recording logistics services agreements
recording logistics services agreements

The importance of carefully recording logistics services agreements

In early 2021, Hubbel Lastmile B.V. (“Hubbel”) engaged GMW advocaten to assist/ advise it on its legal framework. The reason for this was in connection with the expansion of its business operations. In this blog, we explain the importance of carefully recording logistics services agreements.


The relatively young Hubbel was founded in 2018 with the goal of making The Hague a more liveable city with Smart Green Transport and Logistics. Hubbel believes the first and last mile in the city can be smarter and greener. For example, 100% zero emission, minimum number of kilometres and minimum empty spaces. Providing services such as storage and transshipment, Hub-in-Hub, cross-docking, zero emission urban distribution and handling & fulfilment, Hubbel is a modern and sustainable company making major advances in a short time.

Various commitments

To entrepreneurs, the law is still sometimes perceived as an unnecessarily delaying and cumbersome instrument. Particularly when it comes to the to efficient handling and optimisation of logistics processes. Nevertheless, having a sound legal basis is an important foundation for doing business properly. A standard agreement or lease is often inadequate. Both lessors and lessees of property leased for logistics/ transport purposes should take this into account. In addition to the lease relationship, parties often enter into various commitments with each other, such as transport and services. Therefore, it is important that the parties agree well in advance about which terms and conditions will apply in which situations. The examples below from the logistics service industry underline the importance of carefully recording agreements.

Applicability of the Fenex Terms and Conditions[1]

Provimi (a company specialising in producing animal feed and related products) and Helm Hudig (a logistics provider) entered into a Warehouse Agreement in 2013. In 2015, they entered into a second virtually identical Warehouse Agreement.
As a result of an error by Helm Hudig during the order-picking process on 4 May 2016, an incorrect pallet load was selected. This occurred without a final visual inspection taking place. And itresulted in the wrong variants of vitamin pills being supplied and circulated.

The parties are not in dispute that an error was made by Helm Hudig. In principle, on the basis of the Warehouse Agreement, Helm Hudig is obliged to reimburse Provimi for all losses, costs, damages, claims and demands (including reasonable lawyers’ fees). However, it is under discussion whether the Fenex Terms and Conditions for Logistics Activities apply to the Warehousing Agreement. Then, the liability of Helm Hudig is limited to a maximum amount and to compensation for only certain loss items.

[1] District Court of Rotterdam 3 July 2019, ECLI:NL:RBROT:2019:5870, grounds 4.5 to 4.9.

What was the assessment?

It is clear from the correspondence between the parties that Helm Hudig wanted the Fenex Terms and Conditions to apply. Provimi was not in favour of this. The parties discussed this at length. However, the Fenex Terms and Conditions were declared non-applicable to the 2013 Warehouse Agreement. While negotiating new terms and conditions, Helm Hudig stressed that continuation of the cooperation without the applicability of the Fenex Terms and Conditions was not an option. The Fenex Terms and Conditions were nevertheless subsequently declared applicable by means of the Financial Agreement accompanying the 2015 Warehouse Agreement. It is likely that the relevant clause escaped Provimi’s attention.

The Rotterdam court, however, ruled that the Fenex Terms and Conditions did not apply because the reference to these Terms and Conditions in the Financial Agreement is not sufficient for this purpose. All the more so because Provimi consistently rejected any application of the Fenex Terms and Conditions. Helm Hudig was ordered, however, to pay the remainder. Although the amount of damages was adjusted due to the fact that Provimi was at fault.

Cross-docking and insurance[2]

Kapiteyn B.V. operates a business developing and trading flower bulbs. It is insured for damage during transport through a Transport Goods Insurance. In accordance with Article 13 of the insurance contract, damage caused by one and the same cause at a location, other than by a means of transport, is only compensated up to an agreed maximum amount of €150,000.
Kapiteyn concluded an agreement with Denkers Shipping B.V. regarding the transport of callas (a flower variety) to the United States of America.

Under the agreement, the callas were to be transported at a temperature of 17 degrees Celsius. The callas were shipped in two insulated and temperature-regulated reefer containers and arrived at Bilkays container terminal on separate dates. The first load was stored in a non-temperature-regulated Bilkays warehouse, while the second container was placed outdoors via a semi-trailer. Both loads of callas were exposed to temperatures that were too low. And because of that they were damaged beyond repair, resulting in damage of €418,787.42.
Kapiteyn argues that there are two separate incidents of damage, which would require an amount of €150,000 to be paid in compensation twice. The insurer argues that the damage occurred at one location from one and the same cause, which means that only €150,000 is required to be paid.

[2] Court of Appeal Amsterdam 5 March 2019, ECLI:NL:GHAMS:2019:746, grounds 3.9 and 3.10.

What did the court rule?

Bilkays had been engaged for cross-docking: unloading goods from one means of transport and loading them onto another. It used a semi-trailer for this purpose. The court held that the use of a semi-trailer did not constitute use of an independent means of transport. Especially since it was used as a temporary means of storage and not as an actual means of transport by Bilkays. The callas had been in the process of cross-docking at Bilkays container terminal awaiting further transport. Both loads were damaged by the same cause: exposure to temperatures that were too low. The Court therefore concluded that the insurer could invoke Article 13 because cross-docking is not, as a rule, a separate act of transport by other means of transport.

Conclusion

In both cases, a logistics specialist and a transport specialist drew the short straw. While the positions taken did not appear unreasonable or illogical. It illustrates the importance of vigilance to ensure a firm and clear legal foundation for business operations. The lesson, therefore, is that participants in the logistics process should carefully consider what terms and conditions should apply to their services and operations. Do you have any questions or would you like advice?Please do not hesitate to contact us.