Have you ever thought about how much improper returns could cost your company? We are not talking about transportation costs. Other costs and liabilities can be very high. One very large retail company was issued 10 fines totaling $360,000 for incorrect returns of batteries. The incident that started the investigation was a fire that destroyed a package delivery truck. This fire was started by an improperly shipped 2 volt wet non-spillable battery. The fines only represent part of the costs. How much money was spent on clean-up, incident damages, internal investigations, employee retraining and legal fees? Are you positive all your returns or the returns sent to your company are being properly declared, packaged, marked and labeled if hazardous? Every battery, no matter how small, must be protected from short circuit. Is this being done in your mailroom, maintenance areas and your shipping and receiving areas?

The US DOT Pipeline Hazardous Materials Safety Administration (PHMSA) has been petitioned to add new regulations on reverse logistics. PHMSA issued an Advanced Notice of Proposed Rulemaking on materials that may be hazardous in reverse logistics. This includes recalled products, retailer or consumer returns or any returned shipment including Consumer Commodity ORM-D. The main issue here is transportation safety. Some of the problems are packages leaking or causing hazardous materials incidents during transportation and how to insure transportation safety.

How big is reverse logistics? Numbers are not easily found. The Reverse Logistics Association estimates reverse logistics is 3-15% of the US Gross National product. That would be 360 billion to 1.8 trillion dollars. The National Retail Federation (NRF) reported that in 2010, 8% of on-line retail sales were returned. That is a large number of returns when you consider the NRF stated over 48% of all US retail goods sold (by value) were sold on-line.

Here are some of the issues PHMSA wants to discuss: People and organizations returning materials who may not have any hazardous materials knowledge or training. Shipping of a hazardous material without having the original packaging or any suitable packaging material. Not knowing how to properly prepare materials for shipment. Not having ability to properly mark, label or document hazardous shipments.

Some employees and consumers may not even realize the material they are about to ship is a hazardous material. Consider a person who orders some flammable paint. This will be shipped to them in compliance with the applicable Hazardous Materials Regulations. The customer opens the can and determines the paint is not the color they want. They now need to return a can of flammable material. Many people probably do not understand what is required of them by law. When they offer the paint to a carrier or the USPS they are subject to the same rules the original shipper was. How many people know how to do this? How do we prevent this can of paint from becoming a hazardous materials incident? 

The stated purpose of this notice is to “identify possible ways to reduce the regulatory burden on retail outlets that ship consumer products containing hazardous materials in the reverse logistics supply chain”. Remember, what DOT or any other government agency thinks is better or easier is not always better or easier. The IRS 1040EZ Form is 2 pages but comes with a 42 page instruction booklet. 

This notice asks for comments. This is your chance to make your opinion known. Write comments or accept what others think is best for you and your company. Speak up before October 3, 2012 or someone in your company, probably a customer service person, will be required to do additional work.

Here are some things to consider. Do we really need a new set of rules applicable only to “reverse logistics”? Is there a way to simplify the regulations we already have so they are easier to understand? 

The Hazardous Materials Regulations already require all offerors of hazardous materials to follow the regulations which include hazardous materials training. The Hazardous Materials Regulations also require US importers to “provide timely and complete written information as to the requirements of this subchapter applicable to the particular shipment” (49 CFR 171.21(f)(1)). So if an importer orders a product that is classified as hazardous in transportation he/she is required to provide “timely and complete written information” (US HM Regulations) on materials shipped to them. Who should be required to provide the same type of information on a hazardous material returned to a vendor, supplier or other organization? Should the hazmat shipper or product manufacturer be made responsible for providing instructions and/or required materials to safely return the materials they sold, shipped or transported? Does the average supply chain professional or consumer really know how to adequately drain fuel from combustible fuel powered equipment? Who is knowledgeable on what must be done? If the customer wants a refund or replacement, they normally contact whomever they bought the product from. Normally customer service provides authorization for the return and instructions on how to return the product. Some people believe having the original seller provide instructions makes the most sense. PHMSA is leaning toward the “original manufacturer”. How would the “original manufacturer” know who purchased a product from a retailer who bought the product from a wholesaler? Who is the proper party to educate the people returning these products? Most parcel carriers will not allow call tags on hazardous materials. They have seen firsthand the dangers of undeclared, improperly prepared packages. Some carriers require a hazardous materials account to ship any hazardous materials other than consumer commodities. Consumers and most companies do not have a carrier hazardous material account.

Consider also some organizations that outsource their reverse logistics functions. How does this affect their liability? Whose name is on the package and the shipping papers? Who is liable if the 3PL or other reverse logistics organization ignores the proposed rules? How should rules be written to include this type of organization? 

The notice asks many other questions. Remember, the US DOT is not a hazardous materials shipper. They need input from shippers, carriers and other regulated entities to formulate regulations that make sense. You can file your own comments or we can add them to the comments Safety Specialists, Inc. will be filing. We are working on an article about how to comment on rulemakings published in the Federal Register. We will post it on our website and blog it out. We have the entire reverse logistics notice posted on our website. Go to www.hazmathelp.com.