Dive Brief:
- DHL Global Forwarding has invoked force majeure, a spokesperson confirmed to Supply Chain Dive Friday. The company alerted customers of the decision this week. Force majeure is a provision in many service contracts that describes the conditions under which a provider can be relieved of liability for non-performance, based on events that are beyond the provider’s control.
- “With almost all elements of the air and ocean supply chain on certain trade lanes currently being impossible to predict or control, DHL Global Forwarding decided to declare ‘Force Majeure’ and to reserve the right to modify its services to the prevailing circumstances consequent to the virus,” a Deutsche Post DHL Group spokesperson told Supply Chain Dive in an email.
- For shippers affected by this decision, or the force majeure invocations that may come from other forwarders in the coming weeks, reviewing the original service contract is an important step to understand what elements of a contract are covered and under what circumstances, according to Cynthia Rigsby, partner and intellectual property lawyer for law firm Foley & Lardner, in a blog post emailed to Supply Chain Dive.
Dive Insight:
By now, supply chain managers have likely seen some form of disruption to operations — whether in the form of blank sailings by ocean carriers, limited capacity in air freight or supply delays all over the map. Forwarders, too, are looking at the same shaken-up global freight and logistics picture.
A force majeure declaration is as much a step to protect a carrier’s legal rights as it is a signal to customers that unforeseeable circumstances are disrupting the normal course of business.
The extent to which the clause excuses the carriers’ service requirements and terms varies from contract to contract and depends on the applicable law. Most courts require service providers to make all reasonable efforts to fulfill the service, even if the intended method — or freight mode — is not an option or if the alternative is more costly.
“Any party seeking to invoke the force majeure provisions in its contract usually must show that there are no alternative means for performing under the contract, as increased costs alone will not be sufficient to prevail on a claim of force majeure,” wrote Rigsby.
DHL’s decision does not mean all customers will be affected, nor affected equally. It also doesn’t mean DHL customers can back out of their contracts despite altered circumstances. A customers’ rights will depend on the language of the contract, the applicable law and the specifics of the disruption.
“We will continuously review this position as the situation is very fluid for the industry at the moment. DHL Global Forwarding continues to provide extensive transport services and is tirelessly assisting customers in keeping their supply chains up and running,” said the spokesperson.
