Q: You recently responded to a broker who was suggesting that motor carrier shippers buy their own cargo insurance, saying you didn’t think that was going to happen because it would fly in the face of the “tradition” of the industry.
But you ignored your questioner’s comment that rail and ocean shippers already need to do so, because their insurers don’t cover so many claims. Well, why is this “tradition” only for motor carriers and not for railroads or ship lines? I mean, both are a lot older than motor carriers, and therefore have a lot more “tradition” behind them.
If it’s OK for rail and ocean shippers, why isn’t it for truck shippers?
A: I let that point slide simply because I have limited space for this column and used it up on other points, but allow me to clarify: The “tradition” to which I had reference applies across the board to all modes of transportation, which share a common basis of liability.
Now, I acknowledge that the law applicable to ocean (and, to a considerably lesser degree, air) transportation is less stringent. The law has long accepted that the perils of such modes — especially water — require special treatment. To take the most extreme case, if the captain of a sea vessel steers his ship onto a reef while blind drunk and all goods aboard are lost, the carrier will have no liability to the shippers who owned the goods lost.
There is, as the foregoing suggests, a much longer list of legal exceptions to the rule of absolute carrier liability applicable to maritime carriers. The list is also slightly longer (though much less) for airlines. On the other hand, the exceptions for rail service are identical to those applicable to trucking; legally speaking, there’s no difference between the two modes in the U.S. (although the situation is otherwise in many other countries).
Leaving the exceptions to one side, however, the rule in this country remains the same for all: to wit, the carrier is absolutely liable for all goods entrusted to its care. Fault, or negligence, or whatever else you may care to call it, plays no role.
I’m not sure to what my previous correspondent had reference in pairing rail and ocean service as modes where shippers must insure their own goods. Perhaps it was to the difficulty of collecting on claims with both modes, which I must acknowledge isn’t an uncommon problem, but which is scarcely limited to any particular mode.
Not knowing the rules of every country, I won’t tell you that U.S. law is unique in carrying forward this admittedly archaic rule of absolute carrier liability. Certainly, however, we’re far behind the times in comparison to other industrialized nations, most of which have established monetary liability ceilings by law — in many cases vastly below the average value of cargoes.
However, I’m aware of no national legal system that lets carriers off scot-free unless their fault is proved. Outside the transportation sector, the usual rule is that liability attaches only for negligence of the custodial party — the party that has the goods. In transportation, however, some kind of liability generally applies to the carrier irrespective of its negligence.
It’s to that “tradition” that I was referring. It harks, as I previously wrote, back to an era when transportation carriers were unique in their underlying separation from the commercial community and, further, necessarily removed goods entrusted to them far from the vicinity of the owner, so he could no longer watch over them.
Perhaps in modern times it may be, as my previous correspondent suggested, time to rethink that approach. We live in a very different world, in which carriers no longer exert such peculiar dominion over goods tendered to them — a world in which, realistically, there doesn’t seem any objective reason not to hold carriers to only the same negligence-only standard of liability applied to other bailees.
But we don’t make the change because, more than anything else, we aren’t used to it. It doesn’t feel right. It’s far more comfortable to take the conservative view that we’ve always done it this way, the system isn’t broke and doesn't need fixing, so let’s just stick with it.
That’s not very adventurous of us, perhaps. On the other hand, adventures certainly have their place in fiction and in Hollywood, but few people are nearly so pleased when one takes place in their daily lives.
Consultant, author and educator Colin Barrett is president of Barrett Transportation Consultants. Send your questions to him at 5201 Whippoorwill Lane, Johns Island, S.C. 29455; phone, 843- 559-1277; e-mail, BarrettTrn@aol.com. Contact him to order the most recent 351-page compiled edition of past Q&A columns, published in 2010.