Background

On 31 December 2019, the World Health Organisation WHO China Country Office was informed of cases of pneumonia of unknown cause detected in Wuhan City, Hubei Province of China. A novel coronavirus was identified as the causative virus on 7 January 2020.

Coronaviruses are a large family of viruses that cause illness ranging from the common cold to more severe diseases such as Severe Acute Respiratory Syndrome. A novel coronavirus is a new strain that has not been previously identified in humans.

WHO has published a wealth of helpful resources from how to protect yourself, to the latest updates in research and development.

WHO resources

TT Club service and business continuity

Central to the TT Club’s Business Continuity arrangements is our ability to work remotely. Our Shanghai and Hong Kong offices have been able to work from home fully and effectively since the start of the outbreak in January, allowing normal business operations to continue.

As of Wednesday 18 March all our UK and Mainland European offices and US-based offices will be working remotely. We will still be  providing the same high levels of service our members have come to expect from the TT Club. If you need to get in touch with us urgently  - particularly out of office hours - we recommend calling your Club contact directly, rather than relying on email. Contact details, including mobile phone numbers for our employees are available on the Club website here.

As the situation continues to improve in China and Hong Kong, our Shanghai office and Hong Kong offices reopened Monday 20 April and Monday 4 May respectively. Our offices in Greece will also reopen Monday 11 May. The health and wellbeing of our employees and clients remains Thomas Miller’s highest priority.  Only those wishing to return to working from the office will be doing so for the time being and we will be continuing to practice social distancing by limiting the number of employees in the office at any one time. No external visitors will be permitted.  Our Shanghai team will continue to deliver the same excellent level of service whether they are working in the office or remotely. 

 

TT Club briefings

FAQs

The COVID-19 pandemic has had a profound impact on global trade and the related supply chain. Most pertinently, at a human level, too many have themselves suffered from the symptoms or grieve the loss of loved ones, colleagues and contacts; TT Club stands with everyone in this human dimension. 

While in most parts of the world, supply chain workers have been designated by governments as ‘key’ in order to sustain the movement of goods during mandated lockdown, trade has been disrupted in two key ways:

  • workforce availability has become more restricted through illness and the need to care for others;
  • supply and demand have become dislocated by the ‘twin punch’ of the January closure of production in China followed by the March collapse of demand throughout the rest of the world.

This section seeks to provide comment and advice on numerous functions and activities that form the complexity of the supply chain by way of ‘Frequently Asked Questions’. We hope that these will assist the various stakeholders in navigating the changed landscape they face; should you have other issues, comments or feedback please raise them here and TT Club experts will seek to provide input.

Maintaining service standards

How can I address the challenges of delivering an acceptable level of service to my customers with many staff absent through illness and whilst maintaining social distancing?

Stakeholders are likely to face a number of associated challenges as a result of the COVID-19 outbreak and each business will face unique issues to satisfy their operational requirements. Consider the following suggestions:

  • Restructuring of operational teams
  • Ensuring those with specific skills are spread over different shifts to provide cover 
  • Alternating shift patterns
  • Working with labour pools to ensure that temporary workers are sufficiently trained and qualified to join the workforce when required
  • Increasing the number of ‘tool box’ talks to highlight and address topical issues (consider undertaking these over video conference to avoid the need to meet physically)
  • Planning increased time for shift changeovers to allow for additional cleaning or sanitising of equipment

Stakeholders should remain mindful that this period is likely to be finite and therefore should develop a robust plan to return operations to “normal” protocol once able to do so.

Given the ongoing COVID-19 outbreak, should I be actively taking on new orders from our customers?

This is a commercial decision for each stakeholder to consider. Stakeholders should be mindful of regional operational challenges, applicable restrictions and governmental directions and plan accordingly. Where possible, setting expectations with customers at the outset would be prudent to avoid commercial friction in the event that issues are experienced.

Where new customers are concerned, stakeholders should have robust due diligence processes in place and ensure that these processes are rigorously maintained. 

There is arguably a heightened importance in ensuring that STC’s are sufficiently incorporated into all new service or transport contracts. Equally, review contractual conditions to ensure that your business is able to deliver the required level of performance in the current circumstances.

