Due to the complicated procedures and documentation required for cargo shipment, cargo owners usually appoint a forwarding agent to handle these matters on their behalf. The appointed forwarding agent will then arrange a carrier to ship the cargo to the destination.

Although a forwarding agent can conclude a forwarding contract as an agent, or a carriage contract as a carrier, he can never act as both the forwarding agent and carrier for the same shipment. If he did so, he would be going against a basic principle of general agency law that states that an agent should not make deals with himself on behalf of his principle. In other words, as a forwarding agent, he can act on behalf of the cargo owners to appoint a carrier for the transportation of cargo, or he can act on behalf of a carrier to be entrusted with the transportation of cargo. However, a forwarding agent can never act as the carrier for the same shipment.

If an infringement of this basic principle occurs, arguments usually arise when there is claim. Bound by the contract of carriage, the carrier is responsible for the loading, handling, stowage, carriage, custody, care and discharge of the cargo entrusted to them. The entity acting as the forwarding agent is covered by marine cargo policy. However, in a situation where the forwarding agent is also acting as the carrier, if there is any loss of or damage to the cargo caused by the negligence of the carrier, it is self-contradictory that the marine cargo policy covering the forwarding agent will not cover the loss of or damage to the cargo due to his own negligence.

Customers are advised that they should take great care when appointing a forwarding agent. They should ensure that their chosen forwarding agent is not also acting as the carrier by asking the forwarding agent to declare his relationship with the carrier.

Learn more about our insurance plans:
Cargo
Pleasure Craft