The U.S. Supreme Court has held that the Carmack Amendment, which is the cargo claim regime under U.S. federal law, does not apply to cargo loss claims where the shipment originates overseas.

Conflict Between Carmack and COGSA Explained

A shipment originating overseas under a through bill of lading was transferred from ocean to rail when it reached the U.S. The goods were in good condition when received. However, they were damaged while they were in the possession of the railroad.

The shipper claimed for full recovery for the loss or damage as provided under the terms of the Carmack Amendment. Under Carmack, shippers are permitted to recover the full value of lost or damaged goods.

On the other hand, as far as the carriers are concerned, under the through bill of lading, the Carriage of Goods by Sea Act (COGSA) should cover the claim. Under COGSA, the shipper may recover damages for lost or damaged goods. However, recovery by the shipper is limited to USD 500.00 per package.

The conflict between Carmack and COGSA was resolved by the U.S. Supreme Court decision. In Kawasaki Kisen Kaisha Ltd v Regal Benoit Corp, the court held that terms of a through bill of lading issued by an ocean carrier in a multimodal shipment would take precedence over the domestic bill of lading issued by the railroad under Carmack. Therefore, the shipment was subject to COGSA and not Carmack.

In general, COGSA applies to international ocean shipments and related intermodal services under a through bill of lading. Carmack applies to domestic rail and motor shipments. International shippers will have to work with their insurance carriers to be sure that risks are covered properly. Given the USD 500.00 per package limit under COGSA, unless there is a separate agreement with a carrier, it is likely that shippers will have to assume responsibility for a large portion of many claims where the imported shipment is under a through bill of lading.

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Robert Spira is an experienced transportation and logistics lawyer, who has joined Yormick & Associates as Of Counsel.

Disclaimer: This Transportation and Logistics Law Alert is provided for informational purposes only and is not intended to serve as or provide legal advice relating to a particular matter. Should you have specific questions regarding a cargo, transportation or logistics business or legal matter, please contact:

Robert M. Spira, Of Counsel rspira@yormicklaw.com
Jon P. Yormick, Managing Attorney jon@yormicklaw.com

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