Reverse logistics operations are particularly prone to hazmat violations because employees aren't always aware they're handling hazardous goods. Here's how to minimize risk to your operation.
Contributing Editor Toby Gooley is a writer and editor specializing in supply chain, logistics, and material handling, and a lecturer at MIT's Center for Transportation & Logistics. She previously was Senior Editor at DC VELOCITY and Editor of DCV's sister publication, CSCMP's Supply Chain Quarterly. Prior to joining AGiLE Business Media in 2007, she spent 20 years at Logistics Management magazine as Managing Editor and Senior Editor covering international trade and transportation. Prior to that she was an export traffic manager for 10 years. She holds a B.A. in Asian Studies from Cornell University.
It's no secret that managing the product returns supply chain is different from handling the traditional outbound, or "forward" logistics, function—a fact that makes "reverse logistics" daunting to many practitioners.
You can add this to the list of challenges: Many returns contain hazardous materials, an inconvenient truth that often goes unnoticed by retailers.
For manufacturers, this is generally not a problem. They know their products' properties and handle returns in compliance with the laws and regulations that govern hazmat transportation, distribution, and storage. Retailers' employees, though, don't always recognize the potential hazards inherent in some consumer products. As a result, they may unknowingly violate federal laws and regulations.
Such ignorance puts companies at risk for penalties, lawsuits, employee injury, and property damage. And the risk isn't going away. Due to retailers' increasingly liberal returns policies, the volume of hazardous consumer goods in the reverse logistics stream is likely to increase, according to experts. Consumers' "voracious appetite for consumer electronics and the shrinking lifespan of these devices" means that hundreds of millions of potentially hazardous products are returned or discarded annually on a worldwide basis, says Joe King, vice president of sales, aftermarket solutions, for third-party logistics service provider ModusLink.
That's why it's more important than ever that reverse logistics operations be fully compliant with hazmat laws and regulations, not only at the warehouse or returns center but also at the retail store level. Costly though that may be, the potential consequences of failing to ensure compliance—possibly life-threatening injuries to employees and customers, lawsuits, enormous fines, and damage to facilities—are far worse.
Here's a look at the extent of this troubling situation, the reasons behind it, and what can be done about it.
For more information ...
Here are some resources for information on reverse logistics for hazardous products.
The Council on Safe Transportation of Hazardous Articles (COSTHA), an industry association that promotes regulatory compliance and safety, has launched a reverse logistics initiative and is working with retailers and government agencies to improve awareness, safe handling, and regulatory compliance. The group's recommendations to the U.S. Department of Transportation are available on its website.
The American Public University, an online educational institution, and its associated American Military University, periodically offer courses on reverse logistics, including one for hazardous materials. For details, click here and here.
The Dangerous Goods Advisory Council advocates for responsible regulation and safe transportation of dangerous goods. Note: The organization's website is being revamped, so some information about training and other services may be temporarily unavailable.
Wait—that's hazardous?
A surprising number of consumer products are regulated as hazardous materials. Some, like household cleaners and solvents, are fairly obvious, says Keith Anderson, senior director of regulatory compliance for Inmar, a third-party logistics company. But the average person may not think of items like health and beauty care products, aerosols, and batteries as hazardous, he says.
Most consumer electronics, including televisions, cameras, mobile handsets, computer monitors, and printers, contain materials that could be considered hazardous, says King. "Televisions, for example, are built with electronic circuit boards, glass, and color cathode ray tubes (CRTs), which often contain hazardous materials such as lead and mercury, as well as lesser-known toxins like cadmium, chromium, antimony, beryllium, and brominated flame retardants," he explains.
Sometimes only parts of consumer goods are subject to regulation, says Robert Jaffin, who teaches an online course in hazmat reverse logistics for the American Public University. Seemingly innocuous components like the toner in printer cartridges or the ink in dry-erase markers become a health and regulatory risk when a commercial entity accepts them as returned goods, he says.
