Will Kenton is an expert on the economy and investing laws and regulations. He previously held senior editorial roles at Investopedia and Kapitall Wire and holds a MA in Economics from The New School for Social Research and Doctor of Philosophy in English literature from NYU.
Updated December 19, 2022 Reviewed by Reviewed by Marguerita ChengMarguerita is a Certified Financial Planner (CFP), Chartered Retirement Planning Counselor (CRPC), Retirement Income Certified Professional (RICP), and a Chartered Socially Responsible Investing Counselor (CSRIC). She has been working in the financial planning industry for over 20 years and spends her days helping her clients gain clarity, confidence, and control over their financial lives.
A common carrier is defined by U.S. law as a private or public entity that transports goods or people from one place to another for a fee. The term is also used to describe telecommunications services and public utilities.
The word "common" is an important distinction here. A common carrier, such as a bus service, offers its services to the general public, unlike a private carrier that might be available to only specific clients on a contractual basis.
A utility may be considered a common carrier under the law because it makes no distinction in its customers. It is available to anyone in its coverage area who is willing to pay the fee.
The origin of the term common carrier is in transportation, and that is still the context in which it is most frequently used. Some common carriers transport goods for other businesses and others provide transport for members of the general public.
Some businesses that may be classified as common carriers include taxi services, trucking companies, rail freight services, waste removal services, couriers, vehicle towing services, and air freight services.
Under U.S. law, telecommunications services are classified as common carriers, as are many oil and gas pipeline operators.
Common carriers provide essential public services and thus can face more state and interstate regulations and more government scrutiny.
Generally, a common carrier is one that must provide its services to anyone willing to pay its fees unless it has good grounds to refuse.
States may require common carriers to obtain a permit before they can operate legally. They can face more state and interstate regulations and more government scrutiny than other businesses because they provide essential services to the public, in some cases with little or no competition.
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 usually has a company's logo splashed across its surface. The common carrier may carry the transport company's own logo but will just as likely be plain and unadorned. It could be carrying cans of paint one day and cupcakes the next day.
A business that does not use a common carrier but instead uses its own fleet to transport its goods is called a private carrier. As a matter of shipping logistics, companies can either own their shipping and take on the responsibility of timely delivery or contract it to a common carrier. A company might choose the private carrier option if it is more convenient, more reliable, or less expensive. Even companies that own and operate private carriers are occasionally forced to hire common carriers short-term when business volume exceeds in-house capacity.
One other place a consumer might come across the term common carrier is in the terms of supplemental benefits provided by a credit card issuer.
Some issuers offer common carrier baggage insurance, which covers the cardholder’s luggage in the event it is lost, damaged, or stolen while in transport. The common carrier, in this case, is the airline. The coverage applies when the consumer uses a credit card to buy a plane ticket.