A port strike or typhoon shuts down your key shipping lane. Your cargo is stuck, project deadlines are at risk, and your contractors are asking who will pay for the idle time. Relying on a “force majeure” clause is not straightforward. Your contract’s specific wording is what matters, and a single misstep could leave your company liable for all delay-related costs.

This article provides a clear guide for handling these disruptions. We explain what qualifies as a force majeure event, who typically absorbs the costs, and how to communicate with your partners. You will learn why you must provide official written notice within a strict 5 to 15-day window and see how rerouting your cargo can cost an extra $1,000 to $1,500 per container but may be your only option to keep operations moving.

Defining Force Majeure (Acts of God)

Force majeure is an unforeseeable event beyond a party’s control that makes fulfilling a contract impossible. In shipping and construction, this requires passing a strict three-part test and is limited to specific, listed events like natural disasters or government embargoes, not economic hardship or market changes.

In construction and logistics contracts, “force majeure” or “Act of God” has no independent legal power. Its authority comes directly from the contract’s explicit wording. Without a specific clause, parties in common law systems cannot claim relief under a general force majeure doctrine. This is why modern engineering and shipping agreements contain precise mechanics to define what happens when an extraordinary external event blocks performance.

The Three-Part Test for a Force Majeure Event

For an event to qualify as force majeure, it typically must pass a strict three-part test. First, the event must have been unforeseeable when the contract was signed. Second, it must be completely beyond the reasonable control of the affected party. Third, the event must make fulfilling contractual duties legally or physically impossible, not just more difficult or expensive. The party invoking the clause holds the burden of proof and must demonstrate that this specific event directly caused their failure to perform.

What’s Covered vs. What’s Not

Contracts often list specific covered events to avoid ambiguity. These lists usually include earthquakes, floods, war, riots, government embargoes, and pandemics. Standard engineering contracts like the NEC treat such occurrences as “compensation events” under clause 60.1(19), which can justify schedule adjustments. But courts interpret these clauses narrowly, so events not listed are seldom covered. Economic hardship, unexpected spikes in material prices, and market downturns are almost always excluded because they are considered foreseeable business risks that a company should plan for.

Who Pays for Delay Costs? (The Hard Truth)

Typically, a force majeure event grants a time extension but does not provide cost compensation. The party experiencing the disruption, such as a supplier or contractor, usually absorbs their own delay costs while being shielded from late penalties. The buyer or owner only pays if the contract makes the delay ‘compensable,’ often because they caused it.

Default Rule: Time Extension, Not Cost Reimbursement

Most construction and shipping contracts grant schedule relief (a time extension) but do not automatically provide financial compensation for delays. The affected party, like a contractor or supplier, is protected from liquidated damages for being late but must absorb their own internal costs like idle equipment and extended overhead.

This principle is reflected in standard industry clauses. For example, the BIMCO Force Majeure Clause 2022 suspends performance during the disruptive event without transferring cost liability to the other party.

The Exception: When a Delay Becomes Compensable

A delay becomes ‘compensable’ only when it is caused by the owner’s or buyer’s actions, inactions, or is otherwise under their control. This can include owner-directed work suspensions or changes issued in response to a force majeure event.

In these cases, the owner may be required to pay for the contractor’s ‘actual increased costs of performance.’ Such costs can cover idled labor, extended site overhead, and material price escalation that result from the compensable delay.

Port Strikes (ILA/ILWU): What Happens?

When the ILA or ILWU initiates a strike, operations at major US ports completely halt, stopping all cargo movement. This triggers massive supply chain disruptions, including significant delays, rerouting to other coasts, and substantial daily economic costs and surcharges for shippers.

Operational Shutdowns and Immediate Effects

A strike led by the International Longshoremen’s Association (ILA) results in a complete operational freeze across all 36 US East and Gulf Coast ports. These ports collectively handle over half of the nation’s container volume. When a work stoppage occurs, all activities cease immediately. This includes the loading and unloading of vessels, gate operations for trucks, and intermodal rail services. The shutdown affects every category of cargo, disrupting shipments of standard containers, breakbulk, and roll-on/roll-off (ro-ro) freight.

Financial and Logistical Fallout

The financial and logistical consequences of a port strike are extensive. The disruption can cost the US economy as much as $5 billion for each day operations are halted. To mitigate delays, shippers are often forced to reroute cargo to unaffected ports, such as those on the West Coast. This contingency planning adds approximately 10 to 14 days to total transit times. These reroutes also introduce substantial costs, with port-to-port fees ranging from $1,000 to $1,500 per FEU, alongside other potential surcharges.

