Axiom Discovery Series – Managing Legal Risk in Global Supply Logistics

General Counsel Roundtable Discussion (Wednesday, 8 July 2020)

We were delighted to have three speakers from two online shopping platforms and a provider of electronics components joining us as guest speakers at our latest General Counsel Roundtable on July 8 to discuss “Managing Legal Risk in Global Supply Logistics.” We were joined by numerous lawyers from various industries, including logistics, manufacturing, brand owners, pharmaceutical, and technology companies.

Managing legal risk in global supply logistics has become a growing concern for multinational businesses, many of which have been significantly impacted by the global pandemic and economic downturn. The roundtable touched on the following key issues during the discussion:

  • Compliance risks across the supply chain
  • Logistics and contractual risk in the digital world
  • Managing third party vendors and trade compliance

 

Compliance risks across the supply chain from an intermediary platform perspective

The first speaker shared that the online shopping platform has a key interest in making sure transactions happen smoothly, where delivery time is crucial. During the pandemic, they faced several challenges, including the heavy reliance on stock due to the halt of the manufacturing industry in China, severe disruption to logistics services and cargo travelling, and price gouging.

Amidst the circumstances mentioned above, it became crucial for the company to communicate the exact situations to its users, especially regarding delivery times and availability of products. This in turn helped the company maintain the trust they have built with their customers. In response to concern from regulators and the public in various countries around profiteering, the company created an internal program to identify ethical sellers and ensure prices of personal protective equipment adhered to specific pricing guidelines.

The speaker also shared that for them, suing on service times and being unable to deliver was not their goal – instead they focused on actions they could take to minimize the loss on the suppliers and the consumers.

Logistics and contractual risk within the digital world

The second speaker is part of a digital team at a company which has worked with book writers on deadline extensions due to the coronavirus. The pandemic has not been the ideal time to release new books because book promotion has been difficult due to cancelled in-person events and consumer attention focused elsewhere. In some countries, regulations have been put in place so that only essential goods and services were allowed to be sold or to operate. Research has also been difficult for non-fiction authors.

The speaker also talked about the impact of COVID-19 to online streaming platforms. A lot of filming for movies and television has been halted and in some places it was prohibited to access film sets or to shoot. Sound recording was seriously affected because of the inability to access studios. As a result, a lot of cooperation was required to ship equipment across the world to artists who were not able to travel.

She highlighted that the situation was especially difficult for film crews because the film industry never worked from home. While there is nothing in the contracts that suggests shooting distantly, people were willing to go beyond the contracts. In these difficult times it has been observed that customers and business teams’ interests have been put upfront and teams were willing to work around the status quo to find the solutions. This demonstrates the importance of looking beyond contractual terms to identify the problem and to try and solve it in an innovative manner.

Managing third party vendors and trade compliance

The third speaker shared that one of the challenges recently faced by the company was the suspension of license exemptions by a foreign government for exporting computer parts to an Asian country. As a result, the trade compliance team had to apply for licenses for parts coming from that foreign country. This has lengthened the export process.

Lockdown has made going to work difficult for a lot of us, but for the company’s warehouses in Asia, they were not able to pause work because of the millions of electronics parts to be shipped and delivered. The company had to utilize networks to find out from which authorities to apply for a license and explain why they are operating an essential business – since some of the exports involved medical devices they were able to obtain licenses more easily. In one of these countries, the company waited for a long time before getting approval. This was granted in the end but only for a small percentage of their workforce. The workers worked around the clock to make sure parts were delivered.

Axiom can assist you and your in-house legal counsels

As companies navigate a constantly changing trade and logistics landscape, Axiom’s legal consultants can assist teams with increased work around renegotiating contracts and compliance with new trade regulations.