Coronavirus perspective: ANRP 17.March.2020

Coronavirus perspective ++ +yyyyyyyy++++ 17 March 2020

Covering northeast railroads and ports, and their related operational, technical, legal, and government environments.

Contents 17.Mar.2020

Northeast freight system: New crisis falls upon a compromised network

COVID-19: Force majeur considerations for shippers and agents

Editor's Note

While the Coronavirus lingers as the lens through which all commercial activity must be viewed, ANRP publications will lead with coronavirus-related items that may inform subscibers about effects of the pandemic on our industry.

AND NOW, THIS

While the Coronavirus outbreak is afflicting the freight transportation industry primarily from the outside, in terms of sudden changes in trade and finance activity, it seems that we are relatively insulated from it on the human level, thanks to the largely dispersed/dispersable nature of our work, and the hearty nature of railroad personnel.

But the Northeast freight network is vulnerable. Our rail and port networks have been scrambling to overcome the flurry of unexpected challenges and changes that have befallen us since the new year, beginning with the residual effects of the CN strike, continuing to the First Nations blockades, and the Hoosac Tunnel collapse. Add the continual carload decline, the bumpy imposition of PSR, ownership transfer of two major regional lines, a soggy winter, plus the usual mishugas , and the layers of structural stress mount.

For weeks now , certain key tracks have been carrying a multiple of their normal traffic. Equipment has been assigned to extra service. Yards are filled and containers piled. Crews are bouncing between cab and bed; road gangs are running north and south. Customers have adjusted and readjusted. Now, management is dispersed among hundreds of homes. Children are home from school and activities. Routines are upset, lines of communication stretched. And mud season is here.

The coronavirus is known to be particularly dangerous to individuals with compromised immune systems. We should also consider that an already-struggling system may have reduced capability to withstand this new stressor - one that is itself immune to any familiar fix. Patience is the only tool that works.

As of now, northeast traffic remains fairly strong, if only because so many detour miles are being added to so many carloads. It may well wane over the next few weeks, but we must take care not to try the system's current weakness too hard. The goal for the next month is, above all, to prevent infection of ourselves and of the source of our livelihood.

Embrace the slowdown to triple-check that messages are understood, to care for the equipment and validate instructions, to respond in detail to customers, to secure employees in their work and at home. Apart for now, together forever.

COVID-19: ARE YOU READY FOR FORCE MAJEUR DECLARATIONS?

17 March - GKG LAW FIRM ADVISES REVIEW AND REVISION OF FORCE MAJEUR CLAUSES TO MITIGATE LIABILITY FOR DELIVERY DISRUPTIONS STEMMING FROM VIRUS EFFECTS

Can Force Majeure Protect You from Claims Arising from Coronavirus Disruptions?

By: Brendan Collins and Oliver M. Krischik, GKG Law, P.C.

The coronavirus' impact on the global shipping network invites the question: Does language in your transportation contracts protect you against customer claims arising from disruptions in service due to the coronavirus? Correspondingly, does language in counterparties’ contracts for transportation, warehousing, and logistics services allow them to impose charges against you, regardless of coronavirus driven interruptions? Now is a good time to review your transportation contracts and determine whether changes are necessary to protect your business.

Turmoil in Shipping

COVID-19’s effect on the shipping industry is indisputable — quarantines, travel restrictions, disrupted transportation, closed factories, strained supply chains, backed up cargo at terminals and warehouses, and two million ocean containers idled in late February alone. Many forwarders and vessel operating carriers have had firsthand experience with this disruption over the last several weeks. When global crises affect parties’ ability to perform under contract, whether because of war, terrorism, or a global pandemic, lawyers have traditionally turned to force majeure clauses to mitigate unforeseeable liability and infeasible obligations.

“ Force majeure ” is a French term that literally means “superior force,” but is most often recognized as the clause in your contracts that is rarely discussed, invoked or even noticed. A traditional force majeure clause states that neither party will face liability for breaches if unforeseen Acts of God (e.g., earthquakes, hurricanes, etc.) or of governments or regulatory bodies (e.g., war, etc.) prevent a party from performing under contract. The types of unforeseen circumstances that can trigger a force majeure clause, however, will depend on how it is written. This is particularly true in cases like the coronavirus, where the United Nations World Health Organization declined to characterize COVID-19 as a pandemic until just recently.

Don’t Get Whipsawed

In determining the effect, if any, of a force majeure clause, first look to see if your Bill of Lading Terms and Conditions and general forwarding services Terms and Conditions contain such a clause. If not, they should. If they do have a force majeure clause, the next question is how broadly the clause is drafted, i.e., is it exclusively limited to an enumerated list of potential circumstances, or is it more broadly written to address unforeseen eventualities. Put differently, is the force majeure clause only triggered when one of several named events takes place?

Preferably, the force majeure clause in your terms and conditions will be without limitation, providing an inclusive list of possible triggering events as well as “other causes reasonably beyond the party’s control.” Otherwise, any circumstances that are not listed in the clause may be deemed to fall beyond the scope of its protection. Even if the clause is open-ended (i.e., without limitation), a company will have a much stronger case for invoking force majeure if the disruptive event at issue is specifically named. For these reasons, it may be prudent to add quarantine, pandemic, and public health emergencies to your force majeure clauses, and make the lists illustrative rather than exclusive. Before coronavirus, the world grappled with an H1N1 flu pandemic (2009) and SARS (2003). Unfortunately, it stands to reason that another global outbreak may lurk on the horizon.

If the force majeure clause in your Bill of Lading Terms and Conditions is properly drafted to cover all unforeseeable circumstances outside the forwarder’s control that might prevent the forwarder from performing, this clause may protect you from obligations to your customer.

