Freight forwarders should take the opportunity to review their contractual arrangements and insurance protection, according to Breeze. This is following introduction of the International Air Transport Association‘s (IATA) revised Direct Air Waybill (DAWB) framework.
The company believes the revised framework has the potential to alter the allocation of legal responsibilities between airlines, shippers, and freight forwarders, creating uncertainty over where liability sits and whether existing insurance arrangements remain appropriate.
“Without a doubt, this represents a significant reallocation of risk,” said Matthew Phillips, Chief Commercial Officer at Breeze. “Liability is generally expected to follow control. The revised framework raises legitimate questions where a freight forwarder could potentially become responsible for matters traditionally associated with the shipper or carrier.
“The uncertainty is increased if implementation differs between airlines. It would mean forwarders may need to understand the contractual position on a carrier-by-carrier basis.”
Insurance implications under scrutiny
Phillips said existing freight forwarder liability policies have traditionally been designed around risks that forwarders control. This includes their own errors, omissions, and negligence when arranging transport, rather than obligations that sit with shippers.
If the revised contractual framework results in forwarders assuming responsibilities previously associated with shippers, insurers may review how those risks are assessed.
This could include changes to underwriting, policy terms, or pricing as the market gains a clearer understanding of the practical implications of the new arrangements.
Reducing uncertainty through cargo cover
Rather than waiting for the insurance market to evolve, Breeze believes forwarders can reduce uncertainty by ensuring cargo itself is appropriately insured.
“The most practical step is to confirm whether the shipper has comprehensive all risks cargo insurance. Also, where appropriate, offer cover on a shipment-by-shipment basis,” said Phillips.
“That provides immediate protection for the cargo owner. Meanwhile it helps to reduce uninsured exposure across the supply chain as the industry adapts to the revised framework.”
The revised IATA Direct Air Waybill framework came into effect on 1 July. It is intended to rebalance contractual responsibilities between airlines and freight forwarders.
The changes have prompted discussion across the air cargo industry regarding the legal, operational, and insurance implications of the revised framework. This is in particular is where implementation may differ between airlines. As the market adapts, forwarders are expected to work closely with carriers, insurers, and customers to understand how the revised arrangements apply in practice.