What options are available to overcome the challenge of securing a signature on delivery paperwork that social distancing presents?

Social distancing practices mandated by many governments and/or adopted by consignees may prove problematic when it comes to having delivery paperwork signed. Whilst practicing good hygiene, it may still be possible to leave the paperwork in a defined location/desk with the person in charge at the delivery point and they sign it and allow the driver to collect it once the they have vacated the area. Alternatively, it may be possible to have the proof of delivery signed by the delivery point, scanned and emailed. Similarly, delivery paperwork could be emailed to the consignee ahead of the delivery (rather than taken by the driver), enabling the consignee to arrange for the proof of delivery to be signed, scanned and returned electronically. 

Taking no action to obtain a proof of delivery should be avoided where ever practicable. Engagement with national industry associations is recommended to understand whether accepted alternative practices have been adopted/agreed.

Our usual courier services are not available. How can we ensure original documents arrive with the consignee on time?

“Courier services we ordinarily use to ensure that original documents (bills of lading) arrive with the consignee in a timely manner are not always available. Cargo has arrived at the destination port, but we are unable to release against the original bill of lading where we cannot physically get the document to the correct party. What are my options?”

This challenge is likely to become frequent during this period in certain jurisdictions, depending on how extreme the mandated lockdown is enforced and the precise manner of release at the destination port. Where there is no reasonably practicable means of ensuring that the original documents reach the intended recipient in order to release the cargo at the port of discharge, all interested parties (including banks where a letter of credit is involved) should explore the options and mutually agree on an acceptable solution. 

Potential problems arise in this scenario because of the unique role played by a bill of lading in determining ownership of the cargo. Delivery to a party not holding an original bill of lading is effectively a breach of contract. If cargo is released to a party without an original bill of lading, the rightful owner and holder of the original bill of lading could later demand delivery of the cargo. In such circumstances, the legal holder of the bill of lading can sue the carrier, or the party who has wrongfully delivered the cargo. The legal holder of the bill of lading could be the shipper, the receiver, a bank, or another party to whom the bill of lading has been negotiated.

It is vital to identify the rightful holder of the bill of lading and that obtain their express permission to release the cargo. This could, for instance, involve agreement to accept a defaced/endorsed electronic scanned copy of the original bill of lading with a commitment to collect the original documents when possible to do so. A letter of indemnity (LOI) is another option, but it is likely that similar challenges around obtaining the original copy of an LOI will be faced.

Given the potential exposures, releasing cargo without the original bill of lading should happen only in exceptional circumstances. Carriers, NVOCs and forwarders are urged to implement appropriate processes and controls. Do not allow a temporarily agreed practice to become an accepted norm.
 

How do I best handle enquiries from my customers about delayed shipments?

"The Covid-19 outbreak has caused disruption in our supply chain and services. This has the potential to result in the delay of shipments and friction with our customers."

Each claim issue be assessed on its individual merits. The applicable contract should be reviewed to understand what your obligations are with regard to meeting delivery dates. In most cases, provided that they are sufficiently incorporated, terms under the applicable bill of lading or STC's should contain a clause providing protection with regard to delay of shipments in transit. 

It is recommended that stakeholders actively seek open lines of communication with customers at an early stage to provide transparency in relation to potential delays and issues in transit in order to set realistic expectations and address any specific operational challenges which may be caused by a delayed delivery.

Contractual issues

Apart from my standard trading conditions, I also contract on bill of lading terms. Should I consider amending the conditions applicable to my bill of lading?

The terms of most bills of lading have substantial commonality and are linked to generally well-established statutory or case-law principles. As a result, while it is, in any event, good practice to review your bill of lading wording periodically to ensure that it remains relevant and fit for purpose, this may not be an immediate priority. 

In many instances, your bill of lading terms will have been drawn from an industry association model (such as FIATA or BIMCO), in which case you should liaise with the appropriate body in relation to an review process. Further, you should seek independent legal advice.

Stakeholders should remember that notwithstanding any other concerns, bills of lading will incorporate national and international law that will often be mandatorily applicable and paramount, particularly in relation to events that may exempt the carrier from liability, including force majeure provisions. 
 

