Carrier Liability Limits: What Your Shipping Line Actually Owes You

A container carrying $500,000 of goods is damaged in transit from Port Klang to Hamburg, under a Hague-Visby bill of lading. The shipper proves carrier fault and submits a claim. The shipping line pays approximately $50,000. The shipper absorbs $450,000 of loss.

Those numbers are not a worst case. They are the default outcome under the most common international carriage regime in use for containerised trade, applied to a mid-sized export shipment, assuming carrier fault can be proven in the first place. Most Malaysian and Singaporean shippers, asked what their shipping line would pay on a total loss, have no idea that the true answer sits at somewhere between 5% and 15% of the cargo value.

This guide walks through the four sea carriage regimes (Hague-Visby, Hamburg, Rotterdam, US COGSA), the air, road, and rail regimes (Montreal Convention 1999, CMR Convention, CIM-COTIF), and the gap between those limits and what cargo insurance covers.

Key Facts: Carrier Liability at a Glance

How much does a shipping line pay for damaged containerised cargo? Under the Hague-Visby Rules, the most widely applied sea carriage regime, approximately $900 per package or $2.70 per kilogramme of gross weight, whichever is higher, at April 2026 SDR-to-USD rates.

How much does an air carrier pay under the Montreal Convention 1999? 26 SDR per kilogramme, or approximately $35 per kilogramme at April 2026 rates, effective 28 December 2024 following the ICAO five-year inflation review that raised the limit from 22 SDR/kg.

How much does an international road carrier pay under CMR? 8.33 SDR per kilogramme, or approximately $11.25 per kilogramme.

How much does an international rail carrier pay under CIM-COTIF? 17 SDR per kilogramme, or approximately $23 per kilogramme.

What is the US COGSA limit? $500 per package, a figure set in 1936 and unchanged since; the US has not ratified the Visby or SDR protocols.

Why does carrier liability rarely match cargo value? Carrier caps were designed in an era of smaller, lower-value shipments and require the shipper to prove carrier fault; for high-value containerised trade they typically recover between 5% and 15% of cargo value.

Why Carrier Liability Is Not Cargo Insurance

Carrier liability is the set of obligations a sea, air, road, or rail carrier owes to the shipper for damage or loss to the goods they are carrying. It is contractually defined, convention-capped, and requires the shipper to prove that the carrier was at fault.

Cargo insurance is a separate contract between the cargo owner and an insurer, responding to loss or damage from perils named or covered under the policy, regardless of whether the carrier was at fault, subject to policy terms and conditions. The two instruments sit in different places in the transit risk architecture and are not substitutes.

Where cargo insurance responds to a covered loss, the insurer pays the cargo owner and then, through subrogation, pursues the carrier for recovery under whichever carriage regime applies. The cargo owner is made whole by the policy; the recovery battle with the carrier is for the insurer's account.

For the wider gap argument, see our guide on why your freight forwarder is not your insurer.

The Special Drawing Right: The Unit Every Regime Uses

All international transport liability regimes express carrier caps in Special Drawing Rights (SDR), the International Monetary Fund's composite unit of account. SDR is revalued daily against a basket of currencies. As of April 2026 the SDR is worth approximately $1.35, with a recent trading range of roughly $1.33 to 1.38.

When converting a convention cap to dollars, the figure moves with the SDR rate. Hedge all converted amounts with "approximately" and note the SDR valuation date where accuracy matters.

Hague-Visby Rules: The Default for Containerised Sea Freight

The Hague-Visby Rules are an amended version of the 1924 International Convention for the Unification of Certain Rules of Law relating to Bills of Lading (the Hague Rules), protocol-amended in 1968 (Visby Protocol) and 1979 (SDR Protocol). They are the most widely applied sea carriage regime for containerised shipping and are incorporated into Malaysian and Singaporean carriage of goods by sea legislation: Malaysia gives effect to Hague-Visby through its Carriage of Goods by Sea Act 1950 (amended to align with the Visby Protocol) and Singapore through its Carriage of Goods by Sea Act 1972.

Hague-Visby caps carrier liability at SDR 666.67 per package or 2 SDR per kilogramme of gross weight of the goods lost or damaged, whichever is higher. Applied to April 2026 exchange rates, this is approximately $900 per package or $2.70 per kilogramme.

Carrier liability under Hague-Visby requires the shipper to prove carrier fault, unless the loss results from an exception such as fire, error in navigation, or unseaworthiness that the carrier exercised due diligence to prevent. Many routine claims fall into a middle ground where the carrier asserts an exception and the shipper must prove otherwise, which consumes time and legal cost before any recovery.

The per-package measure turns on what the bill of lading describes as packages. A container described as "1 x 40' container STC 100 cartons" is 100 packages for the per-package calculation, not 1. A container described as "1 x 40' container, goods in bulk" may be treated as a single package, which can be a significant reduction in the shipper's recovery.

For the technical walk-through of the regime, see our reference on the Hague-Visby Rules.

