QUESTION: Why are parcel express carriers allowed to limit their liability to only $100 per package when their parcel rates have escalated to many times the rates charged when the $100 limit was first approved by the I.C.C.? Also, why is there a fixed limit on express carriers packages but not on truckers freight?
ANSWER: In answer to your first question, there is no longer an I.C.C. or C.A.B., or any federal agency for that matter, that has jurisdiction over parcel express carriers rates, routes or practices. For example, when the C.A.B. was in existence, shippers petitioned for an investigation of the airlines loss and damage claim rules and limitations. After seven years, the C.A.B. finally declared that the airlines and airfreight forwarders 50 per pound limit was unreasonably low and ordered it changed to the Warsaw Convention level of $9.07 per pound. The reason given was that 50 per pound was first used by Pony Express in 1861, and it was time to adjust it to account for inflation. Four months later, air cargo was deregulated, and the airlines went back to 50 per pound, where it remains today.
The relief from the parcel express carriers fixed $100 per package liability is long overdue, but there does not appear to be any forum in which shippers can go to obtain this change. The express carriers could, of course, voluntarily double their package limitation, as a goodwill gesture to their customers and in recognition of the inequity in this long-existing limitation. If such a change were ever to be made by parcel express carriers, however, it would have to be accompanied by a change in their claim declination policies for denying every damage claim on the grounds of insufficient packaging. Just because a package suffers damage in transit does not mean that the packaging was insufficient. The question is, What did the carrier do to it in transit?
Based upon complaints received from parcel express shippers over the years, this is not the question that parcel express carriers ask when they receive a claim for damage. Declination letters with this allegation have been received by claimants even before a carrier representative visited the shipper to conduct an investigation and even when the package had been tested and approved by the carrier's testing laboratory. Carriers claim personnel must be forced to admit that occasionally, their high-speed package systems get jammed up, and packages get damaged and destroyed through no fault of the shipper or its packaging. Paying such claims without an automatic denial would seem to be a relatively painless way to keep customers satisfied compared to the ill-will that these declinations create every day.
In answer to your second question, a uniform limitation for express packages traces back to the old Pony Express days and later, the Railway Express. These package carriers published one rate on all commodities moving between the same two zones. As long as the package fit within the carrier's size and weight category, that rate applied to everything shipped. Therefore, a flat limitation of liability was applied, regardless of the value of the commodity.
Truckers, on the other hand, publish a scale of class ratings for every commodity they haul. The classes range from class 50 to class 500, depending primarily on the product's density, but also on the product's value. Value was important because the Carmack Amendment required motor carriers to be liable for the full actual loss, unless the shipper agreed in writing to lower the carrier's liability in exchange for a reduced rate.
However, since the I.C.C.s demise, motor carriers have published blanket limitations on their liability that govern claims, even if the shipper does not have notice of the limitation. Shippers must request a copy of the carriers tariff to learn whether or not a claim will be limited to a specific amount. If they fail to make such a request, the limit will be enforced by the carrier and the courts. Unfortunately, many shippers are not aware of this relatively new requirement (since 1996) and are surprised by a refusal to pay the full invoice value of a shipment. It's time for shippers to take action against these outdated laws!
William Augello is an attorney that has practiced transportation law for the past 53 years. He teaches transportation law at the University of Arizona and is the author of Transportation, Logistics and the Law. He can be reached at williamaugello@comcast.net or 520-531-0203.
