Cargo liability (Carmack Amendment)

Scope

For-hire interstate carriers and shippers of freight must be aware of and observe various legal deadlines and time limits governing the filing of loss/damage claims, overcharge/undercharge claims, and lawsuits.

Regulatory citations

• 49 CFR 370.5 — Acknowledgment of claims
• 49 CFR 370.9 — Disposition of claims
• 49 CFR 378.7 — Investigation of claims
• 49 CFR 378.8 — Disposition of claims

Key definitions

• Bill of lading: The bill of lading is an agreement between a shipper and a carrier governing their relationship with respect to the transportation of goods. It is the contract of carriage. As a contract, it names the parties involved and locations, defines the specific rate or charge for the transportation, and provides information regarding the limits of the carrier’s liability for damaged or lost goods. A contract carrier that has a specific agreement with a shipper is not required to use a bill of lading under 373.101.
• Carmack Amendment: The Carmack Amendment is a uniform national liability system for interstate carriers which provides certainty to both carrier and shipper. It specifically allows a carrier to require claims for shortages or damages by a shipper to be submitted in writing within nine months from the date of the loss or damage. The courts have found that the Carmack Amendment preempts state and common law claims. This amendment also provides the sole recourse to shippers for loss or damage in interstate transit.
• COD (cash on delivery): The payment for goods is made at the delivery point. The driver must collect payment before the cargo is unloaded. Policies regarding this vary from company-to-company.
• Motor truck cargo liability insurance: Insurance that protects motor carriers from the perils of transporting cargo over the road. It protects the owner of the goods and the insured party (or parties) while the cargo is being transported.
• Order notify shipment: The payment of goods on an Order Notify Bill of Lading. The driver must collect a copy of the bill of lading from the person receiving the goods as payment for the goods.
• Through bill of lading: Covers a shipment by more than one carrier at a fixed rate for the entire service.
• Value of cargo: Cargo is valued as either actual valuation or released valuation.
  • Actual valuation: The actual value of goods shown on the bill of lading when the rate applied is dependent on that fact.
  • Released valuation: The value of goods set by the shipper as limits of carrier liability and as the basis of rates charged.
• Warehousing receipt: A receipt for goods placed in a warehouse.

Summary of requirements

These time limits are listed below, along with where to find them in the Code of Federal Regulations (CFR) or the United States Code (USC).

Overcharge claims — billing disputes initiated by shippers. 49 USC 13710 (a)(3)(B). If a shipper seeks to contest the charges originally billed or additional charges subsequently billed, the shipper may request that the Surface Transportation Board determine whether the charges billed must be paid. A shipper must contest the original bill or subsequent bill within 180 days of receipt of the bill in order to have the right to contest such charges.

• Acknowledgment. Upon receiving a written or electronically transmitted claim, the carrier must acknowledge its receipt in writing or electronically to the claimant within 30 days after the date of receipt, except when the carrier has paid the claim or declined it within that period (378.7).
• Disposition. A carrier must pay, decline, or settle each claim within 60 days after its receipt, unless the claimant and the carrier agree to a specific extension. If the carrier declines the claim, or makes a settlement in an amount that differs from the claim request, the carrier must provide notification of the reason for the action (378.8).
• Civil action. A person must begin a civil action to recover overcharges within 18 months after the claim accrues (49 USC 14705 (b)).

Undercharge claims — billing disputes initiated by carriers. 49 USC 13710 (a)(3)(A). In those cases where a motor carrier (other than a motor carrier providing transportation of household goods or in noncontiguous domestic trade) wants to collect charges in addition to those billed and collected which are contested by the payor, the carrier may request that the Surface Transportation Board determine whether any additional charges over those billed and collected must be paid. A carrier must issue any bill for charges in addition to those originally billed within 180 days of the receipt of the original bill in order to have the right to collect additional charges.

• Civil action. A carrier providing transportation or service subject to jurisdiction under chapter 135 must begin a civil action to recover charges for transportation or service provided by the carrier within 18 months after the claim accrues (49 USC 14705 (a)).
• Loss or damage claims — filing period. A carrier may not provide by rule, contract, or otherwise, a period of less than nine months for filing a claim against it under this section. Damage claims are filed within nine months after delivery of the load. Loss claims must be filed within nine months after a reasonable or expected time for delivery has passed (49 USC 14706 (e)).
• Acknowledgment. A carrier must respond to any claim within 30 days after it is received, unless the carrier has paid or declined the claim within 30 days of receipt (370.5).
• Disposition. When a claim is received for loss, damage, injury or delay of delivery, the carrier must pay the claim, decline the claim, or make a compromise settlement offer in writing within 120 days. If the claim cannot be processed and disposed of within 120 after receipt, the carrier must advise the claimant of the status of the claim during that time period, and at the end of each following 60-day period until final disposition (370.9 (a)).
• Civil action. A carrier may not provide by rule, contract, or otherwise, a period of less than two years for bringing a civil action against it under this section. The period for bringing a civil action is computed from the date the carrier gives a person written notice that the carrier has disallowed any part of the claim specified in the notice (49 USC 14706 (e)).