Freight Forwarder or Broker? Details Matter

Kevin Anderson Cargo Liability, Transportation

As most trucking companies are aware, there is a comprehensive law in the United States to deal with damages to interstate cargo. This law is known as the Carmack Amendment and can be found in 49 U.S.C. § 14706. The idea of the law is to provide a state by state system of liability for damaged cargo, thus eliminating a complex web of several different sets of laws which would vary from state to state.

To have a law like the Carmack Amendment is sensical, and helps company plan for company exposure in many ways. But as clear cut as the law is, there are recurring sticky points about it that can be disputed in litigation for damaged goods. One of these sticky areas is the difference between freight forwarders and brokers.

Freight Forwarders Under the Carmack Amendment

Like common carriers who haul freight interstate, freight forwarders are also liable under the provisions of the Carmack Amendment. The federal law itself has a definition of what a freight forwarder is in the context of shipping cargo among the states. There are several key elements that make a freight forwarder a freight forwarder, for example:

  • Is presented to the public as a person or company that provides transportation of goods in their ordinary course of business;
  • Assembles, consolidates, or provides break-bulk and distribution of goods and cargo for transport;
  • Assumes responsibility for the goods transported; and
  • Uses the provisions of the Carmack Amendment.

These are the major guide posts a court will look at to determine whether a company or person should be considered a freight forwarder under the law.

Brokers Under the Carmack Amendment

Brokers are different than freight forwarders or carriers, and they are not liable under the provisions of the Carmack Amendment in the same way. In a general sense a broker is simply someone who arranges for transportation of goods and while another company actually takes responsibility for the freight and ships it. 49 U.S.C. § 13102(8) As a result it can be a common defense to get out of a Carmack Amendment claim by claiming to being a broker, and therefore not liable.

This is what happened recently in a case decided by a federal judge in Florida. In that case a shipper contracted with a dealership to ship his Aston Martin from Florida to Michigan, but it was damaged in the process. The shipper sued the dealership who plead being a broker to avoid liability under the Carmack Amendment. The court did not agree that it was a broker, though, because it is a fact driven inquiry where the details of the transaction matter. As a result the case will go through discovery and possibly trial before the results are in about liability.

Your Transportation Law Partner

The transportation industry can be a wonderful way to make a living, but it is full of complex rules and laws that can interrupt a company’s goals and future. At Anderson and Yamada, P.C., we have decades of experience helping trucking companies work through their legal issues and achieve success in the industry. Contact us today so we can be your transportation law partner.