Dangerous Goods - managing risks of transport, storage and shipping

Issues concerning freight transport, warehousing and logistics rarelymake the news, let alone the headlines. Paradoxically, whenever theindustry has made the top of the news during recent decades, it has

frequently highlighted the tragic outcome of large-scale failures insafely managing the storage and handling of dangerous goods (DG).

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Massive and Immediate Supply Chain Disruption, often with tragic consequences

T , dhe August 2015 event at Tianjin Port in China cost 173 lives andinjured hundreds more people.

The port facilities were completelyclosed for quite a while and it will takeconsiderably more time for them tofully re-establish normal operations.The resulting disruptions to globalsupply chain ecosystems includesdelays and diversions for inbound andoutbound freight, having adverseimpact for major companies such as DHL, Maersk’s logistics division Damco, Deere & Co, Caterpillar, Airbus, Wal-Mart Stores and Toyota Motor Corporation.

With Tianjin being a global hub for theautomotive sector, Toyota haltedmanufacturing for several days at a plant in Tianjin and also at another operation about 40 miles away that was dependent on receiving parts from the Tianjin factory; the company was reportedly undertaking an in depth review of its exposure and the impact on its broader global supply chain ecosystem.

In November 2015, India’s largest car maker Tata Motors attributed their quarterly loss to a massive one-off hit from the Tianjin gasexplosion, which they quantified as a USD 379 million cost resulting from the chemical blast, in which 5,800 cars had been lost.

Thankfully, such major catastrophic events are rare, no doubt due to the high standards of safety and care generally in place throughout the industry when dangerous goods are being stored, handled and shipped. However even one Tianjin explosion is one disaster too many, with its dramatic impact on people’s lives and global supply chains; not to mention the many but smaller, often unreported, dangerous goods-related incidents that can hitcommunities and businesses.

earthquake in Japan. A Fukushima-based sole-producer of metallic paint pigment was closed down for two months, resulting in the halting of automotive production lines in North America for global leaders such as Ford, Toyota, GM and Honda.

In fact, the massive supply chain disruption emanating from the Tianjin explosions has uncomfortable echoes of March 2013 when leading automotive manufacturers were taken unawares by the ramifications of the 3

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Which materials are at risk?

It’s not just Chemicals

T , dhe level of risk involved and the necessary precautionsdepend not only on the

materials, but their condition and the environment in which they are held.

M any seemingly innocuous dusts also have the ability to catch fire and explode when mixed with air.

They can be found in a diverse range ofindustries - quite apart from the obvious such as chemicals and pharmaceuticals - including food, agricultural products, tobacco, furniture and other wood products, textiles and rubber. Such products include most solid organicmaterials such as sugar, flour, grain, wood,powdered milk, starch, cotton and nylon dust, and less surprisingly coal and carbon-based dusts. Metal dusts at risk include alu minium, iron, manganese, magnesium and sulphur.

The US Government’s HAZMATdefinition of the various types ofdangerous goods representing a "health hazard" or "physical hazard" includes the following:

reproductive toxins, irritants, corrosives, agents that act on the hematopoietic system (stem and blood cells), and agents thatdamage the lungs, skin, eyes or mucousmembranes;

Chemicals that are carcinogens, toxic or highly toxic agents,

Chemicals that, in the course of normal handling, use or storage, may produce or release dusts,gases, fumes, vapours, mists or smoke having any of the above characteristics.

Chemicals that are combustible liquids,compressed gases, explosives,flammable liquids, flammable solids,unstable (reactive) or water-reactive;

Some of these materials are notnormally regarded as combustible, but they can burn or explode if the particlesare the right size and in the rightconcentration. Dust can collect on surfaces such as rafters, roofs, suspended ceilings, ducts, crevices, dust collectors, and other equipment. When the dust is disturbed and under certain circumstances, there is the potential for a serious explosion to occur. The build-up of even a very small amount of dust can cause serious damage.

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HAZMAT:ATEX:REACH:COSSH:DSEAR:UNRTDG:

as above, a generally used acronym for Hazardous Materials and Itemsname given to two European Directives for controlling explosive atmospheresEU legislation on Registration, Evaluation, Authorisation and Restriction of ChemicalsUK term for Control of Substances Hazardous to HealthDangerous Substances and Explosive Atmospheres Regulations 2002UN Recommendations on the Transport of Dangerous Goods.

In addition, companies may also come across other specific frameworks such as the ASEAN Protocol of Dangerous Goods, China’s Chemical Inspection andRegulation Service (CIRS) or the Australian Dangerous Goods Codes(ADGC and ADG7). 5

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Legislative Frameworks

A s might be expected, the rules controlling the management ofdangerous goods and substances - and the related fire and explosionprevention regimes - are extremely rigorous throughout the world.

Understanding the various acronyms is in itself something of a challenge, even before interpreting and implementing their many and often complex requirements, the predominant ones being:

Definitions

T , dhe many and varied pieces of legislation all provide broad rangingdefinitions of what comprise dangerous goods - and the conditions under which they become dangerous, which may include temperature or pressure

parameters, density of the materials, gases or liquids, frequency or likelihood of dangerous scenarios.

For example ATEX regulations divide gases, vapours and mists into three distinct categories according to the frequency and time scale of their presence.

Zone 0 applies where an explosive atmosphere consisting of a mixture of air of dangerous substances in the form of a gas, vapour or mist, is presentcontinuously or for long periods or frequently.

Zone 1 applies where such conditions occur occasionally.

Zone 2 applies where such circumstances are unlikely to occur, but if so, will persist for short periods only.

