CEVA Logistics declares force majeure, citing COVID-19 impact

CEVA Logistics declares force majeure, citing COVID-19 impact

Forwarders are struggling to fulfill their cargo obligations with such widespread capacity cuts and supply chain disruptions, and several have invoked force majeure. Photo credit: Shutterstock.com.

CEVA Logistics has become the latest global forwarder to declare force majeure on all its ocean, air, and land contracts, invoking the measure just days after DHL Global Forwarding took the same step to cope with unforeseen impacts of the coronavirus disease 2019 (COVID-19).

CEVA, a CMA CGM subsidiary, told customers in a coronavirus update Thursday that the spreading disease was disrupting all aspects of business activity, and the necessary response measures being taken by governments were entirely outside its control.

“As they were unforeseeable, they fall within the definition of force majeure, the principles of which are universally recognized in business, and enshrined in law,” CEVA said in its statement. “This means that [CEVA] is temporarily relieved of its normal contractual obligations where these are rendered impossible or impracticable, due to the coronavirus epidemic and its effects.”

The measure will apply to all CEVA services, including air freight, ocean freight, ground freight, rail, customs brokerage, and contract logistics. 

DHL Global Forwarding declared force majeure March 19 because of the effect of the coronavirus on air and ocean transportation.

Exceptional operating environment

At least 77 liner sailings have or will be blanked as a result of the coronavirus effect on demand, according to data from Sea-Intelligence Maritime Consulting, which predicts the canceled sailings will result in 1.9 million fewer TEU in total 2020 volume.

In the air, the majority of passenger flights on the trans-Pacific and trans-Atlantic have been grounded, and with belly cargo comprising more than 60 percent of available global air freight capacity, this has created an acute shortage of lift at a time of strong demand.

CEVA Logistics said it took the force majeure step because of the exceptional operating environment. The forwarder said it now “reserves the right to modify all or part of its services, to change its working procedures and any previously agreed rates and prices, to levy surcharges, or otherwise to take any measures necessary to adjust its business operations and its obligations to its customers, suppliers and other stakeholders, in response to the prevailing circumstances.”

Ashley Craig, a Washington, DC-based trade attorney with Venable who represents IHS Markit, said the last major industry-wide occurrence of force majeure declarations came in the wake of the bankruptcy of the container line Hanjin Shipping in 2016. Craig said that due to the nature of the COVID-19 situation, both shippers and carriers, with forwarders acting as non-asset-based carriers, could potentially declare force majeure in contracts.

Contact Greg Knowler at greg.knowler@ihsmarkit.com and follow him on Twitter: @greg_knowler.