LTG Cargo and Skinest Baltija will head into a legal battle over the cancellation of a supply contract between the two parties. Earlier, LTG Cargo claimed that Skinest Baltija had breached the contract on various occasions. The company then added Skinest Baltija to a list of ‘unreliable suppliers’. Skinest Baltija disputes LTG Cargo’s claims and intends to sue the Lithuanian rail operator.
LTG Cargo and Skinest Baltija signed a contract for the supply of spare parts of diesel engines and freight locomotive systems in 2021. Polish publication Kurier Kolejowy writes that LTG Cargo submitted over one hundred claims against Skinest for ‘improper performance of services’ that it was to provide under the terms of the contract in a single year.
Moreover, Skinest is currently said to be over a hundred days late with the delivery of its goods. The company has reportedly already incurred 30,000 euros in delay penalties. LTG Cargo claims that Skinest is also often late to rectify qualitative defects and shortages.
Extreme measures
As a result, LTG Cargo says it had to deal with more than 30 cases of technical problems where it had to delay or suspend scheduled deliveries while cargo was en route. It forced the company to carry out unplanned repairs in over 20 cases.
“We can no longer trust a supplier who constantly fails to properly fulfill its obligations, so we decided to take extreme measures – to terminate the contract and add Skinest Baltija to the list of unreliable suppliers”, says the head of LTG Cargo.
Skinest laments LTG Cargo way of operating
Skinest explains that the supply issues arose due to the covid pandemic and supply chain issues. “We must acknowledge that there have been certain breaches of the contract, namely delays due to the covid pandemic and disruptions in supply chains caused by the war in Ukraine, resulting in shortages of certain positions in the market”, says CEO Valdas Rasimas.
At the same time, Rasimas says that the company communicated these issues with LTG Cargo and requested a change of the supply terms. Rasimas says that “Skinest Baltija has repeatedly requested the possibility of changing the supply terms due to the situation that has arisen, but unfortunately, we received a negative response from LTG Cargo representatives.”
Moreover, Rasimas accuses LTG Cargo of mishandling technical issues. “Some defective reports were filled and submitted without the participation of Skinest Baltija representatives, although we actively requested the presence of our representatives,” the Skinest CEO says. “These reports were based solely on visual inspection without measuring specific parameters of the components, such as surface roughness or the ability of certain parts to withstand pressure. We disagree with such subjective, technically unfounded, and potentially erroneous defect assessments.”
Relationship hits rock bottom after ups and downs
According to Rasimas, there were ups and downs in the company’s relationship with LTG Cargo. “Some representatives attempted to preserve the contract, while others, due to their incompetence in assessing and evaluating components, discredited us as a supplier”, he says. However, he adds, “there were some periods of understanding, we even signed a settlement agreement last year as a proof of goodwill.”
Skinest does not agree with the situation as sketched by LTG Cargo. The relationship between the two companies has hit rock bottom. “Yes, we are preparing to take legal action”, says the CEO. “We will defend our rights according to the provisions of the law.”
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