Several airlines have suspended their flights to China. British Airways is currently not flying to China and will reassess the situation on 29 February 2020 (). Lufthansa, Swiss and Austrian Airlines will fly to China for the last time on 31 January. After that, all flights will be temporarily suspended until 9 February 2020 (). Cathay Pacific plans to reduce flights to mainland China by up to 50% by the end of March (). Further reductions and suspensions of scheduled flights must be expected. This will not only have an impact on passenger transport, but will also lead to a significant reduction in air freight to and from China. Considering that air freight is mainly used for time-sensitive and, in relation to its weight, valuable goods, these restrictions can lead to considerable problems and damage in supply chains.
CRISIS MANAGEMENT
These restrictions on air travel can turn customers’ entire supply chains upside down. Airlines and forwarders must therefore look for alternative transport options at short notice and depending on the product. This includes alternative routes as well as other means of transport. Furthermore, it must be clarified immediately whether the products in question are perishable and limited in time. If the goods do not reach their destination via alternative routes or the expiry dates cannot be met, it must be determined whether the goods must be stored, returned or even destroyed.
Due to the shortage of air freight, bottlenecks and possible delays will occur on the alternative routes. This in turn results in many problems which must be anticipated as far as possible and for which solutions must be organised. The transport of products or of shippers who are unable to negotiate priority treatment on the alternative transport route will again be threatened by substantial delays.
Between shipper (forwarder) and air carrier, customs authorities also have to face the challenges. For example, it must be clarified whether export clearance has already taken place or whether any certificates of origin still remain valid, and via which customs office customs clearance will take place if an alternative transport route is used. Depending on the customs status, documents may have to be cancelled, amended and/or resubmitted.
All these urgent issues, including those with legal implications, must be resolved under great time pressure. However, fundamental decisions are regularly made here which prove to be an obstacle to later processing. Therefore, despite great time pressure, the necessary care should be taken.
At the same time, everything points to the fact that the restrictions will not only have short-term effects, but that the corresponding supply chains will have to be reorganized in the medium term. Today’s decision by British Airways to temporarily suspend its flights to Shanghai and Beijing for a whole month, i.e. until the end of February, demonstrates this.
LEGAL REVIEW AND LIABILITY
Once the most urgent issues have been resolved from a transport and supply chain point of view, the legal and financial consequences of these events must be clarified. Cancellation of flights will result in additional costs, e.g. for storage and alternative transport routes. In addition, damage caused by delays is to be expected. SLAs in supply chain contracts may be violated and there is a risk that perishable goods will arrive at the recipient in a condition that cannot be used anymore. It will have to be clarified who is liable for the corresponding damages and to whom.
A distinction must be made here between the underlying transaction, i.e. the commercial transaction between the seller and shipper and the buyer and recipient, and the transport or logistics transaction.
Whether claims for damages can be successfully enforced depends to a large extent on the content of the agreement between the parties, but also on the law that is mandatory for such contracts. In principle, the party which was unable to fulfil its contractual obligations under the given circumstances will attempt to invoke “force majeure” and thus reject its liability. However, an appeal to “force majeure” presupposes that an event “unforeseen” occurs. Thus, once supply chains are reorganised through alternative means, the exclusion of liability of “force majeure” should no longer apply.
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