1. The hazardous properties of the dangeroussubstances involved2. The amounts of each substance3. Work processes that will be carried out, includ-ing any cleaning, repair or maintenance activities 4. The temperatures and pressures at which the dangerous substances will be handled5. Containment systems and controls in place to prevent liquids, gases, vapours or dusts escaping into the general atmosphere of the workplace 6. Any explosive atmosphere formed within any enclosed plant or storage vessel

7. Any measures provided to ensure that anexplosive atmosphere does not persist for anextended time, for example, ventilation systems.

A ll the various forms of legislation in force have integral elements relating to systematic analysis and assessment

of the risks involved.

One leading example is the paper produced by the ASEAN-German Technical Cooperation Group for Sustainable Port Development which listed seven key points when assessing risk, namely:

In addition, any such dangerous goods riskassessment should take into consideration the properties of the substances stored, the size of potential releases, the extent ofhazardous areas and any other operations or considerations that may heighten the risks involved.

To Identify:

Risk Assessment

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What freight forwarders need to know about dangerouscargos

T , dhe dilemma for freight forwarders is that unlike most business activities, they may not come into direct physical

contact with the goods, even though they will be handling the documents and passing oninstructions to those parties who are handling the goods. So it is absolutely vital that alldocuments are prepared accurately and that the goods are packed appropriately.

The first step is of course for the freightforwarder to know and recognise that the goods presented for carriage are or may be hazardous materials requiring dangerous goods classification. Many products have ‘DG’ classification; however it is not alwayspossible to know this from the basicdescription of the products as provided on the documents.

The manufacturer or shipper has the prime responsibility for correctly classifying, packing and documenting dangerous goods, but the forwarder needs to be acutely aware of all the relevant details - and to raise questionsappropriately.

It’s important to note that different countries may use different symbols to describe and identify the same hazardous materials.Nevertheless, staff should be trained toidentify dangerous goods and be aware of what may lie behind a plethora of different trade names, in order to understand the risks involved and therefore what precautions need to be taken.

Each mode of transport has its own requirements and regulations. As multi-modal transport specialists, freight forwarders are expected to have a professionalunderstanding that the carriage of dangerous goods is subject to compliancewith national and international regulations, such as:

The US Department of Transportation’s Pipeline and Hazardous Materials Safety Administration provides a valuable and practical on-line guide for freightforwarders, forwarding agents and warehousing companies. Their guidelinesinclude the following three key points:

International Maritime Dangerous Goods Code

International Civil Aviation Organisation (ICAO)

Carriage of Dangerous Goods and Use of Transportable Pressure Equipment Regulations 2009 (CDG 2009) which apply to the carriage of dangerous goods by road, rail and internal European Union waterways

European Agreement concerning the International Carriage of Dangerous Goods by Road known as ADR and incorporated into CDG 2009

1. Know your shipper, the kind of HAZMATS involved and their quantity, which involves more than just taking documents on face value. Visually check the consignment for damage, unsuitable packaging or other possible infringements2. Make sure the HAZMAT description matches the proper shipping name, class or division. Look for an emergency response number.3. Advise the shipper of ANY discrepancies and remember it is the freight forwarder or agent’s responsibility to correct any error or paperwork before the goods are moved.

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Business opportunities forSME forwarders

W , hilst many of the giants of the freight forwarding world provide specialist Hazardous Goods freight

services, there are still significantopportunities for smaller local, regional ornational logistics companies and freightforwarders to develop profitable businesses.

Not least because the level of investment and expertise makes it easier to justify moreattractive tariffs - away from the hurly-burlyjungle of the often commoditised price-per-container or price-per-kilocompetitive landscape.

Nimble organisations with appropriate DG expertise are strategically well-placed to take advantage of grass-roots local knowledge, working with networks of proven and reliable partners who know their territories, favourable

Within the world of internationally recognised dangerous goods there is a huge diversity and variety of materials, each of which require specific and individual handling. This provides the potential for a more niche or boutique approach that plays to the advantages of the smaller, specialist freight service provider that is typically agile, flexible and very customer focused.

routes and have first-hand familiarity with national variations in legislative custom and practice.

By specialising in related sectors such asPharmaceuticals, Fuel and Petroleumproducts, Paint and Varnishes or Gases, the specialist shipping and freight transport provider is able to offer an even more bespoke, knowledgeable and expert service.

Every client using a transportation service provider seeks assurance, service and peace of mind and no-where does this apply more than when one organisation places thestorage and transport of dangerous goods into the hands of another.

Clients have engaged Mark Millar as Speaker, Moderator, MC or Conference Chairman at more than 350 corporate events, client functions and industry conferences across 23 countries.

He is the author of Global Supply Chain Ecosystems - commissioned and published by Kogan Page of London - in which he presents detailed and practical insights that help companies capitalise on market opportunities, overcome supply chain challenges and make better informed business decisions.

Mark is a Visiting Lecturer at Hong Kong Polytechnic University and is recognised in the ‘China Supply Chain Top 20’, as one of ‘Asia’s Top 50 Influencers in Supply Chain and Logistics’ and in the 2014USA listing of ‘Top Pros-to-Know in Supply Chain’.www.markmillar.com

But more than ever rigorous vigilance is the watchword to keep ports, industries, towns and communities safe.

The risks involved with dangerous goodscargo are much higher for both parties but considering the many tonnes of such

Summarymaterials moved around the globe each day, the low number and scale of incidents is areassuring reflection of the high standardsimposed on and by the industry - and theefficiency of logistics providers in maintaining those standards.

We are proud to announce that we have signed a memorandumof understanding with industry thought leader Mark Millar.

The purpose of whitepapers is to provide you insightfor innovative business development.

Industry thought leader Mark Millar has been engaged byclients as Speaker, MC, Moderator or Conference Chairmanat more than 250 events in 20 countries and is recognized

by the Global Institute of Logistics as “One of the mostProgressive People in World Logistics”