Corona virus slows logistics – China traffic: Additional costs make supply chains more expensive

The measures taken by the Chinese government to combat the spread of the corona virus are having an increasingly negative impact on international supply chains. This is pointed out by the DSLV Federal Association of Forwarding and Logistics. The restrictive official orders in some regions of China as a result of the recently increasing number of infections lead to slower customs clearance and significant delays in delivery. The situation is exacerbated by the backlog of cargo that arises as a result of the Chinese New Year. Sea and air freight are particularly affected, and there is currently little uniform information about restrictions on land transport by rail and road. The current cancellation of all passenger flights by Lufthansa and other airlines to China (mainland) is reducing the available cargo space by more than half, as this means that the belly capacities (freight in the passenger plane) are no longer available. At present, German freight forwarders can still partially compensate for the restrictions caused by rebooking and new arrangements for air freight, albeit at higher freight costs for the shipper. The DSLV clarifies the legal assessment of additional costs incurred: The coronavirus epidemic is subject to force majeure. If the freight forwarder cannot avoid additional expenses incurred for the proper execution of his contractual obligations, these must be borne by his client. This already results from section 17.1 of the General German Freight Forwarder Conditions (ADSp) as terms and conditions generally agreed between the forwarder and his customer; provided that the freight forwarder is not responsible for the expenses. The freight forwarder has to pass on his customers particularly so-called detention, demurrage and storage charges, i.e. costs for delaying sea freight. “Due to the capacity restrictions, the rates in sea and air freight are currently increasing, so that the shipping industry has to expect additional costs for goods traffic depending on the quantity and destination,” DSLV CEO Frank Huster estimates the situation. “Uncertainties exist above all due to the short-term orders from the Chinese authorities, which can result in further regional production stops and ultimately in a persistent export weakness in China. Here, German logistics service providers have to be very flexible at certain points. In the end, however, the focus is also on the safety of your own employees on site. “