Compensation for cargo claims in reverse supply chains

Julia Hornig, Martijn Schippers

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Abstract

The circular economy is essential to combat climate change. As part of the circular economy, supply chains are converted into closed-loop supply chains as this prevents non-recoverable waste and is thus more sustainable than traditional linear supply chains. The reverse supply chain is the part of the closed-loop supply chain that represents the phase whereby goods, at the end of their life span, are sent to a recycling or recovery facility. It is essential that goods in reverse supply chains reach their destination instead of being discarded along the way. In this article the authors presume that the current compensation systems in the international transport conventions discourage carriers or participants to close the material loop. The reason for this is that the compensation systems in international transport conventions are primarily based on the value of the transported goods. Because an inherent characteristic of goods in a reverse supply chain is that they have a negligible or low value, a financial incentive is lacking for the carrier to take care of the goods and make sure they reach their destination. The authors found several solutions to overcome these flaws. One is including a financial incentive in the transport conventions by making use of the principles for determining the customs value of imported goods. Taking a bottom-up or top-down approach are two other solutions explored in this article. In the case of the bottom-up approach, private parties include different contract models to facilitate the successful closed material loop, whereas the top-down approach introduces legal instruments to governments to intervene if the value for the compensation between the parties is too low.

Original languageEnglish
Pages (from-to)61-86
Number of pages26
JournalWorld Customs Journal
Volume16
Issue number1
Publication statusPublished - 31 Mar 2022

Bibliographical note

Funding Information:
Dr Julia Hörnig is an Assistant Professor in Commercial Law and academic coordinator of the master program Maritime and Transport Law at the Erasmus University Rotterdam. In her doctoral thesis she pursued an interdisciplinary approach by combining logistics innovation with the legal implication of multimodal transports and transhipments. Her PhD project was funded by the German Transport Law Association. Julia Hörnig publishes about transport and maritime law with a strong focus on sustainability and in particular closed-loop supply chain. This focus is also reflected in her lectures on carriage of goods and transport law which she gives at the Erasmus University as well as the master thesis she supervised. Julia Hörnig is the German Correspondent for the Centre for Maritime Law of the National University of Singapore (CML)/Comité Maritime International (CMI) Database of Judicial Decisions on International Conventions and guest lecturer at the University of Bayreuth (GER), the Europe University Frankfurt (GER) and for the German Lawyers’ Academy courses for Specialist Transport and Trade Law. ORCID iD: 0000-0002-1430-4430

Publisher Copyright:
© 2022, International Network of Customs Universities. All rights reserved.

Research programs

  • SAI 2007-05 FA

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