What is a Common Carrier
A common carrier is a commercial entity that gets paid to transport goods or people. Some common carriers transport goods for other businesses, some transport goods for the general public and some transport members of the general public. Types of businesses that may be classified as common carriers include taxi services, trucking companies, waste removal services, couriers, towing services and air freight services, among many others. States may require common carriers to obtain a permit before they can operate legally and to obtain special permission if they will be transporting hazardous materials.
BREAKING DOWN Common Carrier
Common carriers are often plain in appearance because they transport goods for multiple companies; think of a freight railcar or a plain white trailer on an 18-wheeler. Some common carriers, such as airlines, advertise their brand on their exteriors but may still be transporting goods from various companies. Private carriers, or wholly owned carriers, often advertise their company’s products on the side of their vehicles. That said, just because there is a branded decal on a trailer doesn't mean the company on the trailer side owns the whole truck. Many large companies with regular shipping needs will usually brand the trailers or containers that are owned by the company, but the truck or engine doing the hauling won't be similarly decked out.
A business that does not use a common carrier but instead uses its own fleet to transport its own goods is called a private carrier. When it comes down to shipping logistics, companies can either own their shipping and take on the responsibility of timely delivery or contract it to common carriers. A company might choose the private carrier option if it is more convenient, more reliable or less expensive. Some companies live or die by hitting their transport schedules just in time, so they tend to want to control those risks by owning the whole process. However, companies that own and operate private carriers may still be forced to hire common carriers temporarily when business volume exceeds their in-house capacity.
Common Carrier and Credit Card Insurance
One place consumers might come across the term “common carrier” is in the terms of the supplemental benefits provided by their credit card issuer. A common supplemental benefit is common carrier baggage insurance, which covers the cardholder’s luggage in the event the luggage or its contents are lost, damaged or stolen while in transport on an airplane, train, boat, bus or other common carrier. This coverage applies when the consumer uses his or her credit card to pay the common carrier’s fare (in the form of a plane ticket, for example). Another supplemental benefit will reimburse the cardholder for their common carrier tickets purchased using the credit card if the trip is canceled or interrupted.