Tuesday, June 19, 2012

Freight Forwarders Must Clarify Terms of Logistics Movements

Insurance Body Reviews Lien in Detail
Shipping News Feature

UK – WORLDWIDE – Two excellent articles by the TT Club this week will help clarify the position of freight forwarders with regard to a lien held when a client withholds funds or goes into administration. Dealing in both general and specific terms (the recent case of logistics supplier Uniserve versus fashion house La Senza is covered in some detail) the pieces give a concise picture of the advantages and pitfalls of exercising contractual rights over goods.

Interested parties should read both articles in full but what has always been clear but worth reiterating are the steps any freight forwarding outfit should take to protect itself for when a customer has issues over payment. Primarily all logistics suppliers should ensure they are able to show they have kept each specific customer regularly informed of their contractual terms, particularly with regard to settlement of accounts and the use of a general lien should these been breached.

Exercising a lien has always been a game of poker where the forwarder is effectively ‘going blind’, suspicions over a company’s liquidity can only be acted upon when terms of payment are exceeded and then at the risk of alienating an organisation which may merely be suffering short term cash flow problems.

What should be remembered here however is that, if a forwarder plays his hand well from the outset, clarifying precisely terms of trading such as those available to BIFA members or the TT Club’s model conditions, sticking to payment due dates, researching a customer’s background history etc. he holds the whip hand, possession in this case truly being nine tenths of the law if only for the problems for administrators and other bodies in bringing the matter to a speedy conclusion.

When times are tricky economically it is easy to relax standards to ensure continuity of business but many a transport supplier has sunk under the weight of debt after a seemingly valued customer has gone belly up despite the carrier’s misgivings as to the client’s financial standing.

Photo: Taken from the La Senza UK website which now shows the motto ‘We’ll Be Back Soon’ after closing 81 stores earlier this year.