At the same time, forwarders sign a number of agreements under other party’s terms and conditions, like vessel operating carriers, warehouses, and logistics companies. In these cases, force majeure clauses may protect counterparties that are unable to perform. It is important to review these terms as well, to determine which parties may be able to escape liability for COVID-19 related non-performance.

Most importantly, a forwarder can be left holding the bag if it is caught between strong force majeure clauses in others’ agreements and inadequate force majeure in its own terms and conditions. This is a prudent time to review your force majeure agreements and determine if you are protected from disruption on current shipments and how you can strengthen your position moving forward.

If you have any questions about force majeure clauses or issues of non-performance related to the coronavirus, please contact Brendan Collins (bcollins@gkglaw.com; 202.342.6793) or Oliver M. Krischik (okrischik@gkglaw.com; 202.342.5266).

GKG Law Principal Brendan Collins concentrates his practice in the areas of commercial litigation, bankruptcy, and transportation law. GKG Law Attorney Oliver Krischik focuses on representing businesses, individuals, and non-profit organizations on issues surrounding transportation and regulatory trade matters.

Atlantic Northeast Rails & Ports

Corresponding on rail and port traffic throughout New England, the Hudson, Lehigh, and Delaware Valleys, the Canadian Maritimes, and eastern Quebec.

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Common abbreviations :

BCLR - Bay Colony RR,

BLE – Bessemer & Lake Erie (CN).

BM – Boston & Maine Corp.

CPA – Connecticut Port Auth'ty

CBNS - Cape Breton and Central Nova Scotia Ry, (GWI)

CCCR - Cape Cod Central RR,

CLP - Clarendon & Pittsford RR (VRS)

CMAQ - congestion-mitigation or air quality (money from the US federal government for these purposes),

CMQ – Central Maine & Quebec Ry,

CN - Canadian National Ry,

CNZR - Central New England RR,

ConnDOT - Connecticut Department of Transportation,

CP - Canadian Pacific Ry,

CSO - Connecticut South’n RR, (GWI)

CSRX - Conway Scenic RR,

CSX - CSX Transportation,

EMRY - see NBSR,

FHWA - Federal Highway Admin.,

FRA - Federal Rail Admin.,

FGLK – Finger Lakes Ry. Co.,

FRTC - Fore River Transp’on Co.,

FTA - Federal Transit Admin,

GJRT – Grand Jct. Running Track

GLX - MBTA Green Line Extension project

GMR – Green Mountain RR (VRS)

GU - Grafton & Upton RR,

GWI - Genesee & Wyoming Inc,

HRRC - Housatonic RR,

IPH – Iowa Pacific Holdings

ITHR – Ithaca Central Railroad

JOC – Journal of Commerce

JRAR – Jones Runaround Ry

MassDOT - Massachusetts Department of Transportation,

MBRX - Milford-Bennington RR,

MBTA - Mass. Bay Transportation Authority,

MC - Massachusetts Coastal RR,

MCER - Mass. Central RR,

MEC – Maine Central RR (PAR),

MEDOT - Maine Department of Transportation,

MMA - Montréal, Maine & Atlantic Ry,

MNRY - see NB&M,

MPO - Metropolitan Planning Organization,

MTQ - Québec Ministry of Transport,

NAUG - Naugatuck RR,

NBDOT - New Brunswick Department of Transportation,

NB&M – New Brunswick & Maine Railways, system of NBSR - New Brunswick Southern Ry; MNRC - Maine Northern Ry; and EMRY - Eastern Maine Ry,

NECR* - New England Central RR

NEGS - New England Southern RR,

NET – New England Transload

NHCR - New Hampshire Central RR,

NHDOT - NH Dept of Trans,

NHN - NH Northcoast RR,

NNEPRA - Northern New England Passenger Rail Authority,

NS - Norfolk Southern Ry,

NSDOT - Nova Scotia Department of Transportation,

NYA - New York & Atlantic Ry,

NYNJ - New York New Jersey Railroad (PANYNJ subsidiary, formerly Cross-Harbor),

NYSDOT – NY State Dept. of Transportation

Pan Am – refers to operator of PAS and PAR,

PAR - Pan Am Railways - parent of MEC, PTM, BM, ST

PANYNJ - Port Authority of New York and New Jersey,

PAS - Pan Am Southern Railway,

PTM – Portlsnd Terminal RR

PVRR - Pioneer Valley RR,

PW* - Providence & Worcester RR, (GWI)

QCR - Quebec Central Ry,

RIDOT - Rhode Island Dept. of Transportation,

RJC – RJ Corman

Seaview - Seaview Transport’n Co.,

SLQ* - St. Lawrence & Atlantic Ry (Québec), (GWI)

SLR* - St. Lawrence & Atlantic RR, (GWI)

SNC – Saratoga & North Creek Ry,

ST - Springfield Terminal Ry, see PAR,

TIRR - Turner’s Island LLC,

TEU - twenty-foot equivalent unit (measure of container traffic, equal to a 20x8x8 foot box),

UR – United Rail, Inc.

USWX – Waste Management, Inc.

VAOT - Vermont Agency of Transportation,

VRS -Vermont Rail System (Green Mt. RR Company, comprised of GMR, VTR, CLP, WAC

VTR - Vermont Ry (VRS)

WACR - Washington County RR (VRS)

WHRC - Windsor and Hantsport Ry.

* These railroads are part of the GWI short-line holding company.

Atlantic Northeast Rails & Ports

Holden, MA 01520

(617) 877-5741

Joshua Davidson, publisher and editor

editor@railsandports.com www.railsandports.com

Coverage

The newsletter covers the operating freight railroads and ports in New England, the Maritimes, and eastern Québec, as well as the government environment they function within. Coverage includes passenger rail and ships when relevant to freight operations.

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