Some items that were not subject to regulation when purchased by the consumer may be hazardous when they are returned, notes Jack Currie, administrator of the Council on Safe Transportation of Hazardous Articles (COSTHA) and president of the regulatory compliance firm Currie Associates. Examples include construction, camping, and lawn and garden equipment powered by gasoline, kerosene, or propane. If these machines have been used, then there will be fuel, oil, and—most dangerous of all—volatile vapor in the fuel tanks, fuel lines, and engines, he says.
Regulated products that were properly packaged, documented, and handled when shipped to a retailer's distribution center often aren't recognized as hazmats when consumers return them. That's partly due to a lack of awareness among store associates, many of whom are working in part-time, seasonal, or high-turnover positions and may not have been fully trained in hazmat regulatory compliance or even overlooked altogether.
As a result, Currie says, it's common for customer service or stockroom associates to toss hazardous (and frequently incompatible) items in any handy cardboard box or returnable tote, and then return them—undeclared, unprotected, and often mislabeled—to a warehouse or distribution center.
The presence of hazardous materials in returned consumer goods poses both legal and safety risks for reverse logistics operations, experts say. However, steps can be taken to minimize those risks and comply with applicable regulations. While not a comprehensive list, the following tips from the experts we consulted for this article can get a company headed in the right direction:
Follow the same hazmat policies and procedures you use in forward logistics in your reverse logistics operations. All of the legal and safety requirements that apply to outbound shipments also apply to returns. That includes documentation, labeling, packaging, transportation, mitigation and safety plans, and training, Anderson says. Make sure the returned-goods areas of facilities have the necessary safety equipment, and that insurance coverage reflects these hazmat-related activities and conditions, Jaffin advises.
Train the right people. Experts recommend that anybody who could be called on to handle returned consumer goods, whether at a customer service desk, in a stockroom, in transportation, or at the warehouse or returns center, receive job-appropriate hazmat safety training.
Teach employees to recognize "red flags." Rather than focus on specific products, think in terms of categories that are likely to contain hazardous materials. Employees should know, for example, that all lighting, aerosols, home electronics, cleaning supplies, pet care products, perfumes and nail polishes, and lawn and garden care products—to name just a few—could contain hazardous materials, and they should handle all such returns accordingly.
Pay attention to packaging. Whether at the customer service desk, in the stockroom, or at the shipping dock, employees need to know they can't randomly toss an assortment of items into any available box, Currie says. Returned consumer goods containing hazardous materials must be properly packaged and secured in accordance with Department of Transportation (DOT) regulations before they're sent to a warehouse or returns center. Jaffin points out that companies are required by law to report improperly packaged hazmat shipments to DOT. "You have accepted considerable responsibility if you receive and open those shipments," he warns.
Segregate incompatible merchandise. Train store and stockroom associates to separate products that could produce a dangerous reaction. Currie cites one case where retail associates shipped a drum containing water-activated fumigants together with bottles of cleaning fluids to a returns center. A single leak would have released toxic gas—with potentially fatal consequences for anyone who opened the drum at the warehouse. And don't package food or consumables with "ORM-D" items—consumer packaged goods classified as hazardous by DOT. Because of the risk of contamination, the consumables may no longer be fit for use and will have to be destroyed.
Be aware that some returned consumer goods must be treated as hazardous waste. Because returned items that are leaking, damaged, or have expired must sometimes be classified as hazardous waste, a hazardous waste program should be in place at the retail location, DC, and reverse logistics operation, recommends Anderson of Inmar. That will require registration as a hazardous waste generator, employee training, a designated hazardous waste storage area, and compliance with a number of specific regulatory requirements.
