NTC CEO Dr Gillian Miles.
This article first appeared in the August/September issue of Logistics & Materials Handling.
By Michael Kilgariff, Managing Director, Australian Logistics Council.
Speculation about the impact of Amazon on the Australian retail market kicked up a notch in late June, when news emerged that the company had acquired upscale grocery chain Whole Foods – effectively acquiring ‘bricks and mortar’ stores in strategic locations across the United States.
Many local industry participants are now wondering precisely what that might mean for the retail sector here in Australia, given Amazon’s well-publicised plans to expand in this country.
Yet, for all the time and space this and similar developments occupy in news pages and on television, most of the commentary on the issue is driven by speculation.
At the same time, comparatively little attention is being given to another significant change coming our way – one which won’t just impact freight logistics operators, but also anyone that uses their services.
Granted, it’s not in the shiny form of an app, or a big new market player, or drones delivering groceries straight to the balconies of high-rise apartment buildings in our cities.
Although the coming changes relate to something far more down to earth, they are far more relevant to the day-to-day operation of businesses.
Despite that, awareness and coverage of the issue to date has been astonishingly low.
The forthcoming changes to Chain of Responsibility (CoR) laws, which are due to come into effect in mid-2018, will have an impact on the operations of businesses throughout the economy – not merely in the transport sector.
Accordingly, now is the time to become familiar with exactly what those changes will mean for your business – and establish appropriate systems within business operations to ensure compliance.
For those who may be unfamiliar with its operation, the Heavy Vehicle National Law (HVNL) sets the rules that ensure vehicles of more than 4.5 tonnes in weight operate in a safe manner in all states and territories of Australia (except Western Australia and the Northern Territory).
Under its provisions, if you consign, pack, load or receive goods as part of your business, you can be held legally liable for breaches of the HVNL – even if you have no direct role in driving or operating a heavy vehicle.
In addition, corporate entities, directors, partners and managers are deemed accountable for the actions of people under their control.
This is what is meant by the ‘Chain of Responsibility’.
The aim of the CoR laws is to make sure everyone in the supply chain shares equal responsibility for ensuring breaches of the law do not occur.
Under CoR, if you exercise – or have the capability of exercising, control of or influence over – any transport task, you are part of the supply chain, and therefore have a responsibility to ensure the law is complied with.
The law also recognises that multiple parties may be responsible for offences committed by the drivers and operators of heavy vehicles.
By way of example, let’s consider consignors and consignees of goods.
Effectively, the HVNL is designed to prevent consignors or consignees from pressuring a transport operator to engage in unsafe behaviour, such as speeding or driving long distances without adequate breaks.
If a driver is found to have broken speed limits, or driven in a fatigued state, everyone who was responsible for requiring the driver to undertake a long journey in an unsafe manner could be prosecuted under the national law.
This is because consignors and consignees are required to take all reasonable steps to ensure that drivers don’t speed or drive whilst fatigued. The current maximum penalty for failing to do this is $10,000.
Furthermore, this responsibility extends to directors who either authorised or knew – or ought to have reasonably known – about unsafe transport requirements. That said, it is considered an acceptable defence to show that parties such as directors have shown reasonable diligence in ensuring that the law is complied with.
Accordingly, if you are in a business that deals directly with transport operators to either send goods to clients, or to receive goods from suppliers, you should make certain you have a well-documented set of procedures establishing business rules requiring goods to be transported in a fashion that doesn’t compel drivers to act in a reckless manner.
It would also be prudent to ensure that the executive board establishes reporting requirements that measure how well these procedures have been adhered to.
Having appropriate procedures in place will become vastly more important when the amendments to CoR laws commence operation in the middle of 2018.
These changes are designed to align CoR more closely with workplace health and safety (WHS) laws.
Under the new regime, a primary duty of care will be introduced for supply chain participants to ensure, so far as is reasonably practicable, the safety of ‘road transport operations’, with executive officers (such as directors) having the primary duties regime applied to them through a positive due diligence obligation, similar to that imposed by WHS law.
