The shipment left Guangzhou in a container. It arrived at the Port of Brisbane. It was stripped at a container freight station, loaded onto a truck, transferred to a rail depot, and delivered to a warehouse in Toowoomba. On unpacking, the buyer found 30% of the goods damaged beyond use.
Who is liable? The answer is not obvious, and in some cases the answer is: nobody, if the documentation was wrong and the claim was made against the wrong party.
The mode problem
Each mode of international transport has its own legal regime. Sea carriage is governed by the Hague-Visby Rules or the Sea Carriage of Goods Act. Air carriage is governed by the Montreal Convention. Road carriage in Europe is governed by the CMR. Rail carriage between certain countries is governed by the COTIF convention.
The problem is that these regimes do not form a seamless system. Each covers its own mode. When goods move through multiple modes — which in international trade they almost always do — there are gaps between the modes where no international convention applies, and there are moments where the applicable regime is unclear.
Where damage actually occurs
In most multimodal cargo claims, the stage at which damage occurred is uncertain. Was the carton crushed during the ocean voyage? Was it dropped during de-vanning at the freight station? Was it damaged in transit on the truck?
The claimant cannot always prove where the damage happened. And the carrier whose regime would apply depends on where the damage happened.
The through bill of lading
The through bill of lading is the document that attempts to bridge this gap. Issued by the principal carrier or a non-vessel-operating common carrier (NVOCC), it covers the entire journey from origin to destination under a single contract, regardless of the modes used. The issuing carrier accepts responsibility for the goods from pickup to delivery and subcontracts the individual legs.
The catch: the through bill of lading typically incorporates a "network liability" clause, which applies the rules of whichever mode the damage occurred on, if known. If the stage is unknown, the contract terms — typically the issuing carrier's standard terms — apply. These are often less favourable to the cargo owner than the mandatory international conventions.
The freight forwarder's liability
Many traders use a freight forwarder who issues a house bill of lading or a multimodal transport document covering the whole journey. Their liability is governed by their standard trading terms, which in Australia are typically the Australian Freight Industry Standard Trading Conditions.
These conditions limit the forwarder's liability substantially — often to a figure per shipment or per kilogram that is well below the cargo's commercial value. The claimant who thought they were claiming against a major shipping line discovers they are claiming against the forwarder's limited liability cap.
What to do
Use a through bill of lading or multimodal transport document when you need a single point of liability. Understand what liability cap that document imposes. Inspect goods at every transfer point and note any damage in writing on the relevant document. Buy cargo insurance that covers the full journey and does not have exclusions for particular modes or particular sub-contractors.
The full treatment of multimodal liability, through and combined transport documents, unlocalised damage and cargo claims is in Multimodal Transport: Moving Goods Door to Door, Book 8 of the International Trade and Transport Law Library. Bills of lading themselves are covered in Book 2. See the Library.