Send in the experts. Even with training, retail associates who handle customer returns may need additional support to ensure they're complying with all of the applicable regulations. Some consumer product manufacturers help out by providing approved packaging and instructions for returns, while some power equipment makers send out contractors to clean fuel systems in returned merchandise before it's shipped anywhere. Consider sending consultants, third-party logistics specialists, or your own in-house experts to conduct audits and train associates at the store level. Or you may decide to hand returns management over to a third party. But don't assume that all reverse logistics services are handling your materials properly, cautions King of ModusLink. Ask for copies of documented procedures—not just for direct providers, but also for their vendors, he says.
Economic activity in the logistics industry expanded in January, growing at its fastest clip in more than two years, according to the latest Logistics Managers’ Index (LMI) report, released this week.
The LMI jumped nearly five points from December to a reading of 62, reflecting continued steady growth in the U.S. economy along with faster-than-expected inventory growth across the sector as retailers, wholesalers, and manufacturers attempted to manage the uncertainty of tariffs and a changing regulatory environment. The January reading represented the fastest rate of expansion since June 2022, the LMI researchers said.
An LMI reading above 50 indicates growth across warehousing and transportation markets, and a reading below 50 indicates contraction. The LMI has remained in the mid- to high 50s range for most of the past year, indicating moderate, consistent growth in logistics markets.
Inventory levels rose 8.5 points from December, driven by downstream retailers stocking up ahead of the Trump administration’s potential tariffs on imports from Mexico, Canada, and China. Those increases led to higher costs throughout the industry: inventory costs, warehousing prices, and transportation prices all expanded to readings above 70, indicating strong growth. This occurred alongside slowing growth in warehousing and transportation capacity, suggesting that prices are up due to demand rather than other factors, such as inflation, according to the LMI researchers.
The LMI is a monthly survey of logistics managers from across the country. It tracks industry growth overall and across eight areas: inventory levels and costs; warehousing capacity, utilization, and prices; and transportation capacity, utilization, and prices. The report is released monthly by researchers from Arizona State University, Colorado State University, Rochester Institute of Technology, Rutgers University, and the University of Nevada, Reno, in conjunction with the Council of Supply Chain Management Professionals (CSCMP).
As commodities go, furniture presents its share of manufacturing and distribution challenges. For one thing, it's bulky. Second, its main components—wood and cloth—are easily damaged in transit. Third, much of it is manufactured overseas, making for some very long supply chains with all the associated risks. And finally, completed pieces can sit on the showroom floor for weeks or months, tying up inventory dollars and valuable retail space.
In other words, the furniture market is ripe for disruption. And John "Jay" Rogers wants to be the catalyst. In 2022, he cofounded a company that takes a whole new approach to furniture manufacturing—one that leverages the power of 3D printing and robotics. Rogers serves as CEO of that company, Haddy, which essentially aims to transform how furniture—and all elements of the "built environment"—are designed, manufactured, distributed, and, ultimately, recycled.
Rogers graduated from Princeton University and went to work for a medical device startup in China before moving to a hedge fund company, where he became a Chartered Financial Analyst (CFA). After that, he joined the U.S. Marine Corps, serving eight years in the infantry. Following two combat tours, he earned an MBA from the Harvard Business School and became a consultant for McKinsey & Co.
During this time, he founded Local Motors, a next-generation vehicle manufacturer that launched the world's first 3D-printed car, the Strati, in 2014. In 2021, he brought the technology to the furniture industry to launch Haddy. The father of four boys, Rogers is also a director of the RBR Foundation, a philanthropic organization focused on education and health care.
Rogers spoke recently with DC Velocity Group Editorial Director David Maloney on an episode of the "Logistics Matters" podcast.
Q: Could you tell us about Haddy and how this unique company came to be?
A: Absolutely. We have believed in the future of distributed digital manufacturing for a long time. The world has gone from being heavily globalized to one where lengthy supply chains are a liability—thanks to factors like the growing risk of terrorist attacks and the threat of tariffs. At the same time, there are more capabilities to produce things locally. Haddy is an outgrowth of those general trends.
