Still Think Dangerous Goods is Just Paperwork and Labels?

Last September, a jury at Southwark crown court in south London found Amazon guilty of shipping dangerous goods by air. As reported by The Guardian:

The items included lithium-ion batteries and flammable aerosols, which were flown in and out of the UK between January 2014 and June 2015.

The prosecution was brought by [the UK’s Civil Aviation Authority] under the air navigation (dangerous goods) regulations 2002. It outlines how dangerous goods must be handled when transported by air. This includes how they must be classified, packed, marked, labelled and documented – as well as the dangerous goods training which must be completed by the people packing and sending them.

The dangers of shipping lithium-ion batteries, particularly via air, has been in the spotlight in recent years following several deadly incidents, including the crash of a UPS cargo plane in September 2010 that was attributed to “the autoignition of the contents of a cargo pallet, which contained more than 81,000 lithium type batteries and other combustible materials.”

Of course, dangerous goods (aka hazardous materials) is not just limited to lithium-ion batteries; it also includes other classes of materials, such as flammable and combustible liquids, flammable and poisonous gases, radioactive materials, and corrosive substances. Various regulatory bodies around the world play a role in defining and enforcing the rules for transporting dangerous goods, including the U.S. Department of Transportation (Title 49 of the Federal Code of Regulations), the United Nations, and the International Air Transport Association’s Dangerous Goods Regulations.

So, how could a leading shipper like Amazon fail to comply with dangerous goods regulations? Well, as I learned at the recent Dangerous Goods Symposium organized by Labelmaster, dangerous goods compliance is a complex and dynamic process, and many companies lack the knowledge, training, and tools to do it right.

(In Amazon’s case, the company stated “We ship millions of products every week and are confident in the sophisticated technologies and processes we have developed to detect potential shipping hazards.” Even so, there appears to have been a weak link somewhere.)

In fact, according to a survey conducted by Labelmaster and Hazardous Cargo Bulletin — The  Global Dangerous Goods Confidence Outlook — more than one-quarter of the respondents are still doing dangerous goods compliance manually and they’re not even using general shipping or warehouse software or systems provided by carriers.

And to make matters worse, CEOs and other high-level executives don’t fully appreciate the strategic importance and value of dangerous goods compliance. “It’s unfortunate (and risky), but Dangerous Goods often doesn’t get the focus that it deserves, or management just does not fully understand what it takes to be compliant and the overall impact of compliance on the organization,” states the Outlook report. Over one-third of the survey respondents said that their supervisors are unaware of exactly what they do.

Sound familiar? This is the same issue that trade compliance professionals face within their organizations. As I wrote more than three years ago in A New Era for Global Trade Management Software?:

The biggest reason why the GTM software market isn’t larger today is that many manufacturers and retailers still view global trade management as just paperwork. This was true more than a decade ago, when in a think tank I conducted with supply chain executives, a VP of Customs Compliance at a large pharmaceutical company expressed her frustration with the group: “You would never hire someone off the street to manage your finance operations. But that’s exactly what we do to manage our global trade operations. It’s just viewed as paperwork at our company.”

But the problem is actually much broader than that because responsibility for dangerous goods compliance goes beyond a single company; it’s a trading partner network challenge.

According to the Outlook report, “88 percent of DG/hazmat professionals believe that keeping DG secure across the entire supply chain is more important than ever.” However, according to the survey, “there is not much trust in how partners deal with the complexities of DG regulations: 73 percent of the respondents wish others across their supply chain were as compliant as their company.”

E-commerce is only adding to the complexity and challenge, as small mom-and-pop shops and individuals sell all sorts of dangerous goods online (e.g., cell phones, fragrances) without them knowing any of the packaging, labeling, documentation, and other compliance requirements. Simply put, on any given day, there are countless unmarked and/or improperly packaged dangerous goods in transit because small shippers lack the knowledge, training, and systems to execute those shipments correctly.

In my keynote presentation at the conference, I made the case that DG professionals need to adopt a broader and more strategic answer to “What business are you in?” Yes, you’re in the compliance business, and even more importantly, in the business of preventing death and injury. But for whatever reason, that doesn’t seem to grab the attention of C-level executives, nor does the risk for fines, lawsuits, or even jail time.

For most of them, dangerous goods is just paperwork and labels.

Therefore, dangerous goods professionals need shift the focus and conversation. For example, CEOs and CFOs are very focused on growth these days. Can you leverage your dangerous goods knowledge, expertise, and systems to help the company drive revenue growth or increase market share? Can you turn your DG organization from a cost center to a competitive weapon and profit center? The answer is yes, but you first need to learn to speak the language of the CFO — that is, link the value of what you do in dangerous goods to items on the P&L and Balance Sheet. You also need to break down the silos that exist between dangerous goods, logistics, and sales (among other functional areas) and take a more unified and aligned approach to meeting your corporate objectives. And of course, you need to stop relying on manual processes or Excel spreadsheets to manage your dangerous goods operations — simply put, it’s not scalable, effective, or safe anymore.

I’ll end with this cute, yet informative video that Labelmaster put together to kick off the conference. What do you get when you ask a group of kids at a playground about dangerous goods? Watch the video to find out!

For next year’s video, I suggested to the folks at Labelmaster that they should gather a group of CEOs and CFOs at a playground and ask them the same questions. Sadly, I’m willing to bet that their answers wouldn’t be much different from what these kids said.