When considering safety, most businesses in the supply chain focus on the safety of their product, their people and their premises.
Many such businesses don't focus on the safety of their supply chains, assuming that supply chain safety is the responsibility of their suppliers and/or independent transport contractors.
But with changes to the law in October 2018, the Chain of Responsibility (CoR) laws under the Heavy Vehicle National Law make every business in the supply chain responsible for their role in supply chain safety. All businesses in the supply chain can be held liable for on-road breaches of mass, dimension, load restraint, speed, fatigue and vehicle roadworthiness, to the extent that they perform any task or part of a task relating to those matters – and regardless of whether they own or operate a heavy vehicle.
The CoR laws require a new way of thinking about supply chain safety.
Businesses need to consider their role in a shared safety duty aimed at ensuring safe loads, safe drivers and safe vehicles. Likewise, executives of supply chain businesses have an independent duty to exercise due diligence to ensure that their business is doing the right thing.
Those businesses that do not take all reasonably practicable steps to ensure the safety of their transport activities, or who require or put undue pressure on other parties within the supply chain that requires, results in or encourages them to breach a relevant safety standard are routinely prosecuted and fined. Maximum penalties are $3 million for corporations and $300,000 and up to five years in jail for executives.
Some examples of businesses up and down the supply chain being prosecuted include:
- the operator of a green waste loading facility was prosecuted and ordered to pay $982,206 when a transport subcontractor consistently drove out overloaded, despite obtaining weighbridge receipts which indicated that the truck was overloaded and disregarding them
- an importer of manufactured products made and packed into shipping containers in China and its directors were prosecuted and ordered to pay $204,000 when the goods were found to have been improperly restrained within the container
- the operator of scrap steel loading premises was prosecuted and ordered to pay $115,093 when scrap steel that it loaded onto a third party's truck sprung up during transport and caused the truck to become lodged in the Sydney M5 tunnel
- a receiver of grain was prosecuted for receiving overloaded trucks, with potential penalties potentially exceeding $18 million.
Prosecutions and investigations have been brought in, among others, the construction, primary production, consumer products, landscaping, retail, waste and local government sectors.
In our upcoming Transport, Shipping & Logistics seminar in Sydney, we will take a look at the CoR laws and discuss what they cover, who they apply to, what structures and practices are required to be in place to comply with them and look at some case studies to illustrate what to avoid.
Chain of Responsibility compliance is an essential corporate governance and risk item that will be in the regulator's cross-hairs in 2020 and beyond. Every supply chain business or business in which supply chains play a major part should ensure that it is up to speed.
This publication does not deal with every important topic or change in law and is not intended to be relied upon as a substitute for legal or other advice that may be relevant to the reader's specific circumstances. If you have found this publication of interest and would like to know more or wish to obtain legal advice relevant to your circumstances please contact one of the named individuals listed.