The 2021-2022 season is proving to be the most difficult in recent years for producers and exporters of fresh fruit, hit by the consequences of the operational collapse in the ports. Before nearly 500 participants, Sebastián Norris from the firm Araya & Cía. Lawyers, he addressed this issue with a focus on legal recommendations, in the framework of Fedefruta's #OnlineWednesday on June 8 "Legal response to the impact of the logistics crisis on the export of fresh fruit".

Juan Carlos Sepúlveda, general manager of Fedefruta, greeted the participants and commented on the relevance of the theme of the seminar: He commented on the relevance of the theme of the seminar: “the traditional problems that we have had in our industry have been climate change (drought, frost), pests and diseases, shortage of workers, exchange rate; but we have added two new topics. One, the process of the new Constitution that we addressed last week and the issue of logistics, internal and external. We have incorporated these topics into the #OnlineWednesdays because we believe it is a transcendental topic for the future of our industry”.

On costs and delays: the ravages of the logistics crisis

“For me, this is the worst season I have ever experienced. The situation is catastrophic, the results in the United States are very negative. This is going to make many producers unwilling, or definitely unable, to continue in this business”, commented Rodrigo Manasevich, executive director of Utilitas, who gave the context of what is happening with the internal logistics situation.

The increased cost of transporting fruit to the ship, loading times doubled or tripled, having to resort to non-traditional Chilean ports, ports unable to meet the demand that arrived, and subsequent delays in selling the fruit. fruit, were some of the difficulties that Manasevich exposed, despite prior knowledge of this difficult season.

“In summary”, he pointed out, “the situation is catastrophic, we are living it, there are still no results to be received. We should do something". In addition, Manasevich emphasized that "the producer has no responsibility in this situation, I know that they did their job and did their best to produce good fruit that arrived safely at its destination. The account is not fair or correct that the producer pays it”.

Analysis of logistics problems

Availability of ships and containers, cancellation after booking, shipping delays, operational problems in port and customs clearance have led to breaches of contracts (both by exporters and importers), resulting in losses and low prices for the fruit of export.

Sebastián Norris, a lawyer specializing in international trade and a partner at Araya & Cía., agrees that this season is perceived as the most catastrophic that has been seen in recent times. "Many things are coming that are going to mean great challenges for all of us and for the entire industry," he stressed.

The greatest damages reported by clients of Araya & Cía. have been loss of market and control of the fruit, handling costs and/or total losses. After a complete review of the types of export contracts and legal safeguards, the lawyer stressed that "despite the logistical crisis that may exist in the port of destination, to the extent that the risks have passed to the buyer, it is the buyer who You must pick up the account and pay at least the guaranteed minimums”.

Port of Holt case in Philadelphia: legal actions and recommendations

Norris commented that the case of Holt, Philadelphia, United States, is under development and that the extent of the losses from this situation, which especially involves Chilean table grapes, is not yet known. "Our calculations are that the costs are not going to go beyond 10% or 15% of the true catastrophe that this is going to mean."

On indicating responsibilities between the actors, the lawyer was emphatic in the first place, "the determination will be made based on the potential breaches of the contractual duties that fell to each one and, in particular, the diligence that has been observed by them" . Then, he carried out an analysis of two actors involved: carrier and port, where there is more clarity in the first than in the second.

Understanding that the event that caused the loss of damage or delay occurred when the goods were in its custody, the carrier could have avoided the event and its consequences by taking some measures, such as not raising the temperature of the containers, informing national exporters offering route changes and not having made extra charges.

Regarding the actions to be taken against the shipping company, Norris affirms that there is an important decision. “We are going to sue in Chile under the Hamburg rules or we are going to sue in the United States in accordance with COGSA and its own regulations.” In the case of the port, he explained that the regulations to which the port is subject are still a matter of study. . "The most important thing, and a key issue in this matter, is whether the port was indeed oversold."

As a recommendation, Araya & Cía. He spoke of maintaining unity and a single voice for the entire affected industry, which would mean a collective benefit. "The recommendation is to sue in the United States (...) one of the benefits of the US regulations is that you can sue with many plaintiffs, against a single defendant." A point to consider for this demand is its high costs. "Also, there is the fact that there may be two defendants, that is, it will be much easier to elucidate and have certain advantages in this regard." The advantages of this lawsuit in the United States, in addition to the strength in the number of plaintiffs, are the Discovery, that the court is federal, the proof, reaching agreements and the insurance that can be applied.

Regarding the foundations of these actions, Norris exposed the breach of contract, breach of representations made, negligence in reporting the situation and taking mitigation measures, breach of the duty to fumigate, negligence related to the rise in temperature, information and others, and Demurrage's reimbursement.