Subscribe to our free, weekly email newsletter!


Shipping insurance: Cautionary note on Rotterdam Rules

By Patrick Burnson, Executive Editor
June 21, 2010

The “Rotterdam Rules”—adopted last September by the United Nations General Assembly—will reflect current shipping practices, cover cargo liability on legs of an intermodal shipment, promote harmonization among trading partners, reduce legal obstacles, and allow shippers, carriers and third parties to customize contracts to meet commercial needs.

As reported in LM, 21countries, including the United States, signed the Rotterdam Rules within the UN but they will need formal ratification by at least twenty countries worldwide before becoming law.  In the U.S., the rules would replace the 1936 Carriage of Goods by Sea Act (COGSA). The European Union, the American Bar Association and the National Industrial Transportation League among other groups have endorsed the new rules. 

There is no time table, however, on when the rules would be ratified, and some insurance experts maintain that there’s an underlying risk yet to be fully explained.
“Shippers should be concerned about the Rules because of complications related to two recent Supreme Court cases currently awaiting a decision, says Chris Clott, an adjunct professor at the California Maritime Academy. “The negative impact it could have in the U.S. may be quite substantial.”

The cases, Kawasaki Kisen Kaisha v. Regal-Beloit Corporation, No. 08-1553, and Union Pacific Railroad Company v. Regal-Beloit Corporation, No. 08-1554, were argued together late last spring. The question before the court was whether the inland portion of an intermodal shipment is subject to the Carmack Amendment to the Interstate Commerce Act of 1887, which governs certain rail and motor transportation by common carriers within the United States rather than the Carriage of Goods by Sea Act (COGSA).  The Carmack Amendment, which affects the U.S. surface transportation (rail and truck) is far more encompassing than COGSA regarding carrier liability.  COGSA places severe limits on carrier liability while Carmack has no dollar limits on the amount of liability.  The main issue is whether an international through bill of lading that shows the maritime operator as the “carrier” is liable for damages via the intermodal portion of the move under the tight standards of Carmack or the loose standards of COGSA.
“If the Supreme Court decides the Carmack Amendment applies to all inland transportation, shippers will have to negotiate separate liability agreements with the ocean carrier and the inland railroad or motor carrier,” observes Clott. “The Rotterdam Rules—with one standard of liability throughout a door to door move—would be more limited in their application within the U.S.”

About the Author

image
Patrick Burnson
Executive Editor

Patrick Burnson is executive editor for Logistics Management and Supply Chain Management Review magazines and web sites. Patrick is a widely-published writer and editor who has spent most of his career covering international trade, global logistics, and supply chain management. He lives and works in San Francisco, providing readers with a Pacific Rim perspective on industry trends and forecasts. You can reach him directly at .(JavaScript must be enabled to view this email address).


Subscribe to Logistics Management magazine

Subscribe today. It's FREE!
Get timely insider information that you can use to better manage your
entire logistics operation.
Start your FREE subscription today!

Recent Entries

Transportation stakeholders reliant on North Carolina’s major seaports are welcoming news this week, which outlines plans to enhance the intermodal and cold chain network in the region.

The index ISM uses to measure non-manufacturing growth—known as the NMI—was 56.9 in February, which was 0.2 percent ahead of January and also 0.1 percent ahead of the 12-month average of 56.8. Economic activity in the non-manufacturing sector has grown for the last 61 months, according to ISM.

Non asset-based third-party logistics (3PL) services and logistics technology services provider Transplace said today that Brooks Bentz has joined the company in a newly-created role as president of Transplace Consulting in conjunction with the launch of the company’s new North American consulting services practice.

The advent of e-commerce continues to grow and gain increased traction over time. The many ways for consumers to order and purchase goods online continues to expand and leads to various subsequent byproducts of online purchases, including shopping through multiple channels, and delivery and payment options, among other things. These types of topics serve as the thesis in the second annual UPS Pulse of the Online Shopper Global Study issued this week by UPS and comScore Inc.

A major highlight of CEVA’s fourth quarter performance was its new business wins, which were up 14 percent for all of 2014, with Freight Management wins up 14 percent, and Ocean Freight and Air Freight wins up 30 percent and 14 percent, respectively, while Contract Logistics wins were up 2 percent.

Article Topics

News · All topics

Comments

Post a comment
Commenting is not available in this channel entry.


© Copyright 2015 Peerless Media LLC, a division of EH Publishing, Inc • 111 Speen Street, Ste 200, Framingham, MA 01701 USA