Moore on Pricing: The regulatory squeeze is on

Over the past decade we’ve seen a major trend in regards to safety regulations for freight transport within the United States as well as for import and export shippers—that trend is the “international­ization” of rules and regulations.

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Over the past decade we’ve seen a major trend in regards to safety regulations for freight transport within the United States as well as for import and export shippers—that trend is the “international­ization” of rules and regulations.

While our own government has been proactive in adding new safety rules, shippers need to be aware of what’s going on in Europe and elsewhere that may lead to more delays and higher costs here at home. There’s little doubt that shippers now need to refresh operational procedures to cover a broader set of rules.

The Safety of Life at Sea (SOLAS) weighing requirement, published by the International Maritime Organization (IMO), went into effect in July. The most important language for shippers to note is: “Shippers, freight forwarders, vessel operators, and terminal operators will all need to establish policies and procedures to ensure the implementation of this regulatory change.”

That means: Write it down. Many operations people I’ve visited with have simply started doing the weight verification, which is fine. But has it been made a company policy? Can you show a court or regulatory agency after an incident that you have a written procedure for compliance?

U.S. Hazmat shippers are aware of the U.S. Department of Transportation (DOT) require­ments for labeling, placarding and declarations of hazardous goods. Those persons shipping interna­tionally are also aware that the U.S. regulations were modified to be complimentary to the UN recognized “dangerous goods” regulations.

These are expressed as IMO dangerous goods (for maritime) or IATA dangerous goods (for air). Training in these regulations due to their subtle differences is a must for shippers in these modes to reduce the risk of liability in an incident.

Like the SOLAS rules, those responsible for dangerous goods regulation and enforcement are increasingly looking at the shipper’s role in inci­dents. Earlier in this century, the DOT created a new class of regulated persons called “hazmat employees.”

Shippers found that their employees were now subject to the same regulations as carri­ers—somewhat more in line with the European mode of corporate and employee responsibil­ity. Carriers then said: “Welcome to our world.” Shippers now need to check training policies and documentation to reduce risks of being seen as non-compliant.

Launched immediately after 9/11, the “Customs-Trade Partnership Against Terrorism” (CTPAT) is a voluntary supply chain security program led by U.S. Customs and Border Protec­tion and “focused on improving the security of private companies’ supply chains with respect to terrorism,” according to U.S. Homeland Security.

The program immediately became internation­al, with complimentary programs being developed by many of our trading partners. Fifteen years later, shippers and receivers of international cargo representing the vast majority of all goods into and through the U.S. are now members.

Is this an international regulation? Well, many say it might as well be. For shippers wanting to reduce legal liability after an incident, member­ship demonstrates a professional level of compli­ance with best practices.

These developments mark a change in the game for many shippers who focus mainly on domestic moves, but manage a small percentage of international trade. It’s important for shippers to remember that they can’t outsource regulatory responsibility as a “shipper of record.” This is now a part of their business, and domestic safety agencies are following the global lead of other countries in making sure the shipper is paying attention at all times.

About the Author

Peter Moore
Peter Moore is Adjunct Professor of Supply Chain at Georgia College EMBA Program, Program Faculty at the Center for Executive Education at the University of Tennessee, and Adjunct Professor at the University of South Carolina Beaufort. Peter writes from his home in Hilton Head Island, S.C., and can be reached at [email protected]

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Article Topics

DOT · Pricing · SOLAS · All Topics
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