Essentially, this means that if you or your company operates, loads, drives, sends or receives goods using a heavy vehicle, you will effectively have the same responsibilities as you presently do under WHS law to ensure that the CoR under the HVNL has not been breached.
This means you will need to make certain all reasonably practicable steps are taken to ensure vehicles are properly loaded and goods secured, and that drivers undertake their responsibilities in a safe manner.
This underscores the need to ensure that properly documented road transport practices are kept, and that your organisation’s executive board is kept properly informed as to compliance with these measures.
Yet, in a survey undertaken by the Australian Logistics Council (ALC) in April this year, 50 per cent of respondents did not believe their organisation understood the changes coming to CoR.
Even more worrying was the fact that 90 per cent of respondents were unable to say the CEO of their organisation fully understood their obligations in respect of these matters.
Given the clear lack of knowledge about CoR and the operation of the HVNL, it’s evident that far more needs to be done to support industry in meeting its obligations – and time is of the essence.
Considerable efforts are now under way within the freight logistics industry to help make this happen.
The HVNL permits the development and registration of registered industry codes of practice.
People who can demonstrate compliance with a Code can use this as evidence to prove they have taken all reasonable steps to ensure the discharge of their safety obligations.
The ALC and the Australian Trucking Association (ATA) are now working together to develop a registered industry Master Code of Practice designed to assist freight and supply chain participants in complying with their CoR obligations.
It is the intention of the ALC and the ATA to have the new Master Code ready when the changes to CoR come into effect in mid-2018.
This will help provide certainty for the industry and promote higher standards when it comes to heavy-vehicle safety – which is in the interests of all road users.
The Master Code will help meet and manage the common risks faced by all heavy-vehicle operators, and help reduce red tape and compliance costs.
Given that 98 per cent of trucking businesses have fewer than 20 employees, and that other relevant road parties such as consignors and receivers also have HVNL obligations, establishing a Master Code is a practical way to help responsible parties manage safety risks.
Work on developing the Master Code is now well under way, and the ALC will be working with the ATA to keep industry fully informed as to its progress.
A particularly significant stage of its development will be the 2017 ALC Supply Chain Safety & Compliance Summit [please note, this event has now passed, read a full review in the December 2017 Logistics & Materials Handling].
Taking place in Sydney, 5–6 September, this event will provide an opportunity for participants to have direct input into the Master Code’s content, though a series of workshops focusing on management of speed, fatigue, load and maintenance issues.
All organisations with an interest in improving supply chain safety should register to attend, and make sure their views are heard as the Master Code is developed.
Companies leasing warehouse facilities in Victoria may be entitled to a refund from their landlords thanks to a recent decision made by the Victorian Supreme Court of Appeal.
Essentially, the Court held that the lease of premises used to provide cold storage and logistics services was a ‘retail lease’ for the purposes of the Retail Leases Act 2003 (Vic), Hunt & Hunt lawyers has shared.
Hunt & Hunt noted that the decision has practical implications for warehouse operators and freight forwarders, making many entitled to repayment of expenses including land tax and repair costs going back six years.
The Retail Leases Act impacts all aspects of the formation, operation and ending of covered leases. In terms of costs for tenants, landlords are not able to pass on land tax liability or legal costs associated with the preparation of leases, and
landlord are responsible for maintaining premises in the same condition as at the beginning of the lease, this includes equipment, appliances and fittings provided on the premises under the lease.
For the case that brought about the decision, IMCC Group (Australia) Pty Ltd v CB Cold Storage Pty Ltd , the Court had to consider whether a lease of premises used to operate cool storage facilities would be classed as a retail lease.
“The landlord argued it was not due largely to the nature of the services provided and the fact that almost all of the tenant’s customers were businesses,” Hunt & Hunt shared. “The Court of Appeal held that the lease was a retail lease and took the following factors into account: any person could purchase the storage services if the appropriate fee was paid; the tenant’s business was open during normal business hours; and the tenants customers were the actual consumers of the storage service.”
