AIR CARGO: Liability up in the air

THE ARRANGEMENTS around the liability of each party involved in the movement of cargo by air are well established. One of the most famous aspects of this framework, the Warsaw Convention, will soon celebrate its 100th anniversary. While that Convention has largely been superseded, the fundamentals still apply in terms of the relationship between the air carrier and the cargo interests.

IATA’s proposed change

Recently the International Air Transport Association (IATA) has proposed a change in these arrangements on behalf of the air carriers, which could increase liability of freight forwarders when acting as cargo agents from 1 July this year.

When issuing carriage documents for air cargo the forwarder can effectively wear two hats: as an agent of the carrier when it issues the air waybill and as an agent of the shipper when signing the declaration of cargo particulars.

From a commercial point of view, the forwarder is the intermediary between the shipper and the carrier as a facilitator of the transport but, from a contractual point of view, the air waybill only creates an agreement between the shipper and the carrier.

Carriers are concerned they are dealing with the forwarder in negotiating allocation of cargo capacity and charges, but if an issue arises, they deal with the shipper. Examples of the type of issue that could occur is cargo causing damage to the aircraft or additional charges being incurred in the handling of cargo due to it being incorrectly declared.

Some might argue this situation is easily solved by the forwarder issuing a house air waybill. This would mean the carrier could pursue the forwarder as shipper under the ‘master’ air waybill. The difficulty is that there are many types of shipment that have to be ‘cut’ direct to the actual shipper, such as dangerous goods, due to regulatory requirements.

IATA’s intent is to enable carriers to claim on the forwarder as if it were the shipper under the air waybill. One of the reasons IATA has tried to impose a change unilaterally is ongoing frustration at the process of agreeing on an overall Air Cargo Program between carriers and forwarders. This is an attempt to remove one of the more contentious issues.

While there is scope within the resolution for forwarders to negotiate the terms of the agreement, from a practical point of view forwarders feel this is unlikely to occur. 

What this means for freight forwarders

Introducing this change potentially exposes forwarders, and their insurers, to increased levels of liability across a much wider range of air cargo. The forwarder is not in sufficient control of the goods to accept these liabilities. It could also lead to shippers being less diligent if they know forwarders will have to wear the costs for breaches of requirements.

Claims against carriers are subject to monetary and time limits as per the air waybill and international conventions in terms of loss and damage to cargo during carriage. Shippers, and from 1 July forwarders by default, are exposed to unlimited liability without the same restrictions in place. Insurers of freight forwarders may need to review the cover limits they are prepared to offer or there could be premium impacts. If very large and unexpected claims occur this could reduce the number of insurers prepared to offer the cover, further constricting the market.

Industry response and next steps

The International Federation of Freight Forwarders Associations (FIATA) has recently issued a response to the proposal on 28th May, requesting more time to review and consult before the changes are agreed. It remains to be seen how IATA will respond and whether a delay in the 1 July deadline will be offered.

Steps forwarders should take

• Freight forwarders should take the following steps in order to protect their position.
• Contact their insurance broker to clarify if they have appropriate insurance in place.
• Review of whether other arrangements can be agreed with the airlines for which they issue air waybills.
• Check they are able to seek an indemnity from the actual shipper under their Standard Terms and Conditions (STCs).
• Ensure STCs are properly incorporated with shippers.
• Identify that the shippers for which they are arranging air transport are trusted partners that will work with them in the event of an incident.
• All sides understand the need for a balanced approach to liabilities but this should be agreed through consultation and with input from all the relevant stakeholders.

This article appeared in the June | July 2026 edition of DCN Magazine