Webinar - Preparing Your EXIM Operations For Post COVID Lockdown

Key Takeaways

Freightwalla and FICCI scheduled an online session on 'Preparing your Exim operations for post COVID-Lockdown' with representatives from the Logistics & Shipping Industry, wherein the present scenario and a variety of suggestions were discussed:

What is the status of road transportation? (Mr. Bal Malkit Singh)

The government has made relaxations since the 29 th of March for the smooth movement of vehicles. No vehicle will henceforth be stopped unnecessarily at check posts.

How is the Government helping with the situation of shortage of drivers? (Mr. Bal Malkit Singh)

• There are two primary issues causing a shortage of drivers: (1) drivers fear for their safety and (2) because of these fears, they have returned to their hometowns and are reluctant to return.
• Since the government has started sending migrant workers to their native places, there is a further shortage of drivers. Associations are in talks with the government to support in getting the drivers back on duty.
• In order to reduce the driver’s ‘fear-factor’ of inter-state travel, associations have asked the government to provide insurance policies to drivers on duty and be cognisant of the fact that drivers are also putting themselves at risk, so their concerns should be taken care of.
• There are a number of further suggestions that have been put to the government for improving the safety of drivers which require the government’s support. The industry is currently not in a position to take up these initiatives because it’s financial position is stretched, losing almost about INR 2200 Cr per day. The government has taken these action points for consideration and will revert soon.
• Consigners as well as consignees must help ensure driver safety by doing sanitization of vehicles during loading and unloading.

What is the current situation of Shipping Lines in India? (Captain Deepak Tiwari)

Shipping lines are challenged by a sudden drop of cargo and cargo movements across countries and continents - since lockdown, Indian export volumes have dipped 90%. Since March 2020, there have been 47 blank sailings at Indian ports due to the dip in export cargo. As the situation is improving gradually, expect blanking of sailings & blanking of some entire services to continue.

With regards to imports, during the 1 st phase of lockdown, imports were not being cleared (only 10% was cleared). Then, these imports were disseminated to ICDs and CFS’s and not to factories, causing congestion. During the 2 nd phase of lockdown, 50% of import cargo was cleared. If imports continue to be cleared, there will be decongestion and the Shipping Lines will get back containers that could further be used for exports. Empty equipment pick-up has already started.

Will the digitalization of documents continue post lock-down? (Captain Deepak Tiwari)

The shipping, supply chain and logistics industries must go digital for the benefit of all. Measures are being taken and will continue post lock-down. The Shipping Lines approached the government to give instructions to banks to accept e-Bill of Lading through secure and advanced technology. The technology is ready and the hope is that all Indian banks will start adopting the same. Customs have also adopted a digital interface for “e-ship clearance”.

What is the Force Majeure clause and how can a company use or protect themselves with his clause? (Mr Nishant Shah)

• Force majeure is a contractual provision as agreed by all parties and is as per contractual terms. It has a very high threshold. Not all contracts have it as it exists in few industries and long-term contracts. However, similar clauses may be in the contract such as “Exception Clause”.
• If your contract does not have a Force Majeure clause, as per the ‘Indian Contract Act’, there is a common provision, i.e. “Frustration Clause” for when there is no possibility of executing a contact. However, if your contract has a cancellation policy, you cannot exercise this clause. It is suggested to go ahead only if you can prove “Frustration” of the contract, otherwise, you lose the chance of claiming damages/compensation.
• While claiming damages/compensation, it is important how you structure your claim to mitigate payment of GST. It must be a mutual consent among parties.

Freightwalla disclosure: As each contract and dispute is very case specific, we recommend you check with qualified lawyers with the specifics of your case before engaging in any legal action.

Are importers/exporters being wrongly charged for Detention/Demurrage? (Captain Deepak Tiwari)

During the 1 st phase of lockdown, free-time was announced during lock- down up to 14 th April. During the 2 nd phase of lockdown, most Shipping Lines decided to give additional free-time, basis the Bill of Lading (usually 14 days). Advice to importers and exporters is that the lockdown’s duration cannot be predicted and Shipping Lines cannot forego more revenue. If you are an importer, in order to avoid detention charges, it is best to find transporters who are able to evacuate your cargo.

What are the best practices for inventory management during lockdown? (Mr. O P Hisaria)

The cost of carrying inventory is going to increase. Simplification of supply chains is imperative as there is no way to manage inventory optimally without any certainty or clarity of movement of Goods across borders, both international and state. Inventory will move from Just-in- time to “somehow-in-time” due to the lockdown.