The Court was reportedly not concerned that the premises were acquired for a business purpose.
Hunt & Hunt advises that the criteria for ascertaining whether a warehousing and logistics business’ lease is eligible to be classified as retail will include the rental amount, the size of the premises, whether customers can attend the premises, the hours of operation, the services provided and the permitted use of the premises under the lease.
“Every tenant that provides warehousing and logistics services should have their lease reviewed to determine whether it is potentially a retail lease,” Hunt & Hunt noted. “If it is a retail lease under the law, but the tenant has been paying land tax and maintenance and essential safety maintenance costs, there may be a very strong case to demand repayment of those costs from the landlord.”
With the Federal Government having announced the composition of the expert panel that will advise on the development of the National Freight and Supply Chain Strategy, the real work of shaping its content is now well and truly under way.
It’s not indulging in hyperbole to say that we have a once-in-a-generation opportunity to get this right. Australia’s rapidly growing population coupled with changing patterns of consumer behaviour – especially with the growth of e-Commerce – will impose significant additional demands on the freight and logistics sector.
Indeed, the National Transport Commission (NTC) estimates that Australia’s freight task will grow by some 26 per cent in the next decade alone. When you think of the capacity constraints that are already evident in some of our major cities, particularly growing traffic congestion, such forecasts can appear daunting.
Although it will require a significant degree of hard work on the part of the freight and logistics industry, I am nonetheless confident that we can come up with solutions that will allow us to meet this burgeoning demand.
We know that industry is willing to play an active role, and we know that the Federal Government’s agreement to develop a National Freight and Supply Chain Strategy shows decision-makers are willing to listen to industry’s advice.
Thus, our immediate challenge is to make certain the advice we provide is the right advice, which will help ensure the Strategy that emerges is the right one for our industry and the right one for the Australian economy.
I think there has been an encouraging start on this front.
At the beginning of March, the ALC held its annual Forum in Melbourne, and the entire focus of the event was discussing the content of the National Freight and Supply Chain Strategy.
Of course, we are not starting with a blank piece of paper. Many of the attendees at the Forum are leading figures within Australia’s freight and logistics industry, and throughout their many years of collective experience they have garnered insights and evidence that will prove invaluable in terms of getting policy settings right.
Although ALC Forum 2017 was the first industry-wide gathering since the Prime Minister’s announcement last November that the Government would develop the Strategy, the discussions revealed there is already a remarkable degree of consensus across the industry about what is required to make it effective. This is a strong basis from which to work.
To help synthesise the industry’s conversations to date, the ALC has produced a Working Paper that summarises the views of industry to date about the contents of the Strategy.
Some of the major themes addressed in that publication are as follows:
Urban encroachment issues
In the lead up to the 2016 Federal Election, the ALC prepared a document called Getting The Supply Chain Right, which highlighted the freight and logistics industry’s most pressing priorities for an incoming government.
One of those was urban encroachment, and the lack of buffer zones, land separation setbacks and design mitigation measures around sensitive use developments, which can significantly hamper the efficient operation of freight-related infrastructure.
At the time, the ALC noted that the national freight supply chain will be unable to support Australia’s growing demand if facilities and infrastructure continue to be prevented from realising their optimal capacity, due to restrictions imposed on their use or operating conditions.
This includes things like night curfews for airfreight and port facilities, restrictive speed limits and the banning of heavy vehicles from key routes that provide access to freight facilities.
These things are often pursued by governments in search of an electoral boost. However, their long-term impact is to simply build inefficiencies into the supply chain, which ultimately results in higher consumer prices.
As industry ‘insiders’, we understand that there is a symbiotic relationship between good outcomes for freight efficiency and good outcomes for the community.
The problem lies in the fact that this is vastly underappreciated by the public at large, and even at times by decision-makers within government.
This is how we end up with poor planning outcomes, such as the failure to preserve freight corridors, and insufficient consideration of freight operations when pursuing ‘urban infill’ objectives surrounding new residential developments.
