Stacks of trouble at Dover in the food supply chain

This article looks at the issues for food producers resulting from implementation of Operation Stack at the channel port of Dover.

18th August 2015

Operation Stack, the queuing system at Dover for trucks destined for the continent is widely reported to have cost UK food companies millions of pounds in lost sales.

Perishable goods destined for continental markets, particularly seafood and shellfish, were held in the Stack for periods far longer than ever anticipated.

There is limited hard information about likely financial losses. Certainly, some suppliers will have expeienced cancellation of orders in hand/in transit, or rejection of goods on delivery, because they were deemed to be no longer sellable or sellable only at a reduced price due to shortened shelf life. Wholesalers may also have  found themselves caught with an inability to supply customers, be it processors or caterers/restaurateurs with fresh food. For seafood producers there was a collateral risk to brand reputation given the emphasis on freshness and speed from “catch” to “plate” which justifies premium pricing. Certainty of fast, continuous delivery is a must for such supplies.

Claims for damaged goods will no doubt arise under insurance, but claims for loss of profit/sales by wholesalers may follow. Whether these can be brought will turn on the term of the supply contract: if these are “spot” trades based on industry practice, the terms of supply (or purchase) may be loose and uncertain.

Suppliers and (wholesale) customers may want to check:

  • Whose conditions (of supply or purchase) apply – and who is responsible for carriage?
  • Is the time of delivery specified?
  • What rights of rejection are there?
  • What if food was despatched in good time and then sits for too long? What is the carrier’s liability? Most goods will be transported subject to RHA conditions of carriage.
  • What exclusions or limitations of liability on loss apply?

Longer term or formal contracts may contain “force majeure” clauses – usually designed to protect the supplier against act of god or other intervention interrupting or preventing supply. Often overlooked, these clauses can be helpful, but should only be invoked when there is no realistic alternative supply option. A force majeure event must be one “beyond the reasonable control of the affected parties” – which on its face this is but force majeure needs to be specified in a contract to be a ground for excusing non-performance. Often, performance is only suspended for the duration of the force majeure event, but this is likely only to be relevant if there were a longer term supply arrangement and the Supplier failure were likely otherwise to place it in material breach.

Suppliers and customers may want to review their legal position under their contracts, including those with their hauliers, before making any claim, and certainly on being notified of one.