A costly cargo miscalculation

An air charter broker was engaged by a freight forwarder to arrange the transport of cargo. In preparing the quote, the broker based the pricing and aircraft selection on the total volume capacity of the aircraft’s cargo hold. However, the broker failed to specify that the usable volume - the space actually available for cargo once structural and operating limitations and loading constraints were accounted for – was substantially less than the total quoted figure.

Relying on the broker’s quote, the freight forwarder delivered the cargo to the departure airport. When the aircraft was loaded, it became clear that a significant portion of the cargo could not be accommodated. This resulted in the need for the client to arrange alternative air transport for the excess cargo at short notice, and delays to the shipment.

The end client, frustrated by the unexpected costs and operational impact, issued court proceedings against the freight forwarder, who in turn commenced proceedings against the air charter broker on the basis of negligent misrepresentation. They sought compensation for the additional transportation costs and handling expenses that were claimed by the end client.

As the broker’s negligence was not disputed, solicitors were appointed to obtain a resolution of the matter outside of litigation. A settlement was therefore negotiated for US$85,000 to cover the exporter’s additional transport costs. ITIC indemnified the broker for both the settlement amount and solicitors’ fees.