The freight and logistics industry needs to better ‘sell’ the fact that corridor preservation equates to improved safety, liveability and efficiency outcomes.
There was a broad consensus among participants at the Forum that not enough is being done to make use of data, both in terms of improving safety and efficiency across the supply chain, and also when it comes to effectively planning the nation’s freight infrastructure.
Of course, the top priority must be safety in the supply chain. Regrettably, Australia’s approach to safety in the trucking industry is lagging significantly behind that of other comparable nations. In particular, several participants at the Forum noted that Australia’s trucking industry is making insufficient use of telematics when it comes to making business decisions.
The ALC will continue to pursue a national telematics law, permitting the use of data about vehicle performance, equipment and driver behaviour that can be used to enhance road safety, improve efficiency within the logistics industry and identify problems with driver behaviour.
Technology also offers a potential way to overcome the impact of ever-more restrictive planning and vehicular access policies when it comes to CBD freight delivery. One detailed presentation discussed using urban consolidation/distribution stations. These can provide for multi-modal routing systems using bicycles, walkers and electronic vans to facilitate freight delivery.
It is far more efficient than using large vehicles to deliver small loads – especially given that an increasing number of large-scale residential developments do not incorporate delivery zones or provide access facilities for freight vehicles.
There is very strong support within the industry for construction of the Inland Rail, at last providing a port-to-port rail link from Melbourne to Brisbane. This project has had a long gestation, but with the increasing demand for freight resulting from free trade agreements and the growth of e-Commerce, encouraging more freight onto rail is vital.
Constructing the Inland Rail will help to cut freight transport times, reduce road congestion and promote cheaper consumer prices. There are also considerable economic benefits for regional communities along the route.
However, there are also opportunities elsewhere in the sector to make greater use of short-haul rail. This includes pursing projects like the duplication of the rail line at Port Botany, which will help achieve NSW Ports’ target of moving three million Twenty-foot Equivalent Units (TEU) by rail by the year 2045.
Pursuing a rail connection between the Port of Melbourne and three of Victoria’s inland ports will also be important in promoting supply greater supply chain efficiency and addressing road congestion.
This issue is especially important in the context of Asia’s rapidly expanding middle class, whose appetite for the type of high-quality agricultural goods Australia produces will be a source of growing demand on our freight and export infrastructure. We must be mindful not to cede our competitive edge in this area by failing to have a supply chain that operates safely and efficiently from paddock to port.
The next steps
The ALC believes that a dynamic Strategy requires a dynamic consultation process to guide its development, and accordingly the ALC will be continuing to engage closely with industry over the coming weeks and months to make sure we get the right outcomes.
However, from the conversation thus far, it’s already apparent that there are some clear expectations from industry.
Existing freight infrastructure needs to be made to operate efficiently, through making sure planning instruments not only identify and preserve the industrial lands to provide the jobs and logistics facilities of the future, but also ensure new residential developments do not encroach on infrastructure and prevent its effective utilisation.
It will also be necessary to establish some form of mandatory system of data collection that will allow better decision making and improved outcomes in safety, planning and investment decisions, all of which will help boost productivity.
We will need to move towards hypothecation of levies, fees, taxes and charges raised for the purpose of developing an identified piece of infrastructure – so that money raised is invested properly and not put back into consolidated revenue.
The construction of Inland Rail must continue to be treated as a priority, ensuring rail as a modality has a clear place in moving freight in the Australian supply chain.
Great Commonwealth leadership needs to promote supply chain safety and efficiency – this includes helping the public at large understand the importance of supply chain efficiency, as well as incentivising state jurisdictions to consider freight needs in their planning instruments by making Commonwealth funding support subject to conditions such as having corridor preservation strategies in place.
Finally, the establishment of a specific Federal Department of Planning and Infrastructure will allow the Commonwealth’s expertise in these areas (including the development of funding mechanisms) to be concentrated and properly able to be used as resource, by industry and by other jurisdictions.
Thousands of Australians servicing aviation, including freight forwarders and airport staff, will soon be subject to federal background checks, with new laws covering US-bound cargo coming into effect on 1 July 2017.
