Freight forwarders face elevated liability exposure after the International Air Transport Association (IATA) revised its framework for direct airway bills effective July 1, according to trade associations and insurers. The change shifts responsibility for misdeclared goods, concealed dangerous goods, unsafe packaging, and other shipping errors from businesses to the agents tendering shipments.
IATA stated the "rebalancing of benefits and responsibilities between forwarders and airlines" was necessary due to the growth of B2C e-commerce shipments of dangerous goods, such as lithium batteries. Logistics providers, however, complain the decision was rushed with little consultation, making preparation difficult. They also note liability regimes could differ by airline, creating an inconsistent operating environment.
What Changed with Direct Air Waybills
A direct air waybill (AWB) is a legally binding document that confirms the airline has received goods and outlines transport terms. Unlike house waybills issued by forwarders to customers, or master air waybills used for consolidations, direct AWBs list the cargo owner and its customer as shipper and consignee, with the forwarder as intermediary. They are preferred for dangerous goods, perishables, urgent shipments, and goods requiring no special handling.
| Feature | Direct Air Waybill | House Air Waybill | Master Air Waybill |
|---|---|---|---|
| Issuer | Airline (or forwarder as intermediary) | Freight forwarder | Airline to forwarder |
| Shipper/Consignee | Cargo owner and its customer | Forwarder's customer | Forwarder (shipper) and handling partner (consignee) |
| Use case | Dangerous goods, perishables, urgent shipments | Consolidation of multiple shipments | Consolidation of house bills |
IATA proposed the change in January, arguing forwarders often insert the originating shipper's name in the shipper field for high-risk shipments, effectively stepping out of their role as customer and acting as agents of the shipper. IATA wrote in its Airlines magazine, "This creates a dilemma for carriers. They no longer have a direct commercial relationship with the original shipper, yet they accept these high-risk shipments from the forwarder under a direct AWB that makes it appear as though they do have a contractual relationship with the original shipper." IATA added that forwarders should be responsible because a direct AWB creates a contract with an entity the airline doesn't know and hasn't vetted, making recourse difficult if something goes wrong.
Industry Reaction and Concerns
"Without a doubt, this represents a significant reallocation of risk," said Matthew Phillips, chief commercial officer at Breeze, a digital cargo insurance provider, in a news release. Brandon Fried, executive director of the Airforwarders Association, stated in a release, "Freight forwarders should not be expected to assume liability for cargo they neither own, pack, nor control." Phillips noted that existing freight forwarder liability policies have traditionally been designed around risks forwarders control, including their own errors, omissions, and negligence — not risks from shippers.
"Freight forwarders should not be expected to assume liability for cargo they neither own, pack, nor control." — Brandon Fried, Airforwarders Association
It is unclear whether a major incident, such as a lithium-battery fire, has involved a direct AWB. Airlines usually settle claims, but it is increasingly difficult to pinpoint blame for mislabeled or mishandled dangerous goods, especially with the growing volume of e-commerce and co-loaded shipments.
Operational Implications for Freight Forwarders
- Increased risk exposure: Forwarders now assume liability for shipper errors, even if they had no control over packing or labeling.
- Insurance gaps: Existing liability policies may not cover the new risks, requiring revised coverage or additional premiums.
- Contractual adjustments: Forwarders must update their own contracts with shippers to pass through liability or require indemnification.
- Operational burden: Forwarders need enhanced screening and verification processes for high-risk shipments like lithium batteries.
Watch List
- Potential legal challenges or regulatory scrutiny if a major incident occurs involving a direct AWB.
- Further IATA guidance or revisions if airlines adopt inconsistent liability regimes.
- Insurance market response: whether premiums rise or coverage terms tighten for forwarder liability.
- Shifting e-commerce volumes and dangerous goods flows that could amplify risk under the new framework.
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