Adoption of the technologies used in 3D printing has been decidedly uneven, although we do hear about applications like tissue bioprinting and food printing as well as the printing of trays for dental aligners. At Haddy, we saw an opportunity to take advantage of large-scale structural printing to approach the furniture and furnishings industry. The technology and software that make this possible are already here.
Q: Furniture is a very mature market. Why did you see this as a market that was ripe for disruption?
A:The furniture market has actually been disrupted many times in the last 200 years. The manufacturing of furniture for U.S. consumption originally took place in England. It then moved to Boston and from there to New Amsterdam, the Midwest, and North Carolina. Eventually, it went to Taiwan, then China, and now Vietnam, Indonesia, and Thailand. And each of those moves brought some type of disruption.
Other disruptions have been based on design. You can look at things like the advent of glue-laminated wood with Herman Miller, MillerKnoll, and the Eames [furniture design and manufacturing] movement. And you can look at changes in the way manufacturing is powered—the move from manual operations to machine-driven operations powered by steam and electricity. So the furniture industry has been continuously disrupted, sometimes by labor markets and sometimes by machines and methods.
What's happening now is that we're seeing changes in the way that labor is applied in furniture manufacturing. Furniture has traditionally been put together by human hands. But today, we have an opportunity to reassign those hands to processes that take place around the edges of furniture production. The hands are now directing robotics through programming and design; they're not actually making the furniture.
And so, we see this mature market as being one that's been continuously disrupted during the last 200 years. And this disruption now has a lot to do with changing the way that labor interacts with the making of furniture.
Q: How do your 3D printers actually create the furniture?
A:All 3D printing is not the same. The 3D printers we use are so-called "hybrid" systems. When we say hybrid, what we mean is that they're not just printers—they are holders, printers, polishers, and cutters, and they also do milling and things like that. We measure things and then print things, which is the additive portion. Then we can do subtractive and polishing work—re-measuring, moving, and printing parts again. And so, these hybrid systems are the actual makers of the furniture.
Q: What types of products are you making?
A: We've started with hardline or case goods, as they're sometimes known, for both residential and commercial use—cabinets, wall bookshelves, freestanding bookshelves, tables, rigid chairs, planters, and the like. Basically, we've been concentrating on products that don't have upholstery.
It's not that upholstery isn't necessary in furniture, as it is used in many pieces. But right now, we have found that digital furniture manufacturing becomes analog again when you have to factor in the sewing process. And so, to move quickly and fully leverage the advantages of digital manufacturing, we're sticking to the hardline groups, except for a couple of pieces that we have debuted that have 3D-printed cushions, which are super cool.
Q: Of course, 3D printers create objects in layers. What types of materials are you running through your 3D printers to create this furniture?
A: We use recycled materials, primarily polymer composites—a bio-compostable polymer or a synthetic polymer. We look for either recycled or bio-compostable [materials], which we then reinforce with fibers and fillers, and that's what makes them composites. To create the bio-compostables, we marry them with bio-fibers, such as hemp or bamboo. For synthetic materials, we marry them with things like glass or carbon fibers.
Q: Does producing goods via 3D printing allow you to customize products easily?
A: Absolutely. The real problem in the furniture and furnishings industries is that when you tool up to make something with a jig, a fixture, or a mold, you tend to be less creative because you now feel you have to make and sell a lot of that item to justify the investment.
One of the great promises of 3D printing is that it doesn't have a mold and doesn't require tooling. It exists in the digital realm before it becomes physical, and so customization is part and parcel of the process.
I would also add that people aren't necessarily looking for one-off furniture. Just because we can customize doesn't mean we're telling customers that once we've delivered a product, we break the digital mold, so to speak. We still feel that people like styles and trends created by designers, but the customization really allows enterprise clients—like businesses, retailers, and architects—to think more freely.
Customization is most useful in allowing people to "iterate" quickly. Our designers can do something digitally first without having to build a tool, which frees them to be more creative. Plus, because our material is fully recyclable, if we print something for the first time and find it doesn't work, we can just recycle it. So there's really no penalty for a failed first printing—in fact, those failures bring their own rewards in the form of lessons we can apply in future digital and physical iterations.
