It's time for a "war on waste"

By William J Augello -- Logistics Management, 2/1/1999

Has anyone ever calculated the total cost of freight-transportation accidents and catastrophes--not just the amount of freight claims for which carriers admit liability? If it could be computed, the total annual cost of freight mishaps would very likely be in the billions of dollars.

Consider, for example, the waste of our nation's natural resources that results from every train derailment, truck wreck, or leaking petroleum tanker. Tons of raw materials and precious metals, many of which are irreplaceable, "go down the drain" when cargo is destroyed. But there's more to it than that--including the added cost of energy required to manufacture those lost goods and the cost of labor required to produce and ship them.

Many such accidents, along with problems like theft, are avoidable. But it will require leadership from both government and business interests if this growing problem is to be controlled.

What can be done to reduce the number of avoidable transportation catastrophes? First, we need to get a "fix" on the size and significance of this waste of the nation's products and natural resources. Some of this information was available in the past, but that has changed. Carriers once were required by government regulation to file freight-claim statistics on an annual basis. Since the repeal of that regulation in 1980, there has been no reliable, national source of information on freight loss or damage. These reports need to be reinstated.

The term "loss" includes theft, hijacking, armed robbery, pilferage, misdelivery, and non-delivery (often referred to as "mysterious disappearance"). The common denominator is the failure to deliver to the intended customer.

To reduce these losses, all parties to transportation arrangements must employ tighter security measures. Carriers must take advantage of state-of-the-art security devices and prosecute known cargo thieves as a signal to the underworld that cargo is no longer "fair game." Shippers, meanwhile, can no longer ignore suggestions for improving their packaging in light of the trend toward reduced carrier liability. Federal, state, and local law-enforcement agencies also must allocate a greater share of their resources to the investigation and prosecution of cargo theft.

We need to report, study, and address the causes of transit mishaps better. Prevention of driver/engineer-related accidents, which probably account for the greatest number of avoidable losses, deserves greater attention. Traffic signals, road design, and road maintenance must be reviewed to determine their impact on accidents. It's time, too, to re-examine navigational aids for aircraft and ship movements.

Finally, manufacturers need to calculate how much of their raw materials are being wasted in transportation mishaps. They should add to that the loss of invoice value, the cost of filing and administering claims and litigation, and the cost of lost customer goodwill resulting from the disruption of the distribution cycle.

When all of these factors are considered, our business leaders should have no difficulty in concluding that a concerted effort must be made to curtail avoidable transit waste. A nationwide education program must be launched to apprise freight handlers and transporters of the dire consequences of their negligent acts and omissions. In a more competitive global economy, our nation no longer can afford the luxury of negligence and indifference in the transportation community.

William J. Augello Esq. has practiced transportation law for 46 years. He also is the executive director of the Transportation Consumer Protection Council, an organization that is devoted to protecting shippers and receivers in transportation matters, such as freight loss and damage, undercharges, and contracts. He can be reached at (520) 531-0203 or via e-mail at augello@transportlaw.com.