Consultants in Logistics

Unfair Contractor Terms: Is the Tide Turning?

Unfair Contractor Terms: Is the Tide Turning?

It was Winston Churchill who said, “Never let a good crisis go to waste”.  And whilst the majority of contractors have acted both fairly and responsibly others have taken advantage of labour shortages to increase margins and reduce their liabilities.  To be clear, it has not been an easy time for contractors as they have sought to keep supply chains operating in the face of driver and, in some cases, warehouse staff shortages.  Failure to respond quickly to the operational challenges have run the risk of letting down customers and consumers. The more responsible contractors have worked with their customers to address short term needs without damaging long term relationships. 

Unfortunately, not all contractors have acted to the benefit of customers and consumers.  Some have increased rates well beyond the costs they have incurred and at the same time have reduced many of their liabilities including for damaged and lost product.  In some cases RHA and UKWA terms and conditions have being foisted on customers as a means of avoiding responsibility for the poor product handing and security.  It is one thing to expect the customer to insure product from fire and flood quite another to hide behind £1300 (RHA) and £100 (UKWA) per tonne for lost and damaged product caused by the failure of the contractor to manage the operation properly.

As we move into the New Year the tide is beginning to turn with regards to driver and warehouse staff shortages.  Demand will soon be reducing as we exit the Xmas peak, higher pay is attracting more people back into the industry and the resumption of driving tests are resulting in an increase in newly qualified drivers.  Now is perhaps the time to review your commercial arrangements with your contractors.

  • Are the rates and margins you are paying competitive?
  • Are the service commitments and KPIs fair and reasonable?
  • Is the contractor accepting a fair level of liability for lost and damaged products?
  • Are your contractual terms and conditions of contract fair and reasonable?

Davies & Robson has continued to work with clients and contractors throughout the driver shortage and pandemic to ensure supply chains are maintained and commercial terms remain fair to both parties. 

Where necessary, Davies & Robson has assisted clients source alternative logistics partners and ensure commercial terms that are fair to both parties.  If you would like an independent view of your commercial arrangements we would be pleased to help, please call us on 01327 349090

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