3 Chain of Responsibility traps importers need to know

There was an incident a few years ago that always springs to mind when we consider the chain of responsibility risks overseas partners can introduce. Not because a terrible tragedy occurred, though it could have easily been much worse. But because the consignor involved came unstuck by something that had happened weeks prior in a different country.

A truck carrying a shipping container full of timber tipped while turning a corner, and the container landed on a pedestrian island crossing. The truck was moving at a mere 15km/h.

Incredibly, no one was hurt.

The National Heavy Vehicle Regulator investigated the incident and, among other issues, found:

• The load within the container was not restrained in accordance with the load performance standards.

• The container weight declaration had the incorrect gross weight of the container. The load was heavier than the declared weight.

• The consignor had not complied with their own CoR policy, given any instruction to the overseas supplier on their container restraint expectations, or required evidence of in-container restraint prior to shipping.

The company had an internal CoR policy but the active management of that policy was lacking - a concern considering a large part of the supply chain was overseas. And that makes all the difference for an industry regulator that enforces penalties in regards to potential harm, not just when harm occurs. The company pleaded guilty to the charges.

So what traps can consignors avoid to stay a step ahead on their CoR risks when it comes to importing and shipping goods?

Trap 1: You haven’t made your CoR expectations clear enough to supply chain partners

Large consignors can enforce really high standards to drive safety and accountability, such as training programs, full supply chain photo verification of how containers are packed and transported, and much more.

Smaller consignors don’t always have the benefit of scale, so it can be harder to meet your CoR obligations. Ensuring you communicate your expectations to supply chain partners simply and consistently is vital.

Assuming they have knowledge on Australian legal requirements (even if they’ve worked with other Australian companies before) is a trap to avoid, so you need to make sure you:

• Provide instruction and visual materials that make it crystal clear to your supply chain partners how you expect them to pack containers and operate safely.

• Ensure those materials are presented in a simple and relevant way to your partners - consider language, education and geographical/technology barriers.

• One and done will not work. Constantly educate and advise your supply chain partners on your expectations. People change jobs all the time, and new hires may not be across your CoR obligations and expectations.

• Seek to understand your supply chain partners’ safety culture - this may even include a site visit if possible. Inspect their operations for yourself and ensure you’re happy with the policies and procedures they have in place.

Trap 2: Your contracts and record keeping are not detailed enough

Training is one thing, but making it official in your contracts is where you can ensure overseas supply chain partners know their money is on the line.

Your contractual agreements should be detailed enough that they explicitly outline the CoR obligations and mechanisms for regular compliance checks. And, of course, the consequences of not meeting those standards. This should be more than one throw away line stating “must comply with all Chain of Responsibility laws”.

Contracts should specify responsibilities for weight declarations, load securing and timely information exchange, among a raft of other things. This can obviously be complex, so you should seek legal advice from experienced risk mitigation experts when these agreements are drawn.

This is also where rigid record-keeping and compliance monitoring become paramount. Consignors should maintain detailed records, including documentation of training for packing methods, accurate container weight declarations, load restraint measures, and more.

“Your contractual agreements should be detailed enough that they explicitly outline the CoR obligations and mechanisms for regular compliance checks. And, of course, the consequences of not meeting those standards.”

Completing this goes a long way in doing what is reasonably practicable to ensure your domestic transport provider has all of the information they need to safely and efficiently transport your goods.

Leveraging technology to track and manage this data can significantly enhance the ability to demonstrate compliance and swiftly address any potential breaches.

Trap 3: Your domestic transport provider introduces additional risk into your operation

Managing your offshore partner can take a lot of your attention, but a lack of due diligence in the transport provider moving the goods once they arrive in Australia can add serious headaches to delivering on your CoR obligations.

Many consignors I talk to will often remark “but I only engage large transport companies - surely they’re across it all”. This assumption has and will continue to undo a lot of people.

Instead, when choosing your domestic transport provider, ensure:

• They are a reputable transport provider.

• They can verify that they have safe and roadworthy transport equipment.

• They understand how to transport containers and have experience in what to look for when inspecting them for load safety.

• You have a rock solid due diligence system that gives you confidence they aren’t introducing risks to your business.

• You undertake a pre-qualification of them (and audit as appropriate) that gives you confidence they “do what they say they do”.

• You verify their compliance constantly through ongoing inspections and reviews.

Avoiding these traps can help consignors sleep at night knowing their CoR obligations are being taken seriously at every step. The challenge, of course, is to ensure every partner maintains the kind of diligence that keeps people and companies safe.

© 2024 Logistics Safety Solutions Pty Ltd (LSS) ABN 25 134 417 379. General information only. LSS bears no responsibility, and shall not be held liable, for any loss, damage or injury arising directly or indirectly from your use of or reliance on the information in this article.