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Carrier liability under the CMR convention has a hard cap: as a rule it is calculated in SDR (an IMF unit) per kilogram of missing gross weight, not by invoice value. For high-value, lightweight goods such as electronics or cosmetics, that cap covers only a fraction of the loss. Cargo insurance is what closes the rest.
Where does the gap come from: weight, not value?
The CMR convention sets the ceiling on a carrier's liability in international road transport. What matters is how it is calculated: per kilogram, not per item and not by commercial value. If a pallet weighs little but its contents cost a fortune, the maths works against you. Even a fully valid, paid-up policy from a vetted carrier pays exactly up to that cap and not a penny more.
When carrier liability truly falls short
Carrier liability protects the carrier against a claim, not you against a loss. Beyond the weight cap come exclusions common to many policies: force majeure, fault on the sender's side, defective packaging, sometimes theft under specific circumstances, or a stop outside a secured area. Add the deductible on top. The result is simple: some loads, especially high-value and light ones, fall outside real protection before the truck even moves.
Cargo insurance closes the difference
Cargo insurance (goods in transit) works differently from carrier liability: it protects the goods themselves and, as a rule, is calculated on their declared value, not per kilogram. It covers the difference between the CMR cap and what the load actually costs. That is why, for higher-value shipments, we treat it as standard rather than an add-on and fold it into one point of responsibility for the whole route. We explain the detail under our cargo insurance service.
How do we set the sum insured?
We base the sum on the real value of the load, usually the invoice value, often increased by freight cost and an agreed uplift. We ask about value, weight, goods type, direction and transhipment points, because these change the risk and scope. Under-insuring means paying out of pocket in a claim; over-insuring is a wasted premium. Final scope and amount are always agreed case by case with the insurer, since terms depend on the policy and the route.
How does OTSL prevent this?
Before a load moves, we check whether the CMR cap even covers its value, and for high-value or lightweight goods we propose cargo insurance with a sum matched to the invoice. We combine transport, customs and insurance under one responsibility, so we never send you back and forth between carrier and broker when a claim happens. Read more about the weak points of the chain in our supply chain risks knowledge base.
How do you calculate the liability limit in practice and when does this rule not apply?
Let us look at the exact operational calculation mechanism. The CMR convention sets the maximum compensation limit at 8.33 SDR for every 1 kg of gross weight of damaged or lost cargo. If you send 1 pallet with a total gross weight of 150 kg, the maximum payout from the carrier's liability insurance will be capped at exactly 1,249.5 SDR. When the invoice value of the goods is high, this payout might cover only 3% to 5% of your total financial loss, leaving the remaining 95% completely uncovered unless you hold a cargo insurance policy.
There is, however, a clear operational boundary where this calculation DOES NOT apply: the weight limit of 8.33 SDR per kilogram is void if you prove wilful misconduct or gross negligence on the part of the carrier. In this scenario, carrier liability increases to 100% of the proven value of the lost goods. To preserve your legal right to claim compensation, you must adhere strictly to specified operational timeframes:
- Any apparent damage must be written on the CMR consignment note immediately upon physical receipt of the goods.
- Non-apparent damage must be reported in writing within 7 days of delivery (excluding Sundays and public holidays).
- For temperature-controlled freight, formal written notice to the driver should be issued within 24 hours of offloading.
Step by step
- Assess cargo value. Evaluate the ratio of the weight of your goods to their actual invoice value before dispatch.
- Verify carrier coverage. Review the carrier's policy limits and any specific exclusions in the transport agreement.
- Calculate the liability cap. Determine the maximum statutory compensation based on the total gross weight of the pallet.
- Secure additional coverage. Purchase goods-in-transit cargo insurance to cover the full commercial invoice value.
- Issue transport instructions. Provide the transport organizer with detailed requirements regarding securing the goods and handover procedures.
Definitions
- Carrier Liability (OCP): An insurance policy protecting the carrier against financial claims arising from non-performance or improper performance of a transport contract.
- CMR Convention: An international agreement governing the rights and obligations of parties in international road freight transport.
- SDR (Special Drawing Rights): An artificial reserve asset and account unit created by the International Monetary Fund, used to calculate liability limits.
- IMF (International Monetary Fund): An international financial institution that sets the value of the accounting unit used in compensation settlements.
- Cargo Insurance: Freight insurance that covers the cargo owner up to the full commercial value of the goods.
The OTSL role
OTSL helps assess transport risk accurately and select appropriate freight protection for high-value shipments. We advise when standard road transport requires supplementary coverage and clarify how cargo insurance differs from carrier liability.
