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Table of Contents
- Whats Changing?
- Why Does This Matter To Your Business?
- What Does This Mean For You?
- When Do You Need To Act?
- What's the Risk or Benefit for Your Business?
- What Should You Do Next?
The Montreal Convention of 1999 (aka MC99) is an international treaty that governs liability in international air transport, setting clear limits on compensation for cargo loss, damage, or delays. These liability limits, expressed in Special Drawing Rights (SDRs)—a value determined by the International Monetary Fund (IMF)—provide a standardized framework for air cargo claims.
Starting December 28, 2024, there’s a big change coming to international air cargo rules that might impact how your business handles shipments: the liability limits for air cargo are increasing, offering better compensation if something goes wrong with your shipment. The change, part of the treaty’s built-in mechanism to adjust for inflation every five years, ensures that compensation levels remain fair and relevant in today’s economic landscape. This update is vital in maintaining balance and fairness for businesses relying on international air transport. Let’s explain what this means for you, why it’s happening, and how you can prepare without missing a beat.
What’s Changing?
The compensation limit for cargo loss, damage, or delay is increasing from 22 Special Drawing Rights (SDRs) to 26 SDRs per kilogram.
But what’s an SDR? Think of it as an international currency value set by the International Monetary Fund (IMF). To give you an idea, 1 SDR is currently worth about USD 1.33.
This change isn’t random. Every five years, the liability limits are reviewed to keep up with inflation, ensuring fair compensation for businesses like yours.
Why Does This Matter to Your Business?
If you’re shipping goods internationally by air, this update could affect how much compensation you’re entitled to if something goes wrong. For instance:
- If cargo is lost or damaged, the increased limits mean you can claim more.
- You might see adjustments to freight rates or your insurance premiums as carriers and insurers adapt to the new rules.
Bottom line: this is about making sure you’re better protected. However, it also means your contracts and insurance policies must be reviewed to match these new standards.
What Does This Mean for You?
This isn’t just a change in numbers—it’s a chance to revisit and strengthen your shipping agreements. To stay compliant and avoid surprises, here’s what you need to think about:
- Contracts: Are your shipping terms up to date with the new limits?
- Insurance: Does your policy cover the updated liability thresholds?
- Communication: Have you discussed this with your logistics partners?
Being proactive now can save you from potential headaches later.
When Do You Need to Act?
The new limits officially kick in on December 28, 2024, but carriers have a six-month grace period until June 28, 2025, to update their air waybills and documentation. That said, don’t wait until the last minute! The earlier you align with these changes, the smoother the transition will be for your business.
What’s the Risk or Benefit for Your Business?
This change brings both risks and opportunities:
| Aspect | Risks | Benefits |
|---|---|---|
| Financial Exposure | - Outdated contracts may lead to disputes or inadequate compensation. | + Higher liability limits mean greater financial protection for cargo loss or damage. |
| Insurance Coverage | - Insurance policies not updated to the new limits could leave gaps. | + Opportunity to review and enhance insurance coverage to match new thresholds. |
| Operational Impact | - Delays or disruptions if compliance is not achieved by June 28, 2025. | + Improved alignment with international standards strengthens operational reliability. |
| Customer Relationships | - Perception of negligence if updates are not communicated effectively. | + Demonstrates professionalism and commitment to staying compliant with global regulations. |
| Cost Management | - Potential increase in freight rates due to carriers adapting to limits. | + Clear and predictable compensation structure reduces uncertainty in financial planning. |
| Legal Compliance | - Non-compliance could result in legal liabilities or penalties. | + Adhering to new standards minimizes risks of disputes and enhances trade partnerships. |
What Should You Do Next?
Here’s your game plan:
- Talk to Your Logistics Partner: Start a conversation about the new limits and what they mean for your shipments.
- Review Contracts: Check that your terms and conditions reflect the updated liability thresholds.
- Update Your Insurance: Double-check with your insurer that your coverage is up to date. Alternatively, you can check with Kerry Logistics Oceania and quote on insurance policies that are up to date with any changes in the market:
Wrapping It Up
These new liability limits under the Montreal Convention are a step forward in ensuring fair compensation for cargo claims. While the changes might feel like extra work, they’re also an opportunity to strengthen your risk management and protect your business.
Need help sorting out the details? Contact us today for personalized advice on how to make these changes work for your business. Let’s ensure you’re ready and confident to keep moving forward!
Why Partner with Kerry Logistics
Selecting Kerry Logistics as your trusted partner isn't just a choice—it's a strategic move towards ensuring your success. Our commitment to excellence is not just a promise; it's a guarantee. With a global network that's both vast and meticulously managed, we stand head and shoulders above the competition. This means you benefit directly from unparalleled service quality, ensuring your supply chain needs are met with precision, efficiency, and minimal hassle.
Are you ready to elevate your logistics game and experience seamless support tailored to your unique needs? Let's discuss how we can bring unparalleled value to your business.
