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May 30, 2016 4:00 AM, EDT

Opinion: FSMA Regulations to Drive Change

This Opinion piece appears in the May 30 print edition of Transport Topics. Click here to subscribe today.

By Andrew Lynch

Co-founder and President

Zipline Logistics

The Food and Drug Administration’s new rules on sanitary transportation of human and animal food products have many third-party logistics providers concerned about liability. With the rules defining brokers as shippers, many 3PLs may soon become responsible for requirements tied to equipment, training and record keeping — all things they haven’t been accountable for in the past.

The big-box 3PLs and their lobbyists claim they shouldn’t be legally responsible because they don’t directly touch food products and “just arrange freight.”

It’s certainly a slippery slope for legal accountability, but responsibility is undoubtedly shared among shippers, carriers and brokers. Food safety doesn’t start or stop with one party.

Lynch

We’ve seen somewhat similar dissatisfaction and debate before. When safety performance scores for motor carriers were removed from public view earlier this year, the waters around liability got a bit muddy. Many asked, “How can 3PLs meet Compliance, Safety, Accountability goals without an evaluation metric?” But the Department of Transportation safety data were never even close to robust or consistent enough to be a true measure of carrier performance and safety on their own. Even before the enactment of CSA, building out a proprietary carrier qualification program shouldn’t have been a burden taken on to avoid liability, but an opportunity to use a combination of available data and tools to create a carrier network specially qualified to meet client needs.

Just like the volatile safety regulations of the past decade, the Food Safety Modernization Act rules will bring a new level of accountability — and a new wave of opportunity for specialists in the transportation marketplace. Generalist brokerages will need to decide to either invest in new processes that ensure safety and regulation compliance or choose to stop shipping food products. Just arranging freight can’t be an acceptable business practice for those who wish to participate in specialized transportation demographics. For the specialized incumbents, communicating and upholding food-safety standards has always been a given. For generalists, this likely means a lot of work. But treating laws that were put in place to better the market and increase food safety as a burden and not an opportunity is a poor approach.

Food and beverage transportation specialists already are operating with many of these sanitation requirements as part of their standard operating procedures. Clearly communicating vehicle preparation, product handling, transit temperature, necessary paperwork and other key requirements is what they do every day. This part of the job is very serious. Without organizational process standards and thorough communication, it would be extremely difficult to ensure that all precautionary protocols are taken.

Third-party logistics providers should be answerable to what carriers they use for customer shipments. Choosing the right transporter is arguably the most important and basic principle of the job. As middlemen, 3PLs must ensure the conditions required by a customer reach the party who will be transferring their product. When these requirements aren’t communicated properly, risk for contamination immediately increases.

Shippers will need to either play a bigger role in sanitation monitoring or work with a 3PL that has extensive knowledge of food-safety requirements. This is where the mentality of partnerships must take over. Rather than pushing blame onto other involved parties, 3PLs, shippers and carriers must step up and help each other navigate the shifting regulations. Talk with each other about the new laws. What are each of you doing to comply? Is everyone educated on what’s happening? Can you provide any additional information with shipments? Is there a need to change protocols? To answer these questions, work together to find solutions to better ensure food and beverage transportation safety, expect revised contracts or procedures and pay close attention to updated liability language.

As a result of FSMA, the market will be heavily motivated to further specialize.

The 2016 Third-Party Logistics Study from the Council of Supply Chain Management Professionals states, “Most 3PLs are achieving a better focus on what they do best and on what core competencies they can provide to enhance the functioning of customer supply chains.” Already moving in the direction of specialization, the new safety rules may act as the ultimate catalyst.

No one can (or should) try to ship everything — 3PLs and carriers alike. To prevent contamination, spoilage and other detrimental food-chain issues, it will become even more important to work with partners who know your industry, your products and the rules to which you’re held accountable. Deeper specialization, more business consolidation and an overall push for change in coming months and years are expected. With food shipments now requiring extra attention, fewer 3PLs are expected to participate and take the risk.

There is no fault in making this decision. Successful businesses must focus on what they do well and put their energy and resources there. Investing time and money into unfruitful areas of an organization will never result in sustainable growth. This fact supports predictions for further specialization as the market continues to innovate and grow.

It is the responsibility of all involved parties to manage food and product safety — 3PLs, shippers and carriers — even though how the liability issues from FSMA will play out is yet to be seen.

Zipline Logistics is a specialized 3PL that exclusively serves retail and food and beverage customers.