Hamburg Rules: Broader in Scope, Narrow in Adoption

The Hamburg Rules (United Nations Convention on the Carriage of Goods by Sea, 1978) widen carrier liability compared to Hague-Visby. They cap carrier liability at SDR 835 per package or 2.5 SDR per kilogramme, whichever is higher, and apply a broader liability framework on the carrier for the entire period the goods are in its charge.

Hamburg has been adopted by fewer major trading nations than Hague-Visby, so in practice most Malaysian and Singaporean shippers will rarely see a pure Hamburg-governed bill of lading. It applies in specific jurisdictions and can be incorporated contractually into some trades.

For the detail, see our reference on the Hamburg Rules.

Rotterdam Rules: Adopted, Not Yet in Force

The Rotterdam Rules (2008) are a modernising regime designed to replace Hague-Visby and Hamburg, covering multimodal transits and door-to-door movements. They cap carrier liability at SDR 875 per package or 3 SDR per kilogramme, whichever is higher.

The Rotterdam Rules have been signed by 25 states but require 20 ratifications to enter into force, a threshold not yet reached as of April 2026, with ratifications still in single digits (Spain, Togo, Congo, Cameroon, and Benin were among the early ratifying states). They are referenced in contractual and academic analysis but are not actively applied to live shipments.

For the technical treatment, see our reference on the Rotterdam Rules.

US COGSA: A Different Animal on US-Bound Cargo

The United States Carriage of Goods by Sea Act 1936 (COGSA) applies to ocean cargo inbound to and outbound from US ports. It caps carrier liability at $500 per package, a figure set in 1936 and unchanged since. The US has not ratified the Visby or SDR protocols, so US COGSA applies a fixed dollar amount rather than an SDR-based figure.

$500 per package in 1936 dollars and in 2026 dollars are not the same thing: the real value of the cap has fallen dramatically over nine decades. For shippers moving containerised cargo to or from US ports, the COGSA cap is almost always substantially lower than Hague-Visby cover on the same shipment.

Some US-bound bills of lading attempt to contract to Hague-Visby terms in carrier tariffs; whether this is upheld depends on the specific contract language and the jurisdiction in which a claim is litigated. For many practical purposes the $500 per package cap is the operative number.

For the detail, see our reference on US COGSA.

Sea Regimes Side by Side

Figures convert SDR at approximately $1.35 at April 2026 indicative rates. Which regime applies to any given shipment is a function of flag state of the vessel, jurisdiction of the bill of lading, and contractual choice-of-law provisions. A shipment from Port Klang to Hamburg on a German-flagged vessel under a German-law bill of lading is Hague-Visby by default; a shipment from Singapore to Los Angeles on a US-flagged carrier is US COGSA.

Montreal Convention 1999: Air Cargo Liability

Air cargo carriers are bound by the Montreal Convention 1999, which caps liability at 26 SDR per kilogramme of gross weight. This figure took effect on 28 December 2024 following the ICAO five-year inflation review that revised it upward from the previous 22 SDR/kg.

At April 2026 exchange rates, 26 SDR/kg is approximately $35 per kilogramme. For a 2,000 kg consumer electronics consignment worth $800,000 shipped by air from Penang to Europe, the Montreal cap delivers approximately $70,000 against cargo value of $800,000, leaving a $730,000 gap.

Montreal applies unit-of-weight calculation across the entire shipment, not per-package as under Hague-Visby. The shipper does not need to prove carrier fault in the way they do under Hague-Visby; air carrier liability under Montreal is strict subject to specified defences.

CMR Convention: International Road Carriage

The Convention on the Contract for the International Carriage of Goods by Road (CMR) governs road cargo liability for international movements where origin or destination is in a CMR state. It caps carrier liability at 8.33 SDR per kilogramme of gross weight.

At April 2026 rates, that is approximately $11.25 per kilogramme. CMR does not apply to purely domestic road movements, so intra-Malaysia road transits fall outside CMR; cross-border road from Thailand into Malaysia where both countries are CMR states would trigger CMR where the movement meets the territorial scope.

CMR is more commonly discussed in European trade contexts than in Southeast Asia, but for traders moving cargo through Europe on a door-to-door basis the CMR leg becomes a significant element of the liability profile.

CIM-COTIF: International Rail Carriage

CIM-COTIF, the Uniform Rules Concerning the Contract of International Carriage of Goods by Rail, caps rail carrier liability at 17 SDR per kilogramme of gross weight. At April 2026 rates that is approximately $23 per kilogramme.

For Southeast Asian shippers, rail liability is primarily relevant on Eurasian land-bridge movements and on specific cross-border routings where rail is material. For pure sea or air cargo, CIM-COTIF does not apply.

All Regimes Compared

Worked Examples: Three Typical MY/SG Shipments

The gap between carrier liability and cargo value is not abstract. These three illustrative shipments show how the numbers come out for typical Malaysian and Singaporean exports.

In all three scenarios the shipper recovers between 5% and 19% of cargo value from the carrier, and only after proving carrier fault (for sea claims) or navigating the defences available to the air carrier under Montreal. The residual gap is the cargo insurance proposition.

