Do you understand CoR?

Michael Kilgariff, Managing Director, Australian Logistics Council.

Michael Kilgariff, Managing Director, Australian Logistics Council.

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.