Intermodal transport can make trouble (case study)
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It can happen that the goods transported by the truck, end up on a rail truck or ferry etc. Intermodal transport has many benefits, but it can also pay quite an unpleasant prank on the shipper or forwarder. All because of an insurance protection gap. If you are a shipper, a forwarder or a carrier, this text is just right for you!
Today we are dealing with the verdict of the German Federal Court of Justice in Karlsruhe.
Turkish shipper ordered the transport of clothes from Turkey to Spain. Because the route led across the whole of Europe, the carrier decided to apply intermodal transport. Two trucks reached the beautiful port of Pendik, where a ro-ro ferry has already been waiting for them. The destination port was the equally impressive Italian Trieste, from where they were to continue their trip to sunny Spain. Unfortunately, the ship burst into flames and burned down along with the transported freight.
The shipper applied to the carrier for compensation. The case ended up in the German Federal Court of Justice in Karlsruhe.
The legal basis
The claim was based on article 2, paragraph 1 CMR Convention, which is related to intermodal transport. Let me briefly remind you of the pure essence of this regulation. In the case of intermodal transport, the CMR Convention applies to all transportation. However, if
- the loss occurred during piggyback transport
- and its cause is specific only to this type of transport,
then the haulier’s liability is determined by the provisions according to this particular type of transportation.
For instance, a truck enters the ferry that runs aground, damaging the consignment. Because the grounding is a typical marine risk, the liability of the road carrier (not sea carrier!) will be judged not under the CMR Convention but the Hague-Visby Rules, because they regulate maritime transport. In other words, the same road carrier that we contracted is still responsible for the loss, but on a different legal basis.
And now the puzzle is whether the fire is a common risk, proper for all modes of transport, or is only suitable for sea transport? How do you bet? Try to answer the question before you move to the next point.
The next point
The court faced the question of whether the fire on the ferry is a common or a typical marine risk? The verdict was a bit surprising. The court found that fire as such is not a specific marine risk; however, it could be, under certain circumstances. A fire on a ferry has different characteristics from that of a vehicle fire. It spreads very rapidly, and the only way to deal with it is to use sprinklers.
The Federal Court of Justice in Karlsruhe found that in that case, we were dealing with a typically marine risk, and the Hague-Visby Rules applied. As a result, the carrier was released from liability, due to the approach of these Rules to fire risks. In other words, the shipper did not receive his compensation.
German lawyers found this verdict positively. Earlier, the courts ruled quite arbitrarily, and you never knew what to expect. From this point of view, it is a big issue. Legal certainty has its great value. But it cuts both ways! This verdict, in turn, caused an insurance gap and insurance protection uncertainty.
Why the insurance gap? Because the Hague-Visby Rules are very generous to carriers but not to the shipper. The main duty of a sea carrier is basically only to make vessels navigable and his responsibility is focused on this. There are a lot of exclusions of sea carrier liability, and believe me, these Rules can really put the shipper at a disadvantage. If insurance coverage is to be like armour, then your chest is exposed to blows inflicted by unpredictable fate.
Why uncertainty? Because it isn’t either/or situation. Note that the phrase “the fire under certain circumstances” is not precise. Replace the word fire with the name of another most common risk, and you get uncertainty. Should we also apply certain circumstances to this risk or maybe not? If so, why?
You need to be aware that intermodal transport is associated with a higher risk. It is necessary to take into account that there is a possibility of transition from the CMR Convention to other legal acts, which is associated with a different scope of liability of the carrier. Well, use cargo insurance. This is your bulletproof vest that will protect your chest. It’s shippers’ interest.