Your cargo value minus carrier liability equals your gap. Close it.

Get a cargo insurance quote via the form, or WhatsApp us on +60 19 990 2450 for a quick indication on a specific shipment.

Why the Gap Is Not Filled by Forwarder Cover

A freight forwarder's liability insurance protects the forwarder against claims from cargo owners. It is a liability policy, not a cargo policy, and it responds to the forwarder's legal liability as defined by the trading conditions of the forwarder association (FIATA, BIFA, SLA, FMFF) or the negotiated contract.

Most forwarder trading conditions track the carrier regimes back-to-back: the forwarder's liability to the cargo owner is typically capped at the same or very similar limits to what the forwarder could recover from the underlying carrier. Which means the forwarder, at best, passes through the carrier cap to the cargo owner.

The cargo owner who looks to the forwarder to make them whole on a total loss is in the same economic position as the cargo owner who looks to the carrier. Neither is the answer to the gap; the cargo owner's own cargo insurance is. For the explainer on forwarder liability, see our FFL insurance page and the separate guide on what freight forwarder liability insurance actually covers.

How Cargo Insurance Fills the Gap

Marine cargo insurance responds to loss or damage caused by perils covered under the policy, regardless of carrier fault, subject to policy terms and conditions. A policy on ICC (A) 2009 basis pays out for the full insured value (typically commercial invoice value plus freight plus 10%) where the physical loss is covered, and the insurer then pursues whatever recovery is available from the carrier through subrogation.

For the cargo owner, this shifts the economics: the settlement timeline is driven by the policy not by a liability battle, the recovery amount is the insured value not the carrier cap, and the fault question is handled by the insurer's claims team and not the cargo owner's finance department. See our marine cargo insurance solution page for the product, what marine cargo insurance covers for the foundation, and the Marine Insurance Act 1906 for the legal framework governing most Malaysian and Singaporean marine policies. For the general average mechanic that sits alongside cargo insurance during major incidents, see our reference on the York-Antwerp Rules 2016.

Frequently Asked Questions

Do I still need cargo insurance if my shipping line confirms Hague-Visby cover?

Yes. Hague-Visby is a liability cap, not a cover. Recovery requires proof of carrier fault and is limited to SDR 666.67 per package or 2 SDR per kilogramme whichever higher, typically a small fraction of actual cargo value, subject to policy terms and conditions on your own cargo policy.

How do I know which carriage regime applies to my shipment?

The regime is a function of the bill of lading terms, the flag state of the vessel, the jurisdiction of the origin and destination, and the contractual choice-of-law clause. Most Asia-Europe containerised movements default to Hague-Visby; US-bound movements default to US COGSA.

What does "per package" mean when the cargo is in a container?

Under Hague-Visby, the per-package measure turns on what the bill of lading describes as packages. A container described as "1 container STC 100 cartons" is 100 packages for the calculation; a container described as "1 container, goods in bulk" may be treated as a single package, significantly reducing the cap.

Does the Montreal Convention cap apply to all air freight?

Montreal applies to international carriage of cargo by air between states that have ratified the Convention. Domestic-only air freight within a single country is governed by that country's civil aviation law, not Montreal, and liability rules vary.

What happens if the carrier denies liability?

Under Hague-Visby the shipper bears the burden of proving carrier fault; under Montreal the air carrier can plead specified defences. A denied carrier claim is a disputed claim, and even a successful outcome typically takes months or years. A cargo insurance claim is paid first, with the insurer then taking over the recovery battle through subrogation.

Is CMR liability relevant for Malaysian or Singaporean exporters?

CMR governs international road carriage within CMR states, primarily European. For MY/SG exports, CMR becomes relevant on the European road leg of a door-to-door movement, not on intra-Asia road transit.

Why is the US COGSA limit so low?

The US Carriage of Goods by Sea Act 1936 set the per-package cap at $500, a figure unchanged in nearly nine decades. The US has not adopted the Visby or SDR protocols, so the cap does not inflation-adjust and remains at its original dollar value.

Voyage Conclusion

Carrier liability is a floor, not a ceiling. Every international carriage convention caps what the carrier pays at a level that, for most cargo, recovers somewhere between 5% and 20% of cargo value, and only after fault is proven. Cargo insurance closes that gap regardless of carrier fault, subject to policy terms and conditions.

Voyage is a specialist marine insurance platform covering Malaysian and Singaporean shippers and logistics providers, with sharp rates and 24 to 48 hour turnaround on most quotes. If you have a shipment where the gap is visible, send us the details via the quote form or WhatsApp us on +60 19 990 2450. For the forwarder side of the conversation, see our freight forwarders liability insurance solution page.

Disclaimer: This article provides general guidance on carrier liability limits under international transport conventions as of April 2026. Liability frameworks, SDR conversion rates, and applicable regimes differ between jurisdictions and may change.

Always review your specific carriage contract, bill of lading, and policy wording, and consult a qualified insurance or legal professional before making coverage decisions.