Globally Trusted Stables, Engineered for Your Climate.

Our precision-engineered écuries are built with premium, rust-proof materials to withstand any weather, from 40°C heat to -10°C winters. We custom-design every stable to meet your region’s safety standards, ensuring ultimate comfort and security for your horses.

Explorer les solutions stables →

Rerouting Cargo: Options & Costs

When facing shipping delays, you can reroute cargo by optimizing the shipping mode (like LTL to parcel for small loads) or analyzing different lanes to find économies de coûts. Costs are driven by density (PCF), weight, and freight class, with specific lanes and backhaul opportunities offering significant savings potential.

Analyzing Shipping Modes and Lanes

You can reduce costs by strategically adjusting your shipping methods. For smaller shipments, moving from Less-Than-Truckload (LTL) to alternative parcel carriers can be effective. Data shows that for 35% of shipments under 500 lbs, this shift can cut costs by 14%. Another key strategy is to analyze shipping lanes to find backhaul opportunities. Carriers often have excess capacity on these return routes, which translates to lower rates for your cargo. Rerouting also helps you bypass ports with high detention charges—fees applied when loading and unloading exceeds the allotted free time.

Calculating Rerouting Costs and Savings

The financial impact of rerouting depends on several key metrics. Cargo density, measured in pounds per cubic foot (PCF), is a primary factor that helps set the freight class. You can compare different options by calculating the cost-per-pound—for example, a $0.60/lb rate for a 2,000 lb shipment totals $1,200. Focus your optimization efforts on high-cost routes, as analysis often reveals that a small number of lanes (just 18%) can make up a large portion of total spending (62%). To avoid unexpected charges, always ensure your freight is correctly classified based on its weight, dimensions, and density to prevent reclassification fees from carriers.

Communicating Delays to Your Contractors

When a shipping delay occurs due to an uncontrollable event, you must provide immediate written notice to your contractors, typically within 5-15 days. This notice must be followed by official evidence, such as a port authority letter, to validate the claim and protect your contractual rights.

Sending the Initial Written Notice

When a force majeure event disrupts your shipping schedule, your first obligation is to provide immediate written notice to your contractors. Most contracts specify a strict window for this notification, often between 5 and 15 days from when the delay began. This formal notice is essential to activate the force majeure clause in your agreement and officially preserve your contractual rights. Sending the notification on time signals that an uncontrollable event has occurred.

Failure to meet this deadline can have serious financial consequences. If you do not send a timely notice, you risk voiding the clause’s protections entirely, which could make your company liable for all costs resulting from the delay. Industry standards, like the BIMCO Force Majeure Clause 2022, reinforce the requirement for prompt notification, making it a critical step in managing contractual risk during supply chain disruptions.

Providing Verifiable Evidence of the Delay

After sending the initial notice, you must support your force majeure claim with verifiable evidence. This documentation must come from an official source, such as a port authority letter, a customs memo, or a certified document from a competent authority at the location of the event. The proof needs to clearly demonstrate that the event was unforeseeable, beyond your control, and the direct cause of the inability to perform, not just a matter of economic inconvenience.

Informal updates or simple email explanations are not enough. For legal and arbitration proceedings, only formal, evidence-backed notices carry weight. You should archive all communications, operational logs, and any proof of mitigation efforts you undertook, like searching for alternative shipping routes. Maintaining a complete record is vital to substantiating your claim and defending your position if a dispute arises.

Réflexions finales

Force majeure clauses offer a shield, not a sword. They protect you from penalties for delays caused by events like strikes or natural disasters, but they rarely compensate you for the financial hit. The burden falls on you to prove the event was unforeseeable and made performance impossible. This means you absorb your own costs for idle resources and are responsible for finding and funding alternative routes. The contract grants a time extension, but the financial pain of the disruption remains your problem to solve.

Your best strategy is proactive management. This starts with a clearly drafted contract that spells out exactly what constitutes a force majeure event and what the notification procedures are. When a disruption hits, immediate and formal communication with your partners is critical to preserving your rights. Having a contingency plan ready, including knowing your alternative shipping lanes and modes, allows you to act quickly instead of just reacting. Navigating these events successfully depends on your preparation long before the storm arrives or the picket lines form.

Questions fréquemment posées