From 1 July 2026, significant changes to the International Air Transport Association (IATA) Air Waybill (AWB) will fundamentally alter the risk profile for freight forwarders, who under the new terms will be deemed to act as the shipper of the goods and assume primary liability to carriers. This shift exposes freight forwarders to direct financial and operational risks that were previously borne by shippers, making it critical that they take proactive steps to protect their position.
In particular, freight forwarders should ensure that their insurance arrangements adequately cover this expanded liability and urgently review their standard terms and conditions to confirm that shipper indemnities extend to these new exposures and have been properly incorporated and accepted.
Background and proposed reforms to the AWB regime
For many years, there has been reasonably standard practice in the form of the AWB prescribed by the IATA for use in the movement of goods by airlines.
In very general terms, the IATA AWB is completed by a freight forwarder as agent, either for the shipper of goods or for the airline carrying the goods. Although completed by the freight forwarder, the form of the AWB prescribed by IATA creates an agreement between the shipper and the carrier.
For some years, IATA has been concerned with those contractual arrangements. While carriers deal with freight forwarders in negotiating commercial terms of the carriage of goods and completing the AWB, if issues arise, then the carrier’s immediate recourse is against the shipper. This can create problems in several ways. For one example, the freight forwarder may not have detailed information regarding the goods and cannot alert the carrier to dangers associated with the goods, meaning that the carrier does not take adequate precautions to deal with the dangers. In another example, if financial liabilities arise relating to the carriage of the goods, the shipper may not have the financial means to indemnify the carrier against that financial liability.
The situation has been aggravated by the inability of carriers and freight forwarders to complete a comprehensive air cargo program, which would allocate obligations and risks between freight forwarders and carriers throughout the world for all carriage of goods.
To address IATA’s concerns regarding current AWB arrangements, IATA has proposed that from 1 July 2026, the terms of AWBs will change so that the freight forwarder becomes the shipper of the goods. The expectation is that the freight forwarder would be primarily liable to the carrier and, therefore, would be more concerned to ensure correct completion of the AWB and manage liabilities associated with the carriage of the goods that are the subject of the AWB. Such a practice would also give the carrier direct recourse against the freight forwarder, who is more likely to hold insurance to cover potential liabilities.
The freight forwarding industry has expressed dissatisfaction with the proposed changes. The International Federation of Freight Forwarders Associations (FIATA) has engaged in direct negotiations with IATA seeking more time to discuss the proposed changes and either delay the introduction of the new arrangements or adopt different arrangements which do not expose the freight forwarders to this new direct liability. However, as of the time of writing this article (25 June 2026), there has been no announcement of changes to the new arrangements proposed by IATA.
Key actions for freight forwarders
If there is no delay to the adoption of the new arrangements by IATA, freight forwarders will be exposed to more direct liability arising in the carriage of the goods from 1 July 2026. On that basis, then freight forwarders should immediately look to new actions including the following:
- Work with their insurers and employees to assess the new types of liability which could arise.
- Ensure that their insurances cover this direct new liability.
- Review their standard terms and conditions (STC) with their shipper clients to ensure that the indemnities provided by the shipper cover the potential new liability and that those terms and conditions have been accepted by the shipper.
- Require proof that the shipper holds insurance which would cover their liabilities under the STC if the freight forwarder becomes directly liable to the carrier under the AWB.
- Ensure that their shipper clients are known, responsible, and reliable companies.
- Adopt new practices with their shipper clients so that the freight forwarders are better aware of any dangerous goods which are being carried which could increase potential liability.
- Negotiate with carriers so that liabilities are subject to new limitations.
- Remain in close contact with FIATA and their local industry associations so that they are aware of any changes to IATA’s new practices.
Looking ahead
We will continue to review developments, including whether the new obligations and liabilities imposed by the carriers may be reduced or limited by the effect of our Unfair Contracts legislation.
Contact us
If you would like to discuss the proposed changes to the IATA AWB, or require assistance to review and update your terms and conditions or other contracts, please contact Andrew Hudson, Partner — Customs & Trade, on +61 3 9321 7851.
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