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From ship to shore – Exporters in the Chain of Responsibility

26 November 2018

#Transport, Shipping & Logistics

Published by Rebecca Niumeitolu

From ship to shore – Exporters in the Chain of Responsibility

The Heavy Vehicle National Law (HVNL) impacts international transport supply chains that involve on-road distribution in Australia. Due to the concept of shared responsibility and the broad scope of the Chain of Responsibility (CoR), this impact begins even before cargo is unloaded from vessels and loaded onto heavy vehicles for on-road distribution. It begins when a contract is formed with a foreign supplier. 

The HVNL and foreign suppliers

Chasing foreign businesses that are involved in a breach of the HVNL can be difficult from an enforcement perspective. Wholly foreign suppliers probably consider themselves outside the purview of the HVNL, thinking: "Realistically, what could an Australian regulator do to make me change the way I pack and load my product? How could a foreign penalty be imposed on me if cargo was loaded incorrectly or if my transport documents contained false and misleading information?"

While direct regulatory enforcement against wholly foreign businesses for breach of the HVNL is practically impossible, there is a strong business case to rebut the perspective that foreign suppliers are beyond the reach of the HVNL. 

In terms of business longevity, domestic importers and transport service providers’ HVNL obligations do (and should) impact the way foreign suppliers do business and behave in the international transport supply chain. This is because the ripple effect of missteps early in the transport supply chain on the costs and safety of transport activities down the Chain are too significant for domestic CoR parties not to require foreign supplier compliance with the HVNL – essentially, domestic parties can expect to pay the cost for noncompliance. 

For example, if a foreign supplier organised for a container to be packed for shipment without regard to the Load Restraint Guide, the load’s weight distribution and whether the load could become dislodged, that would pose a serious risk to the safety of the transport activities of parties further down the Chain. It would also amount to other CoR parties breaching load restraint requirements if they do not check and reload the product before it is transported by road. 

Another example would be where a foreign supplier records the incorrect mass information in their transport documents, which if relied on, would risk drivers, operators and consignees breaching mass obligations under the HVNL and pose a risk to the safety of their respective transport activities. 

In each of the above examples, it makes commercial sense for domestic parties in the Chain to mitigate against the risks posed by foreign supplier who do not comply with the HVNL by either not doing business with them or obtaining assurances from foreign supplier about the procedures they implement to ensure compliance with the HVNL. 

Thus, far from being free from HVNL obligations, foreign suppliers (whether they like it or not) are active and participating parties in the Chain and share responsibility for breaches of the HVNL, by reason of the commercial risks posed by their non-compliance with the law.

How to mitigate your risks through pre-engagement screening 

The level of appropriate checks to mitigate risks to your business will vary on the type of supplier you are dealing with. Large suppliers with a strong customer base in Australia may be familiar with the HVNL requirements and may already have effective systems and policies to ensure compliance, such that pre-engagement screening and compliance checks are seamless. 

Whereas smaller exporters or exporters with a limited customer base in Australia may require more ‘hand-holding’ to ensure that they are aware of the standards with which they must prepare and load their product and prepare their transport documents. 

Key points that domestic CoR parties should address in pre-engagement screening are as follows: 

  • advise the foreign supplier of its requirements under the HVNL, in particular obligations relating to mass and load requirements as well as transport documentation
  • provide the foreign supplier with the Load Restraint Guide, or at least extract specific requirements that are relevant to the goods which are the subject of transportation. This could include portions relating to load performance standards (that identifies limits on the permissible movement of the load) and the types of restraint suitable for the products that are to be transported
  • don’t make compliance an option, make it an obligation. Make sure that your contract makes clear reference to the foreign supplier’s obligations to ensure compliance with the HVNL and identify what recourse you have against them if they breach such obligations. For example, non-compliance could be grounds for refusing to accept the goods (subject to your obligations to deal then with the non-compliant load) or the costs of making new arrangements to transport the goods in a manner that complies with the HVNL
  • agree on a process for identifying and addressing risks and breaches of the HVNL. 

Warning signs during transportation 

  • discrepancies in the mass or dimension information in transport documentation should raise alarm bells that you may need to verify these elements of the load before transport
  • signs of a shifted load or failed load restraint will mean that checks need to be conducted on the load restraints and the weight distribution of the load. 

Remember, there are other links in the Chain 

Securing the compliance of foreign supplier with load, mass and transport documentation obligations under the HVNL serves to mitigate against risks of breaching the HVNL, risks to cargo and ultimately your business but it is important to remember that foreign consignors are just one part of the Chain.

Author: Rebecca Niumeitolu

* A version of this article was originally published in CoR Adviser. This article is © 2018 Portner Press Pty Ltd and has been reproduced with permission of Portner Press.

Contacts:

Sydney
Nathan Cecil, Partner 
T: +61 2 8083 0429 
E: nathan.cecil@holdingredlich.com

Geoff Farnsworth, Partner 
T: +61 2 8083 0416 
E: geoff.farnsworth@holdingredlich.com

Melbourne
Harry Kingsley, Partner
T: +61 3 9321 9888 
E: harry.kingsley@holdingredlich.com

Brisbane
Suzy Cairney, Partner 
T: +61 7 3135 0684 
E: suzy.cairney@holdingredlich.com

Disclaimer
The information in this publication is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavour to provide accurate and timely information, we do not guarantee that the information in this newsletter is accurate at the date it is received or that it will continue to be accurate in the future.

Published by Rebecca Niumeitolu

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