‘Be aware of your responsibilities in the logistics chain’

Importers and exporters
face myriad risks when
transacting in the global
supply chain but a
strong understanding of legal
contracts will help businesses
to avoid some of the common
pitfalls.
Quintus van der Merwe,
a partner and attorney
specialising in maritime and
international trade law at
Shepstone and Wylie, said
major risks facing importers
and exporters, apart from the
fluctuating value of the rand
versus foreign currencies,
included potential tariff
barriers, problems securing
supply chain payments and the
often unaccounted for high
costs of delays as a result of port
congestion, customs processes,
police stops and the costs of
compliance.
“One needs to be alive to
potential political instability,
piracy, and potential
unforeseen consequences.
There can be unexpected
costs due to port congestion,
strikes, civil disturbances or
intervention by authorities
which give rise to substantial
unexpected costs,” he said.
“Major retail importers
as well as exporters are
sophisticated and aware of
what is required. The same
applies for some
of the major
commodity
traders. There is
however a large
portion of small
businesses and
even bigger
importers/
exporters who
lose sight of or
are unaware of
the risks” Van
der Merwe said.
“The problem
is that they can do business for
quite some time without any
problem and without being
aware of just how vulnerable
they are. It takes one major
incident to potentially prejudice
an otherwise viable business.”
Van der Merwe said
exporters needed to be aware
of payment risks to ensure that
payment was received for goods
shipped, while
importers had
to ensure that
goods were
received.
“Businesses
need to ensure
they have
quality controls
to avoid
receiving goods
of inferior
quality, or in
the case of
exports, to deal
with spurious quality claims
aimed at trying to push prices
down,” he said.
“There are transport and
logistics risks. Parties need
to understand the potential
hazards in the logistics
process and to ensure that
they are suitably insured
where possible. They also
need to be aware of what their
responsibilities are in terms of
the logistics process.”
Van der Merwe said it was
important for businesses to
fully understand the myriad
legal contracts and trading
terms and conditions and how
these affected all the business
partners in a transaction. These
range from the contract of sale
between purchaser and seller
to the contract of carriage for
the transportation of goods
– as well as the contractual
responsibilities of all service
providers in the chain including
forwarders, road transporters,
expediters, inspection agencies
and buying and selling agents.
The slow global economic
climate had also raised the risk
of doing business, he added.
“Since the 2008 economic
crash, a number of shipping
lines have gone into liquidation.
Shippers of cargo or receivers
of cargo have suddenly found
themselves with cargo being
stranded and having to pay
the administrators’ additional
costs to try and get cargo
released or transhipped to their
destination,” he said.
“Some years ago, a number
of Lesotho-based companies
went belly up. Suppliers of
materials and other products
to the manufacturers in the
textile trade were faced with
trying to recover the goods for
which they had not been paid,
while retailers who had ordered
end product were faced with
losing deposits or trying to
get the finished product from
administrators.”
INSERT & CAPTION
It takes one
major incident to
potentially prejudice
an otherwise viable
business.
– Quintus van der Merwe