The operational challenges my business faces as a result of the COVID-19 outbreak were previously unforeseen. Should I consider amending my businesses standard terms and conditions?

It is likely that your existing STC’s have adequately served to define and protect your business for many years. There may be no immediate requirement, in light of the COVID-19 outbreak, to undertake a wholesale review of your conditions. However, it is, in any event, good practice to review STC’s periodically to ensure that they remain relevant and fit for purpose.

Those wishing to review and potentially amend their existing STC’s, taking account of issues arising from or in relation to the pandemic, should seek independent legal advice and could consider the following:

  • Bolstering existing clauses around delay to shipments.
  • Including a more detailed force majeure clause, which explicitly refers to epidemic, pandemic and quarantine. (Where force majeure clauses are concerned, stakeholders should remain mindful of jurisdictional requirements).

In many instances, stakeholders may have adopted model conditions provided by an industry organisation (such as a national forwarding association); where this is the case, liaise with that organisation. 

Whenever you make changes to your STC’s, you must ensure that the new version is sufficiently incorporated into all your relevant contractual arrangements. By not doing so you risk uncertainty in the event of a claim arising. Read more here about incorporating STC's. 
 

If I take the decision to amend my standard trading conditions and/or bill of lading will they be enforceable?

In the event that you decide to amend your STCs and/or your bill of lading terms, you should obtain independent legal advice in the applicable jurisdiction(s) to ensure that any amended clauses are reasonable, enforceable and will serve the intended purpose.

Stakeholders are likely to face challenges if attempting to include blanket disclaimers for all/any costs relating to COVID-19. From a practical perspective, trading partners and customers are likely to face resistance to such clauses.

Whenever you make changes to your STCs, you must ensure that the new version is sufficiently incorporated into all relevant contractual arrangements. By not doing so you risk uncertainty in the event of a claim arising. Read more about successfully incorporating STCs here
 

Can we defend claims using the "force majeure" clause in our STC's/bill of lading/service contract?

"We are assessing our potential liability towards our customers. The Covid-19 outbreak is entirely outside of our control and has the potential to impact on our ability to meet our contractual obligations in a range of ways."

For a force majeure defence to succeed, the party seeking to rely upon the defence has the burden of proof to demonstrate that the event is beyond or outside the control of a contracting party and prevents that party from performing its obligations under the contract. 

English law does not define the concept of force majeure, a specific clause therefore must be included in the terms of the contract, which is itself sufficiently incorporated for the service or transactions in question. In some jurisdictions the concept of force majeure is expressly recognised, in which case there will generally be clearly defined requirements to be met for force majeure to apply. Under English law, it would depend on the contract wording, thereafter verifying that the circumstances have given rise to a force majeure event within the scope of the contractual wording. The applicability of the defence will be fact specific in each case. The party seeking to use a force majeure defence must also be able to demonstrate that they have explored/taken all reasonable steps to avoid/mitigate the associated loss.

Whether quarantines or restrictions related to COVID-19 constitute force majeure will depend on the wording used in the contract. For example, if a contract defines force majeure as “An Act of God” and the proximate cause of the presented claim is a voluntary work from home or quarantine directive, then the circumstances may not fall within the force majeure definition. However, if the force majeure clause specifically includes reference to for example “pandemic”, there would be a stronger argument for a force majeure defence. 

Stakeholders should not simply assume that there is a blanket defence to claims under force majeure. It is recommended that legal advice is sought in the applicable jurisdiction for individual cases whereby a stakeholder is considering a declaration of force majeure.

Additional charges

I’m facing demurrage and detention charges. What action should I take?

“Several of my shipments have remained uncollected at the port of discharge beyond the free time allowed. I am now being approached by the shipping line with potential demurrage and detention charges which are escalating with each passing day. What action should I take?”

The shipping line is likely to be contractually able to recover such costs. In all instances, you should review daily fee tariffs to ensure that you are aware of the costs that may be accruing. Close communication with both the shipping line and your customer is vital in managing this situation.  

