It is one of those regulatory scenarios that companies pay trade associations good money to identify, monitor, and, if necessary, head off before it becomes another well-intentioned government rule that spawns unintended consequences.
In late 2013, the Food and Drug Administration (FDA), proposed requirements for shippers, railroads, truckers and receivers involved in the movement of human and animal food to, in the FDA's words, "use sanitary transportation practices" to ensure the hazard-free movement of goods. The FDA acted as part of its implementation of the Sanitary Food Transportation Act of 2005 and the better-known FDA Food Safety Modernization Act signed into law in 2011.
Perhaps reflecting its lack of familiarity with the shipping world, the FDA stressed it had no plans to laden more regulations to current sanitary food transportation practices. Its goal, instead, is to ensure that the status quo doesn't trigger unnecessary risks to food safety. It also proposed a host of exemptions: Any shipper, carrier, or receiver engaged in food transport operations with less than $500,000 in total annual sales would be exempt. The rules would not apply to the movement of "shelf-stable" foods (that is, food that would normally be refrigerated but which can be stored for a long time in a container at room or ambient temperature), live foods, animals, and raw agricultural commodities when transported by farms. Nor would the rules cover intermediaries that arrange for the transportation of the commodities but never touch the freight. The agency reasoned that shippers and consignees should bear responsibility for any transport-related risks since they are intimately familiar with the product and its shipping characteristics.
Still, that didn't stop 150 interested parties from filing comments during the first half of 2014. Most of the comments supported the general thrust of the FDA's proposal, noting that the nation's cold-chain transportation network works remarkably well given its scope and complexity, and that it doesn't need regulatory tinkering. Yet they also made suggestions that would, in their minds, ensure that their respective oxen would not be gored. As the Transportation Intermediaries Association (TIA), the trade group representing many property brokers, put it in a white paper last year: "The best defense is a good offense."
For example, TIA voiced concern about a section in the rules asking stakeholders to suggest "other" groups that should be subject to the requirements. Concerns were also raised over the provision exempting participants with less than $500,000 in total annual sales. England Logistics Inc., a Salt Lake City, Utah-based broker and third-party logistics provider that arranges a large number of food shipments, said the language would effectively nullify the purpose of the regulation because most truck fleets are small operators with sales under the threshold and would likely be exempted. In addition, concerned food shippers could decide to work only with those carriers that are required to be compliant, thus having the unintended effect of forcing many smaller carriers out of the market, England said.
The company also urged the FDA to only require temperature-control requirements as they apply to food safety, not the far more stringent practices that govern food quality control. Commingling the two differing requirements in a final rule would result in a "flood of unnecessary cargo claims and mountains of wasted food," England said.
The warehouse logistics association IWLA, which represents warehouse-based third-party logistics providers (3PLs), urged the FDA to be more specific on who constitutes the shipper in a typical transaction covered by its proposal. The agency has crafted its definition so broadly that it "could include a range of supply chain intermediaries" that have little or no knowledge of the food's characteristics and that rely on the product's owner to provide the information, according to IWLA.
IWLA also had trouble with the FDA's interpretation of a shipper as a party who "initiates" the process of a food shipment. The group questioned whether a warehouseman who removes three pallets of packaged frozen shrimp from the warehouse and prepares it to be loaded on a truck arranged by the product's owner is, in fact, initiating the shipment.
Based on the broad range of comments, the FDA is expected to modify its initial proposal and publish a revised version, according to a brokerage industry source. As it currently stands, the rule would go into effect 60 days from its publication date. Most businesses would have one year from that point to comply. Truckers with less than $25.5 million in annual sales would have two years to comply, under the current proposal.
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