The business group launched their COVID-19 Logistics Report on 7 January 2021, providing a detailed summary of how the pandemic has impacted on the industry and the steps that have been take to overcome these challenges.
Speaking with Elizabeth de Jong, the organisation’s Director of Policy commented, “Despite facing significant operational and financial disruption since March 2020, the logistics industry has stepped up to ensure it continues to supply the nation with the goods it needs, including food supplies and PPE. The COVID-19 crisis has highlighted how critical our industry and its people are to the success of the economy; Logistics UK is proud of the way in which its member businesses, and the wider industry, have worked together to service the needs of the nation during this critical time.”
“To deal with the COVID-19 crisis, logistics businesses managed risks by scaling back operations, taking work back in-house and reducing their reliance on third-party services; many also focused activity on their core fleet of vehicles to save costs.”
During the early stages of the lockdown restrictions in March 2020, 85% of respondents to Logistics UK’s COVID-19 survey reported business downturn with work and orders beings cancelled. As supply chains eased in disruption this figure decreased to 60% by the end of May. The report also explained that delivery times had significantly improved due to less congestion on the roads.
The report combines national statistics and analysis conducted specifically for Logistics UK along with data from surveys that were conducted with its members in the first 10 weeks of lockdown and its monthly Logistics Performance Tracker surveys.
The Impact on Freight Forwarders and Logistics Operators
One of the most important steps the industry had to take was to continue to do the job it had always done whilst preventing the spread of the COVID-19. Whilst this caused significant delays, policy and procedure were worked upon to ensure this happened with these key factors at the forefront of the changes:
• Social Distancing – Supply chains include physical and clerical processes that traditionally require large groups of people to interact together. This also extends to the cargo packing operations. Since the introduction of social distancing, the industry has had to think of many solutions to overcome the barriers their traditional work environment had including remote working and where possible to warehouse automation.
• Commercial Impact – The reduction in the number of goods handled and shipped inevitably had an impact on the customers of any freight forwarding company. International travel restrictions meant that certain routes and networks were inaccessible for a certain amount of time and freight forwarders were expected to create expensive “workarounds” to ensure that critical supplies were still able to reach their destination.
Legal Implications for Freight Forwarders
In unprecedented times, it was crucial for freight forwarders to ensure that they were covered legally when there was the potential for things to change at short notice. These were some of the things that had to be considered:
• Special Contracts – Whilst freight forwarders operate to standard trading conditions with the majority of their customers, there are a number that hold special contracts with their key customers. It has been questioned whether these special contracts need to be reviewed and identify the obligations of the supplier when it comes to issues such as COVID-19. Especially when it comes to questions such as, Is the forwarder or the its agent required to issue a Forwarders Cargo Receipt (FCR)? Is the operator required to undertake consolidations? It was also necessary for forwarders to consider imposing force majeure clauses in their contracts whereby the problems in China may be a reason for the contract to be terminated and their obligations to be discharged.
• Industry Standard Terms – For freight forwarding companies that operate to standard trading terms, it is recommended to look into whether imposing force majeure clauses into existing contracts with your customers may be an option. In terms of taking on new transactions relating to a supply chain reliant on China, scrutiny on its logistics and legal advice will probably be required.
• Communication with Customers – It was important for freight forwarding companies to keep customers updated of all issues that arose in the supply chain from the vendors, hauliers, lines, agents or terminals. To be able to claim a force majeure clause or for the company to not fulfil their side of a contract with a client, there needed to be sufficient evidence that customers losses were caused by matters genuinely outside of their control. Companies were also be required to consider any alternative workarounds that could be implemented with a moderate additional cost to the customer.
• Communication with Supply Chain Stakeholders – Freight forwarders and logistics operators needed to maintain good communication with other stakeholders of the supply chain to evidence that they did everything that they could to avoid customer losses. A high level of detail and accuracy was required when explaining the steps that were taken and problems encountered.