Common Carrier: Definition, How It Works, and Examples

What Is a Common Carrier?

A common carrier is a private or public entity that transports goods or people for a fee. It can also refer to telecommunications services and public utilities.

A common carrier, like a bus service, provides its services to the general public, unlike a private carrier that serves specific clients on a contractual basis.

A utility company can be considered a common carrier because it doesn’t distinguish its customers and is available to anyone who pays the fee.

Key Takeaways

• A common carrier transports goods or people for a fee.
• Utility and telecommunications companies are also common carriers.
• Unlike private carriers, common carriers must provide service to anyone willing to pay, unless they have grounds for refusal.

How Common Carriers Work

The term common carrier originated in transportation and is primarily used in that context. Some common carriers transport goods for businesses, while others transport the general public.

Common carriers include taxi services, trucking companies, rail freight services, waste removal services, couriers, vehicle towing services, and air freight services.

Telecommunications services and many oil and gas pipeline operators are classified as common carriers under U.S. law.

Common carriers provide essential public services and are subject to more state and interstate regulations and government scrutiny.

Generally, a common carrier must provide services to anyone willing to pay, unless there are valid grounds for refusal.

States may require common carriers to obtain permits before operating legally. Due to their provision of essential public services, common carriers face greater regulation and scrutiny, often with limited competition.

Special Considerations

If you’re wondering how to distinguish a common carrier’s truck from a private carrier’s truck on the highway, look at the advertising, or lack of it, on the exterior.

A private carrier typically displays a company’s logo on its surface. A common carrier may have the transport company’s logo but often appears plain and unadorned. It can transport various types of goods.

A business that uses its own fleet for transportation instead of a common carrier is known as a private carrier. Some companies choose private carriers for convenience, reliability, or cost-effectiveness. However, they may still hire common carriers on a short-term basis when their in-house capacity cannot meet the volume.

Credit Card Insurers and Common Carriers

Consumers may encounter the term common carrier in the supplemental benefits provided by credit card issuers.

Some issuers offer common carrier baggage insurance, which covers the cardholder’s luggage if it is lost, damaged, or stolen during transport. In this scenario, the airline is considered the common carrier. The coverage applies when the consumer uses a credit card to purchase a plane ticket.

Some issuers offer common carrier baggage insurance, which covers the cardholder’s luggage if it is lost, damaged, or stolen during transport. In this scenario, the airline is considered the common carrier. The coverage applies when the consumer uses a credit card to purchase a plane ticket.