AFGC Supply Chain Seminar Michael Kilgariff

Managing Director - Australian Logistics Council

28 June 2017

The Australian Logistics Council

The Australian Logistics Council

The big change isn’t being talked about…

While much commentary surrounds Amazon and the like, the biggest change to impact the FMCG sector next year will be a regulatory one.

This coming change is receiving far too little attention.

ALC / AFGC Retail Logistics Supply Chain Survey

Conducted in April 2017

Responses received from Transport Managers, Logistics Managers, Supply Chain Managers and Transport Compliance Managers.

Those responding represented organisations of varying sizes in the FMCG sector.

Key Findings – CoR Management Systems

69% stated their organisation’s CoR management systems needed updating, were insufficient, were non-existent or were unsure the system was comprehensive.

Key Findings – CEO Obligations

Over 90% of respondents were unable to say that their Chief Executive Officer ‘fully’ understood their CoR obligations.

Key Findings – Changes to CoR

50% consider that their organisation does not understand the coming changes to CoR obligations.

Key Findings – Barriers to Compliance

The most common response was lack of knowledge and/or understanding at the CEO/senior executive level – and lack of systems was the second most common.

CoR Obligations – The Current Picture

Directors ARE part of the chain under the Heavy Vehicle National Law.

This means they could be found guilty of a breach if a driver speeds or is fatigued when trying to meet deadlines that directors had a role in setting.

Heavy Vehicle National Law (HVNL)

Currently instituted in all states and territories except the Northern Territory and Western Australia.

Governs vehicles over 4.5 tonnes to ensure a safe manner of operation.

Incorporates the ‘Chain of Responsibility’.

Chain of Responsibility Obligations

If you consign, pack, load or receive goods as part of your business, you could be held legally liable for breaches of the Heavy Vehicle National Law.

Corporate entities, directors, partners and managers are accountable for the actions of people under their control.

The aim of the Chain of Responsibility is to make sure everyone in the supply chain shares equal responsibility for ensuring breaches of the law do not occur.

Consigners and Consignees

Consignors and consignees are required to take all reasonable steps to ensure that drivers don’t speed or drive whilst fatigued.

If a driver is found to be in breach of speed and fatigue laws, everyone involved in setting the schedule for the driver is also held to account. The current maximum penalty is $10,000.

This responsibility is extended to directors who either authorised, or knew or ought to have reasonably known about unsafe transport requirements.

What can you do as a director?

Have a well-documented set of procedures requiring

goods to be sent or received in a manner that doesn’t compel a driver to operate illegally.

Institute board reporting mechanisms to measure and oversee the effectiveness of the procedures.

Having in place appropriate procedures will become more important in the future.

The Coming Changes to the Heavy Vehicle

National Law (HVNL) Will impose a primary duty of care on all supply chain

participants to ensure, as far as reasonably practicable, the safety of a ‘road transport operation’.

Executive officers to have primary duties regime applied to

them with the imposition of a positive due diligence obligation.

The legislation is expected to commence mid-2018.

If your company…

operates a heavy vehicle; or loads a heavy vehicle; or drives a heavy vehicle; or sends or receives goods on a heavy vehicle and you

can influence how deliveries are made You will have the same responsibilities to ensure that the Chain of Responsibility under the HVNL is not breached. This reinforces the need to have documented road transport practices and board reporting mechanisms to oversee compliance.

Registered Industry Codes of Practice

ALC is working with the ATA to develop a registered industry Master Code, to provide practical guidance in complying with Chain of Responsibility requirements.

Demonstrating compliance with such codes could be used as evidence that reasonable steps have been taken to ensure the discharge of safety obligations under the Chain of Responsibility

The Master Code

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.

Will help meet and manage the common risks faced by all heavy vehicle operators, and help reduce red-tape and compliance costs.

Establishing a Master Code is a practical way to help all responsible parties manage safety risks.

The National Freight and Supply Chain Strategy

ALC’s top priority before the 2016 election campaign was the

completion of a National Freight and Supply Chain Strategy.

This strategy has also been recommended by Infrastructure

Australia.

Prime Minister Malcolm Turnbull announced such a Strategy

would be developed in November 2016. Work is now underway.

Charting The Course…

Last week, ALC released its

second Working Paper to help

shape the content of the

Strategy.

Further Working Papers will

be published as consultation

continues.

Industry Priorities Are Clear..

Freight movement needs greater consideration in planning policy Preservation of freight transport corridors and employment lands Getting more freight onto rail Better use of data and new technology to improve supply chain

visibility and efficiency Developing a forward-looking approach to road funding

Have your say on the Strategy

Submissions close on 28 July 2017

Needs broadest participation possible to ensure Strategy is as

comprehensive and relevant to industry & economic needs.

Ultimately, improved supply chain safety and efficiency is

in the interests of all consumers.