Q: You currently produce your furniture in an automated microfactory in Florida, with plans to set up several more. Could you talk a little about what your microfactory looks like and how you distribute the finished goods?
A: Our microfactory is a 30,000-square-foot box that mainly contains the robots that make our furniture along with shipping docks. But we don't intend for our microfactories to be storage warehouses and trans-shipment facilities like the kind you'd typically see in the furniture industry—all of the trappings of a global supply chain. Instead, a microfactory is meant to be a site where you print the product, put it on a dock, and then ship it out. So a microfactory is essentially an enabler of regional manufacturing and distribution.
Q: Do you manufacture your products on a print-to-order basis as opposed to a print-to-stock model?
A: No. We may someday get to the point where we receive an order digitally, print it, and then send it out on a truck the next day. But right now, we aren't set up to do a mini-delivery to one customer out of a microfactory.
We are an enterprise company that partners with architects, designers, builders, and retailers, who then distribute our furnishings to their customers. We are not trying to go direct-to-consumer at this stage. It's not the way a microfactory is set up to distribute goods.
Q: You've mentioned your company's use of recycled materials. Could you talk a little bit about other ways you're looking to reduce waste and help support a circular economy?
A: Yes. Sustainability and a circular economy are really something that you have to plan for. In our case, our plans call for moving toward a distributed digital manufacturing model, where we establish microfactories in various regions around the world to serve customers within a 10-hour driving radius of the factory. That is a pretty large area, so we could cover the United States with just four or five microfactories.
That also means that we can credibly build our recycling network as part of our microfactory setup. As I mentioned, we use recycled polymer stock in our production, so we're keeping that material out of a landfill. And then we tell our enterprise customers that while the furniture they're buying is extremely durable, when they're ready to run a special and offer customers a credit for turning in their used furniture, we'll buy back the material. Buying back that material actually reduces our costs because it's already been composited and created and recaptured. So our microfactory network is well designed for circularity in concert with our enterprise customers.
Generative AI (GenAI) is being deployed by 72% of supply chain organizations, but most are experiencing just middling results for productivity and ROI, according to a survey by Gartner, Inc.
That’s because productivity gains from the use of GenAI for individual, desk-based workers are not translating to greater team-level productivity. Additionally, the deployment of GenAI tools is increasing anxiety among many employees, providing a dampening effect on their productivity, Gartner found.
To solve those problems, chief supply chain officers (CSCOs) deploying GenAI need to shift from a sole focus on efficiency to a strategy that incorporates full organizational productivity. This strategy must better incorporate frontline workers, assuage growing employee anxieties from the use of GenAI tools, and focus on use-cases that promote creativity and innovation, rather than only on saving time.
"Early GenAI deployments within supply chain reveal a productivity paradox," Sam Berndt, Senior Director in Gartner’s Supply Chain practice, said in the report. "While its use has enhanced individual productivity for desk-based roles, these gains are not cascading through the rest of the function and are actually making the overall working environment worse for many employees. CSCOs need to retool their deployment strategies to address these negative outcomes.”
As part of the research, Gartner surveyed 265 global respondents in August 2024 to assess the impact of GenAI in supply chain organizations. In addition to the survey, Gartner conducted 75 qualitative interviews with supply chain leaders to gain deeper insights into the deployment and impact of GenAI on productivity, ROI, and employee experience, focusing on both desk-based and frontline workers.
Gartner’s data showed an increase in productivity from GenAI for desk-based workers, with GenAI tools saving 4.11 hours of time weekly for these employees. The time saved also correlated to increased output and higher quality work. However, these gains decreased when assessing team-level productivity. The amount of time saved declined to 1.5 hours per team member weekly, and there was no correlation to either improved output or higher quality of work.
