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Legal ruling chills freight industry
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02/07/2009
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A new legal precedent means that small mistakes in the complicated 'manufacturer to high street' supply chain can send freight operators to the wall – through no fault of their own.
The commercial transport industry journal International Freighting Weekly reported on "a frightening prospect for shippers and shoppers alike" after a British High Court ruling found a freight company liable for the theft of products which had been delivered to its warehouse in error by a client, with its insurance policy being declared void due to the clerical error.
IFW said it all started when £345,000 worth of Bluetooth mobile phone devices that were meant to have been flown to Hong Kong, were mistakenly delivered to Uniserve's local warehousing facility in Manchester. While the goods were at the warehouse, a robbery occurred and the devices disappeared into the criminal underworld. Uniserve, which would have charged £3 for moving and storing a pallet of that size, relied upon its limited liability insurance to cover any damage or theft of products. However, because the goods had been delivered by mistake – regardless of the fact that the mistake was not Uniserve's – the insurance company voided its policy. Uniserve now faces a total bill – including legal costs – of nearly £2 million.
On May 11, Judge Mackie QC ruled at the high court that, as the goods had been delivered in error, no limited liability insurance contract could apply.
Iain Liddell, CEO at Uniserve told IFW that: "This is going to change the way everything is done through the whole transport chain. Under this new regime, not only will moving a pallet become extremely expensive, but we will have to have far more information about what we handle for other people."
"We would have charged £3 for moving that pallet," explains Liddell. "The increased insurance liability alone would bring costs up to £2343. Can you imagine that effect on a £1000 shipping cost? This isn't pie in the sky. It's now case law. Unlimited liability claims can be made and insurers can revisit six years of claims to establish if an error has been made, and then demand full payment from anyone in the supply chain who can be held responsible."
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Author
Ken Hurst
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