When to file a freight claim for lost or damaged cargo

The mode, route, applicable law, carrier terms, and nature of the loss can all affect how quickly notice must be given and how much may be recoverable through a claim.

When cargo is lost or damaged in transit, filing a freight claim may seem straightforward. But when you need to act and how much you may recover depend on the shipment.

For Canadian businesses, claim requirements can vary by mode of transport, route, terms of carriage, and governing liability regime.

In this article, we explain what a freight claim is and how liability and notice requirements differ by mode of transport.

What is a freight claim?

A freight claim is a request for compensation from a carrier for loss, damage, or shortage that occurs while goods are in transit.

Freight claims can involve different types of loss or damage:

• Apparent damage is visible when the shipment is delivered, such as a crushed carton or torn packaging. It should be documented and noted on the delivery receipt.
• Concealed damage is discovered after the packaging is opened. Because the shipment appeared intact at delivery, establishing when the damage occurred can be more difficult.

A freight claim can also arise when goods never arrive or when a ⁠short shipment results in fewer goods being delivered than expected.

How do freight claim rules differ by mode of transport?

A carrier may be liable for lost or damaged cargo without being required to reimburse its full value. Three factors matter:

• Carrier liability limits determine the maximum amount a carrier may be required to pay for a covered loss. Depending on the applicable rules, the limit may be based on weight or number of packages rather than commercial value.
• Notice requirements determine how and when the carrier must be informed about loss, damage, or delay. Missing an applicable notice period can weaken a claim or, depending on the governing rules, affect your right to recover compensation.
• Time limits for legal action determine how long you have to bring proceedings against the carrier if the claim is not resolved.

Air freight

International air cargo is generally governed by the Montreal Convention, implemented in Canada through the Carriage by Air Act.

Carrier liability for cargo loss, damage, or delay is generally limited to 26 Special Drawing Rights (SDRs) per kilogram, unless a special declaration of interest in delivery has been made and any required supplementary sum paid.

For damaged cargo, written notice must be provided as soon as the damage is discovered and no later than 14 days after receipt. For delay, the period is 21 days from the date the cargo was placed at the recipient’s disposal.

If legal action is required, the right to damages is generally extinguished if proceedings are not brought within two years of the date of arrival at the destination, the date the aircraft should have arrived, or the date the carriage stopped.

Your air waybill should be retained as part of your shipment documentation.

Ocean freight

For ocean cargo subject to the Hague-Visby Rules, which have force of law in Canada through the Marine Liability Act, carrier liability is generally limited to 666.67 SDRs per package or unit or 2 SDRs per kilogram of gross weight of the goods lost or damaged, whichever produces the higher amount.

Apparent loss or damage should generally be reported in writing before or when the goods are removed into the receiver’s custody. If the loss or damage is not apparent, written notice should generally be provided within three days.

If legal action is required, proceedings against the carrier generally must be brought within one year of delivery or the date the goods should have been delivered. This period may be extended if the parties agree after the cause of action arises.

Road freight

Domestic road freight does not operate under a single federal cargo-liability regime. The applicable rules can instead depend on:

• The province or territory
• Applicable legislation and conditions of carriage
• The ⁠bill of lading
• The carrier’s tariff and agreed terms

What should you do when cargo is lost or damaged?

You will need to document the loss or damage and notify the carrier as soon as it is discovered. Written notice of intent to claim can help preserve your position while supporting documentation is assembled.

Keep the bill of lading or air waybill, delivery receipt, photographs, commercial invoice, and relevant correspondence.

Carrier liability should also be distinguished from cargo insurance, which can provide protection beyond the carrier’s liability depending on the coverage purchased.

The Incoterm rule used in the sale helps determine when risk of loss or damage transfers between the seller and buyer, but it does not determine whether the carrier is liable for the loss or damage.

For guidance on preparing and submitting a claim, see our ⁠freight claims management guide.

How Cole International can help

Cole International provides trade consulting and freight forwarding services to help Canadian businesses navigate freight issues when cargo is lost, damaged, or delayed in transit.

If your cargo is lost or damaged in transit, reach out to one of our trade professionals for help understanding the requirements and documentation for your freight claim.