Additional negative organizational impacts of GenAI deployments include:
Frontline workers have failed to make similar productivity gains as their desk-based counterparts, despite recording a similar amount of time savings from the use of GenAI tools.
Employees report higher levels of anxiety as they are exposed to a growing number of GenAI tools at work, with the average supply chain employee now utilizing 3.6 GenAI tools on average.
Higher anxiety among employees correlates to lower levels of overall productivity.
“In their pursuit of efficiency and time savings, CSCOs may be inadvertently creating a productivity ‘doom loop,’ whereby they continuously pilot new GenAI tools, increasing employee anxiety, which leads to lower levels of productivity,” said Berndt. “Rather than introducing even more GenAI tools into the work environment, CSCOs need to reexamine their overall strategy.”
According to Gartner, three ways to better boost organizational productivity through GenAI are: find creativity-based GenAI use cases to unlock benefits beyond mere time savings; train employees how to make use of the time they are saving from the use GenAI tools; and shift the focus from measuring automation to measuring innovation.
According to Arvato, it made the move in order to better serve the U.S. e-commerce sector, which has experienced high growth rates in recent years and is expected to grow year-on-year by 5% within the next five years.
The two acquisitions follow Arvato’s purchase three months ago of ATC Computer Transport & Logistics, an Irish firm that specializes in high-security transport and technical services in the data center industry. Following the latest deals, Arvato will have a total U.S. network of 16 warehouses with about seven million square feet of space.
Terms of the deal were not disclosed.
Carbel is a Florida-based 3PL with a strong focus on fashion and retail. It offers custom warehousing, distribution, storage, and transportation services, operating out of six facilities in the U.S., with a footprint of 1.6 million square feet of warehouse space in Florida (2), Pennsylvania (2), California, and New York.
Florida-based United Customs Services offers import and export solutions, specializing in remote location filing across the U.S., customs clearance, and trade compliance. CTPAT-certified since 2007, United Customs Services says it is known for simplifying global trade processes that help streamline operations for clients in international markets.
“With deep expertise in retail and apparel logistics services, Carbel and United Customs Services are the perfect partners to strengthen our ability to provide even more tailored solutions to our clients. Our combined knowledge and our joint commitment to excellence will drive our growth within the US and open new opportunities,” Arvato CEO Frank Schirrmeister said in a release.
And many of them will have a budget to do it, since 51% of supply chain professionals with existing innovation budgets saw an increase earmarked for 2025, suggesting an even greater emphasis on investing in new technologies to meet rising demand, Kenco said in its “2025 Supply Chain Innovation” survey.
One of the biggest targets for innovation spending will artificial intelligence, as supply chain leaders look to use AI to automate time-consuming tasks. The survey showed that 41% are making AI a key part of their innovation strategy, with a third already leveraging it for data visibility, 29% for quality control, and 26% for labor optimization.
Still, lingering concerns around how to effectively and securely implement AI are leading some companies to sidestep the technology altogether. More than a third – 35% – said they’re largely prevented from using AI because of company policy, leaving an opportunity to streamline operations on the table.
“Avoiding AI entirely is no longer an option. Implementing it strategically can give supply chain-focused companies a serious competitive advantage,” Kristi Montgomery, Vice President, Innovation, Research & Development at Kenco, said in a release. “Now’s the time for organizations to explore and experiment with the tech, especially for automating data-heavy operations such as demand planning, shipping, and receiving to optimize your operations and unlock true efficiency.”
Among the survey’s other top findings:
there was essentially three-way tie for which physical automation tools professionals are looking to adopt in the coming year: robotics (43%), sensors and automatic identification (40%), and 3D printing (40%).
professionals tend to select a proven developer for providing supply chain innovation, but many also pick start-ups. Forty-five percent said they work with a mix of new and established developers, compared to 39% who work with established technologies only.
there’s room to grow in partnering with 3PLs for innovation: only 13% said their 3PL identified a need for innovation, and just 8% partnered with a 3PL to bring a technology to life.