Whilst each occurrence will have to be assessed on its own merits, options should be explored to minimise the accumulating costs. This may involve calculating the ongoing daily demurrage and detention rates compared with the value of the cargo and potential local warehouse storage charges. It may be agreeable and more cost effective to arrange for the cargo to be transported and discharged into a local warehouse facility, where available, until mandated lockdown restrictions are lifted. 
 

My customer is considering abandonment of the cargo due to the accumulating charges. What should I do?

“The accumulation of charges and lack of action by my customer result in a likelihood that the cargo will now be abandoned. What action should I take?”

Abandonment of cargo has long been a challenge for the industry, typically concerning low value cargoes such as waste, although also arising in other ways, such as through payment issues between buyers and sellers. The current circumstances could serve to increase the number of instances, particularly where the consignee is physically unable to collect their cargo for an extended period.

Stakeholders should in any event have sound record keeping and management controls in place to monitor the arrival, clearance and collection of cargo at destination. During the current period, increased focus should be given to enforcing these processes so that issues can be identified at the earliest opportunity. The general guidance is to act without delay as soon as the situation is manifesting.

Where liability is concerned, the first step will be to establish your contractual position regarding the shipment, particularly whether you were acting as “agent only” for the shipper, in which case you may be able to avoid liability. If you have contracted directly with the shipping line and issued a house bill of lading (therefore appear on the master bill of lading as shipper) then you are likely to have a contractual liability towards the shipping line for any associated costs.

Stakeholders should identify and communicate with the shipper/consignee/rightful owner of the cargo to seek immediate instructions and explore options to mitigate the accumulating costs and thus avoid abandonment. There may be viable options, for example, to move the cargo to a more cost effective storage place, devan the cargo into a warehouse or re-export the cargo. Note that the cargo owner may not have a sound understanding of the available options. If all options have been exhausted without resolution, it may be possible to apply to a court for directions, including possibly destroying the cargo in order to cease the accumulating costs. Much will depend on the nature and value of the cargo; local legal advice may need to be sought.

It is prudent to ensure that records of all correspondence are collated and that, where possible, written instructions are received from the rightful owner of the cargo stating their intention to abandon the cargo, for example. 

If the rightful cargo owner is unwilling to enter into meaningful discussions, you may be able to explore options to exercise a lien over the cargo to facilitate a local sale and recover your costs – provided your STC’s have been sufficiently incorporated. Of course, the shipping line may also have this option under the master bill of lading; stakeholders should remain in close contact with the shipping line to understand how they are handling the matter. It is important to seek to maintain open and transparent communications with all counter-parties – proactivity is generally likely to lead to less costly resolution overall.

It may be prudent to involve local expertise at the discharge port to assist with facilitating the onward movement, sale, storage or destruction of the cargo. Where liens are concerned (sale/destruction of cargo), we suggest obtaining legal advice to ensure that it is not possible for the rightful owner to bring a claim against you subsequently.

Workforce safety

My business activities are deemed critical and remain operational. How can I protect staff and others?

“Whilst my operations continue under government guidance, I am mindful of the need to provide a safe working environment for staff and others, including such things as adhering to the recommended social distancing. What are the primary areas of focus to be considered?”

There are a number of primary measures that stakeholders can take to ensure the protection of staff and others in the workplace. Whilst not exhaustive, the below list could be considered.

  • Increase workspace to enable all affected people to maintain recommended social distancing 
  • Provide access to hand sanitisers and sufficient hand washing facilities
  • Ensure that there is sufficient time during shift changeovers to allow for additional cleaning or sanitising of equipment
  • Open communication with staff is critical to address their concerns and ensure that they are sufficiently able to undertake their roles safely
  • Provide access to and generally promote relevant governmental guidance
  • Monitor the health and wellbeing of staff and, where possible, provide health screening
  • Consider what support may be appropriate for staff who are identified as vulnerable
  • Ensure staff are able to work remotely (IT provision), where appropriate, and consider guidance that may support safety and well-being
  • Review internal control procedures to ensure application in relation to staff are working remotely, revising and providing instruction/training as appropriate, and monitoring compliance and expected outcomes

Our port operation remains active during the COVID-19 outbreak. What action should we take in managing ship crew coming ashore or access to the facility by other people?

