IATA Direct Air Waybill Changes Put Forwarder Contracts and Cargo Cover Under Review

The revised IATA Direct Air Waybill framework has put freight forwarders’ contracts and insurance arrangements under fresh scrutiny. Breeze says the changes may shift responsibilities among airlines, shippers and forwarders, leaving companies to check where liability sits in each airline relationship.

The framework took effect on 1 July and is intended to rebalance contractual responsibilities between airlines and freight forwarders. Its practical effect may vary by carrier, according to Breeze chief commercial officer Matthew Phillips. That means forwarders may need to establish the terms that apply with each airline, rather than assume one arrangement covers all their air cargo activity.

“Liability is generally expected to follow control,” Phillips said. He added that the revised framework raises questions about whether a forwarder could become responsible for matters traditionally associated with a shipper or carrier. The concern is not only how the contract is worded, but whether the party accepting a responsibility has control over the activity and protection for the resulting exposure.

Carrier terms may need a closer review

For forwarders, the first practical task is to review contractual arrangements with their airline customers and identify which responsibilities the revised terms assign to them. If those terms differ between airlines, a company’s obligations could depend on the carrier handling a particular shipment. Phillips said that variation could add uncertainty and make a carrier-by-carrier review necessary.

The issue matters where a forwarder’s usual role and its contractual obligations no longer line up neatly. Forwarders typically arrange transport and can face liability for their own errors, omissions or negligence in doing so. Breeze says their existing liability policies have generally been designed around those risks, rather than responsibilities that sit with shippers.

If a revised agreement transfers or adds shipper-related responsibilities to a forwarder, the company should establish what that means for its coverage. The source does not specify which contract clauses or shipment duties may change in each airline’s implementation. Forwarders will therefore need to examine the terms they receive and clarify how they apply to the work they perform.

Insurance questions extend beyond forwarder liability

Breeze says insurers may reassess how they evaluate forwarder risks if the contractual changes result in forwarders taking on obligations previously associated with shippers. Possible areas of adjustment include underwriting, policy terms and pricing, as insurers gain a clearer view of how the new arrangements work in practice. The company does not identify a timetable for those adjustments or say how individual insurers will respond.

That uncertainty makes it useful for forwarders to distinguish their own liability cover from insurance that protects the cargo itself. Phillips recommends checking whether the shipper has comprehensive all risks cargo insurance. Where appropriate, he says, forwarders can offer cover on a shipment-by-shipment basis.

That approach is aimed at protecting the cargo owner while reducing the chance that a loss leaves an uninsured gap in the supply chain. It does not resolve which party carries a contractual responsibility under a particular air waybill. Companies still need to understand their agreements and confirm what their insurance covers against the obligations those agreements create.

For operational teams, the review may involve matching the relevant airline terms to the shipment, confirming the shipper’s insurance status and deciding whether additional cargo cover should be offered. The source does not prescribe a particular internal process. But the carrier-by-carrier variation Phillips describes makes it important for the people arranging air freight to have access to the terms that govern each movement.

Industry groups have also raised concerns

Breeze is not the only organisation to flag questions about the revised framework. The US Airforwarders Association has advised forwarders to confirm contractual arrangements with every airline and review their insurance cover. FIATA has called for a delay to the amendments. Their concerns, as described in the source, add to discussion across the air cargo sector about legal, operational and insurance effects.

The central issue for forwarders is how the revised terms operate in day-to-day dealings with individual carriers and customers. A framework may set out a general allocation of responsibilities, while the terms used by each airline shape the position for a specific shipment. Until those details are clear, forwarders face a practical need to check contracts, understand coverage and discuss responsibilities with carriers, insurers and customers.

For now, Breeze’s advice is to make those checks while the market develops its understanding of the changes. Forwarders that know which obligations they have accepted, and whether cargo cover is in place, will be better positioned to manage shipments under the revised framework.