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Transporting perishable cargo, like food items, is a high liability load for a freight carrier. Can a shipper reject a load with a broken seal even if the cargo is undamaged? One case study, Oshkosh Storage Co. v Kraze Trucking, LLC (Wisconsin, 2014), might answer this question and confirm the important of cargo liability insurance for a freight company.
The Circumstances
Kraze was to deliver a shipment of cheese from Minnesota to Wisconsin for Oshkosh. A refrigerated trailer was sealed at time of pick-up. Written instructions from shipper to the driver noted that a broken seal or seal not matching the manifest would result in rejection of shipment. Verbal instructions from shipper to the driver indicated that Oshkosh personnel would break the seal upon cargo delivery in Wisconsin. Posted signage at check-in also indicated drivers were not to break seals, that Oshkosh staff would verify seal number and break seal before unloading shipment. Upon delivery the driver parked, broke the seal and opened the trailer. Oshkosh rejected the entire load.
What Happened
The carrier’s insurer salvaged the load at a nearly 30% loss of the original contract price. Oshkosh made a claim under the Carmack Amendment against the carrier, citing the broken seal resulted in “actual loss or injury”, the cheese damaged due to loss of integrity. The carrier argued that a broken seal was not sufficient evidence that the cargo was damaged and did not have direct bearing on the goods such as tampering or direct harm.
What To Learn
The cargo had to be sold at a discounted price because the broken seal affected the integrity guaranty from Oshkosh to consumers. The carrier was deemed negligent for breaking the seal. The decrease in product value was defined as an “actual loss or injury”. A broken seal by the carrier makes it impossible to prove that goods have not been tampered with and a food product contaminated. Food distribution requires an extra care of duty toward the public for shipment seals to remain intact. Without the protection of cargo liability coverage, the carrier would have suffered an entire loss, as well as payment to the shipper to mitigate damages.
A single case like this can be financially devastating for a freight company. Is your cargo liability insurance adequate? Call a cargo liability insurance expert and find out more about what you need for better coverage.