Actions will vary from operation to operation. Governmental mandates will inevitably differ and stakeholders will need to remain in close contact with the local authorities to ensure they meet such requirements.

Subject to specific requirements and applicable regulations, stakeholders may consider implementing health screening and restricting access to crew or others arriving at the port facility. Communication with your customers, especially those shipping lines who ordinarily use your facility to undertake crew changeovers, is essential to evaluate available options.

The availability and provision of personal protective equipment (PPE) should be considered. If stakeholders elect to adopt policies of wearing PPE, note that training may be necessary to ensure that it is fitted correctly and adherence to policies is monitored. Stakeholders may consider facilitating access to medical/quarantine facilities for any person showing symptoms, whether onsite or otherwise.

In the absence of a government mandate, it would be prudent for stakeholders to review their standard terms and conditions (STC’s) along with individual contracts to understand how implementing such practices might affect their ability to satisfy their contractual obligations.

General safety & security

My business has temporarily closed a number of premises. What prudent steps should I consider to protect my interest in those premises?

“In response to local Government and World Health Organization (WHO) advice many businesses within the logistics sector globally have either temporarily closed their premises to trade and/or facilitated their workforce to be able to work remotely, therefore leaving their premises unoccupied. What are the primary considerations for business owners?”

There are a number of considerations business owners should explore where premises are closed and are likely to remain unoccupied for a period of time. Depending on the ownership of the premises, there may be several entities who need to be informed, including landlords and insurers. 

It is recommended that you refer to our TT Talk article on unnocupied premises for discussion of this issue and the related checklist
 

A number of regulators appear to be offering relaxations regarding enforcement, how should my business react?

“My operations could benefit from a relaxation of enforcement of certain regulations. I am mindful of the importance to ensure that safety and security standards are maintained. What are the primary areas of focus to be considered?”

A number of regulators have offered relaxations regarding enforcement, including periodic maintenance schedules. In Europe, for example, there is a period of relaxation of drivers’ hours rules and certain training requirements. These relaxations intend to provide short-term relief to supply chain stakeholders to overcome some of the current operational challenges, facilitating the continued delivery of critical goods and services.

Stakeholders should exercise increased vigilance regarding any applicable relaxations and remain in close contact with the relevant regulators to ensure they remain compliant. Whilst strict enforcement may be relaxed, stakeholders will continue to have a duty of care towards other stakeholders and the general public. 

Further, it should be recognised that such relaxations relate mainly to inability to complete actions, such as inspections, that rely on third parties who may not be able to carry out their normal functions at present. Stakeholders are strongly recommended to maintain compliance wherever practicable, particularly where safety might be compromised. Be mindful that regulations are often framed to check that particular actions have been completed, most of which merely reflect good, safe and secure practices. 

Ensure that there is appropriate documentation to evidence any amendment to internal procedures and safety controls, whether or not related to regulatory compliance. Remember that most, if not all, such matters will need to be reinstated at some point. For the most part, all such changes should be determined at board/management level, with clear expectations communicated to all personnel.
 

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Through Transport Mutual Insurance Association Limited and TT Club Mutual Insurance Limited, trading as the TT Club. TT Club Mutual Insurance Limited, registered in the UK (Company number: 02657093) is authorised by the Prudential Regulation Authority and regulated in the UK by the Financial Conduct Authority and Prudential Regulation Authority. In Hong Kong, TT Club Mutual Insurance Limited is authorised and regulated by the Hong Kong Insurance Authority, in Singapore by the Monetary Authority of Singapore and in Australia by the Australian Prudential Regulation Authority. In the United States, TT Club Mutual Insurance Limited is approved as a surplus lines insurer in all states and is accessible through properly licensed surplus lines brokers. The registered offices are: 90 Fenchurch Street, London, EC3M 4ST.

Through Transport Mutual Insurance Association Limited, registered in Bermuda (Company number: 1750) is authorised and regulated in Bermuda by the Bermuda Monetary Authority. 

The UK VAT Identification number for Through Transport Mutual Insurance Association Limited is: GB 564 5244 35 and for TT Club Mutual Insurance Limited is: GB 564 3375 30. The Italian VAT Identification number for TT Club Mutual Ltd is: 03627210101.

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