While the supply of an intact product is important, storage problems are particularly important for the food, beverage and pharmacy industries. For food and beverages, the poorly stored product can be contaminated or fermented without clear temperature parameters, without altering the external appearance. Imagine that a cheese maker reassures a logistic partner about the stability of its products at the temperature of the atmosphere. If the manufacturer`s version of “ambient” is higher or lower than that of the 3PL partner, the product quickly becomes non-cheese, and no derpartei realizes that an error has been made until a customer complains. A defined term allows your financial team to accurately anticipate costs to enable your business to grow sustainably and also support your business relationship with your 3PL. The length and depth of these terms vary considerably depending on your industry and logistics requirements, but your logistics partner can make suggestions and explain their requirements to speed up the process. The result is a win-win situation for both parties and significant savings for you. Contracts are a necessary element in setting expectations and achieving excellent results in the logistics sector. However, negotiating them is not always a convenient process.
Ann Christopher is considered one of the country`s leading storage law authorities and has been a spokesperson for the American Bar Association, Transportation Lawyers Association, IWLA, Southeastern Warehouse Association and Texas Warehouse Association. After working for the EPO in a previous life, she also focuses on compliance with the law. Putting a storage right in your contract strengthens your partnership with your 3PL and gives them some kind of security in case something devastating financial happens. These four pillars of a strong logistics service contract, in addition to others, protect your business, your clarity of communication and your relationship working with your 3PL partner. They also help you avoid financial surprises, and keep your product viable and ready to be marketed, regardless of the conditions. As a service provider, a 3PL is such that it gives its customers the best possible experience. For large accounts, this can take the form of substantial changes to the storage infrastructure or even in specific storage and shipping facilities. A logistics provider is willing to make this effort on behalf of its customers, but it is understandable that 3PL needs appeasement in return. No company has the goal of “sinking”, but it is an unfortunate reality of the company that can happen. A storage right in your contract offers a smart solution: a single business code procedure to confirm secured creditor status in the event of bankruptcy and the freedom to liquidate part of the product held to settle debts. In the event of bankruptcy, this procedure must go through the bankruptcy court to enforce the right to pledge and to offer a clear timetable to keep everyone on the same side.
Unlike a transport right that only covers the product on a truck, a storage right extends to the entire product in a warehouse, giving flexibility to your 3PL to cover unpaid debts. Part of your contract negotiations should be an in-depth discussion about all the value-added storage services your company is used to break down these costs. From product handling services to overtime for storage staff during your working hours, exceeding these costs in advance keeps the logistics trading machine running. You may be tempted to “sign a handshake” or leave important considerations indefinite to secure a business partnership, but this could leave you in a difficult situation if something goes wrong. Don`t object: you absolutely need a well-written logistics service contract, and it should have these four important functions to offer you the most trustworthy commercial protection.