Crises in the logistics industry
Both the pandemic and, for example, the restructuring in the automotive industry have caused substantial economic turbulence for some service providers in this sector. Assistance is offered in a variety of ways, but is often unrelated to the industry or covers only parts of the possible crisis scenario. We bring together an in-depth knowledge of the industry, its processes, its market participants and also its opportunities and complement that with high quality advice from the areas of business management , contractual risk management and insolvency procedures and their pre-litigation processes .
Our professionals have a broad knowledge in the framework of advising companies operating in the logistics sector, as well as a deep know-how of the procedures in the crisis of the company and the legal options available there. This combined offers the companies an assistance, which is new on the market in breadth and depth.
In the following compilation of the various questions and the answers, you will find an initial overview of the conceivable problems and solution approaches that are likely to concern you and for which we can offer you sustained support.
Q&A about freight forwarding in the crisis
The aim is to work out a legal basis by means of which higher remuneration or better profit rates can be achieved with customers.
As a rule, quantity deviations are the starting point of the imbalance. Depending on the contractual situation, claims for damages or price increases can be enforced.
It is also conceivable that more efficient processes, such as route planning, can be agreed with the customer in order to make contracts more profitable.
The decisive factor here is the existing old contractual relationships in relation to new contracts.
It is conceivable that warehouse space could be used for other purposes, e.g. by developing it into a fulfillment center.
It is also possible to act as a subcontractor for other forwarders/service providers.
A third approach is cooperation or mergers with other specialized companies, usually in particular industries, where a high degree of service specialization is required, but where the service is also remunerated at a higher rate.
Here, too, the legal basis should be worked out so that price reductions can be agreed with suppliers.
The legal approaches are currently in particular the consequences of the pandemic as a cause of force majeure. At the same time, adjustments due to a change in the business basis of the contractual relationships are a possibility. In individual cases, individual contracts can also be terminated prematurely.
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The first consideration is the use of modern software to achieve savings, but also to improve quality, if only through stronger quality controls. In this context, it is also conceivable to expand the range of services offered under the heading of information logistics: high data intensity in service processing for the customer.
The second consideration is the extended equipment of vehicles for handling special processes, be it temperature-controlled transports or the handling of goods that are particularly at risk of theft. It is also conceivable to develop special routes, e.g. via Eastern Europe to Asia.
The third consideration is the highlighting of special sustainability criteria, which are often a priority for customers today.
There are key performance indicators such as profitability per vehicle or tour that can be calculated or at least estimated. The aim is to quickly identify the non-profitable business activities and draw up a 10-point plan with acute measures for the next month, which is also disclosed to the financing banks. In a subsequent turnaround program (3 months), measures are developed that will lead to the profitability of the previously non-profitable business activities or bring them to an end.
The organization should be "taken along", i.e. measures should be developed per business unit to underpin the program and the employees should be made jointly responsible. The workforce can undergo a quick check in which the skills of the employees are compared with the requirements of the program. In addition, an incentive system should be designed based on the achievement of the program's goals.
The starting point for any serious crisis situation is first to check whether the company is ready for insolvency. Only when it is certain that a company is not ready for insolvency can non-insolvency restructuring measures be considered. In the case of insolvency maturity, on the other hand, every business manager is obliged to file for insolvency without culpable hesitation, but at the latest after three (insolvency) or six weeks (over-indebtedness). Anyone who, for example, continues to allow payment of warehouse rent and costs for vehicles and drivers in the event of a delayed insolvency application may be personally liable for this to a considerable extent.
Yes. Insolvency proceedings do not mean the end and break-up by an insolvency administrator. It is precisely an insolvency in self-administration or in protective shield proceedings that enables the company to continue as a going concern. No insolvency administrator is appointed, but a so-called administrator who monitors the management of the company.
Since wage costs usually represent one of the largest items of current liabilities in the transport and forwarding sector, it is particularly significant that the Employment Agency takes over up to three months' wages in the event of insolvency via the so-called insolvency allowance.
In principle, however, insolvency has no direct impact on existing employment contracts. The employment relationship continues with the same rights and obligations, but the insolvency administrator takes the place of the employer when insolvency proceedings are opened.
Yes. If a company is not yet ready for insolvency, but is merely threatened with insolvency, a non-insolvency "StaRUG restructuring procedure" may be considered as an alternative. This procedure, which is generally not open to the public, can be used in particular to restructure financial liabilities. This may also be possible against the will of individual creditors; their consent can be compulsorily replaced by the restructuring court, in particular if the creditors would not be worse off as a result of the restructuring plan than without it.
Irrespective of this, there is of course always the possibility of restructuring the company completely out of court, but then as a rule without compulsory intervention. The classic restructuring instruments include, for example, simple deferral or subordination agreements, but also more complicated restructuring measures such as the negotiation of bridge financing and restructuring loans, solutions via so-called double trusteeships or the conversion of debt into equity.
The restructuring of a company basically touches on numerous different areas of law. Our experts offer you advice on corporate, financial, labor, tax and capital market law from a single source. Above all, however, we have highly specialized and experienced teams, especially in the areas of transport/warehousing and distribution law as well as restructuring/insolvency and business administration, who can help your company get back on track. Through the close cooperation of our teams, we develop a solution that is precisely tailored to your company.
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