Since 2005, individuals working unescorted in airport security zones have been required to obtain and display Aviation Security Identification Cards (ASIC) as proof of having undergone a valid background check.
New Federal laws coming into effect on 1 July will require many new classifications of workers supporting the aviation industry – such as freight forwarders and known consigners – to possess higher level security ID, if operations involve US-bound air cargo.
Australian technology company Veritas has received Federal Government authorisation to provide ASICs for individuals supporting the aviation sector.
Stephen Inouye, Managing Director, Veritas, said, “This milestone enables Veritas to extend our technology-enabled security registration services from the maritime and offshore sectors to the aviation sector, thereby helping companies achieve compliance with minimal impacts to operations.”
Inouye noted that from July, only white ASIC holders will be permitted to handle and screen Australian cargo bound for the US.
“Veritas has the systems in place ready to assist thousands of airport staff and freight contractors who, potentially, now need to urgently undertake background checks in order to receive their white ASIC to make sure freight is on planes bound for the US in time,” he said.
“The Office of Transport Security – administered by the Federal Government’s Department of Infrastructure and Regional Development – has identified 11,000 companies which could be impacted. Many Australian employees, particularly of logistics companies and transport operators, may now need white ASIC cards.”
With just over a week until the Victorian Transport Association’s (VTA) annual State Conference in Lorne, the peak freight industry representative body has revealed the full list of speakers that will address delegates over the two-day event, June 4–6.
New keynote speakers include Simon Thomas, Director – Programme Delivery, Australian Rail Track Corporation (ARTC); Jonathan Dexter, Australia National Sales Manager, Viva Energy; Max Kruse, Chief Operating Officer, DP World Australia, Ian Matthews, Regional Operations Manager, WorkSafe Victoria; and CMV-Volvo Product Manager Thiago Leal.
These addresses will be supplemented by panel presentations and discussions from a mix of equipment manufacturers and suppliers, insurance and finance providers, human resources, and superannuation and legal experts.
“Productivity impediments remain the number-one barrier to transport operators being more successful, which is why we’ve built the program around a group of expert presenters and topics that can help delegates improve their operation’s KPIs across the board,” said Peter Anderson, CEO, VTA.
“The program reveals an interesting mix of keynote addresses and presentations from politicians, regulators and industry leaders, supported by several panellists that will share insights and learnings on key productivity drivers of technology, safety, people, customers and equipment during a number of interactive discussions.
Up to 165,000 companies that make up Australia’s heavy vehicle supply chain will be required to take steps to deliver a safer road transport industry under new laws coming in mid-2018.
National Heavy Vehicle Regulator (NHVR) CEO Sal Petroccitto released the latest round of Chain of Responsibility information for 10 key supply chain roles.
“We’ve now delivered more than 30 information forums across Australia and I’m pleased to see many companies in the supply chain undertaking their role in safety and taking practical steps to ensure they meet the new laws from mid-2018,” he told delegates at the recent South Australian Road Transport Association conference.
“We’ve released 10 fact sheets which cover information for roles such as consignees, consignors, loaders, packers, schedulers, executives and employers.
“Whatever the role in the heavy vehicle supply chain, it’s time to be proactive in managing risks to ensure safe transport operations are part of everyday business.”
According to Petroccitto, the NHVR information packs and forums will make it easier for duty holders to understand and assess their risks, and know whether they are complying with the current law and prepare for changes.
The changes include the replacement of existing prescriptive obligations to reduce red tape and better apply risk management processes to focus on safety outcomes.
“There were 213 deaths from 191 fatal crashes involving heavy trucks or buses in 2016. I am determined to see that number continue to fall and make heavy vehicle safety everyone’s business,” said Petroccitto. “Although the changes are a year away, it’s time for businesses across the heavy vehicle supply chain to prepare.
“Earlier this year, we released our guidelines for Industry Codes of Practice, and a Chain of Responsibility checklist as part of a national effort to boost safety for all road users.”