News | Sanctions due to logistical problems


EDRA, GHIN and HIMA appeal to companies for fairness

The consequences of the Covid-19 pandemic put a strain on supply chains worldwide. source: pixabay/Pixel-Sepp

The European DIY Retail Association (EDRA), the Global Home Improvement Network (GHIN) and the Home Improvement Manufacturers Association (HIMA) have issued a joint declaration regarding logistics sanctions in the home improvement sector against the background of the Covid-19 pandemic.
The volatility of demand is having a direct impact on the ability of all market players to meet this demand, say the associations. The supply chain is "significantly disrupted: rising transport costs, a scarcity of transport capacity and higher prices for raw materials such as steel, wood and oil derivatives are putting pressure on production facilities worldwide and on the production of goods in China as well as the ability of these to supply the global markets". The consequences of the Covid-19 pandemic pose a risk to supply chains worldwide.

In this highly unpredictable situation, companies must work together in a fair and practical manner. The international supply chain, especially from China, is under severe pressure. On account of production stoppages, many companies are having difficulty in getting components or products and goods, or deliveries are delayed. Added to this is the fact that the "incident in the Suez Canal continues to have a major impact".  A large number of firms rely on carefully timed deliveries to fulfil time-critical customer orders and could face the threat of penalties if they fail to meet these deliveries. Other companies that have had problems on account of huge price rises have had to increase their own prices to maintain profitability.

Dependence on production in China varies from company to company, say the initiators of the declaration. Some manufacturers and sub-suppliers in the EU whose production and order processing are highly dependent on China may be confronted by retailers with penalty payments for late delivery. Furthermore, the production plants based in Europe face the same challenges, even though they are closer to the market. If goods are not available from China, manufacturers and suppliers must do everything they can to find alternative procurement sources to try and meet their contractual obligations to their partners and to keep them informed of delivery bottlenecks and interruptions to the supply chain.

The associations are appealing to all players to seek sensible solutions to possible supply shortages and disruptions in these challenging times and not to resort immediately to legal recourse and swift contractual penalties. The ability and flexibility to offer alternative products at short notice and the option of reviewing delivery contracts to cover difficulties in the fulfilment of existing contractual obligations through force majeure clauses could help to ensure a comprehensive supply of products to consumers.

|24 June 2021 | 11:49


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