insurance and working with a reliable freight forwarder.