Since, exporters do not have control over these transport hazards, they safeguard their interests with insurance. Learn more about Cargo Insurance.
This said, there is one other reason that can lead to accidents or incidents on goods carriers. Like the other causes, this can also cause damage to other cargo on the carrier, the land and property nearby, and hurt the crew or people on board. It is presence of “dangerous goods” or “hazardous cargo” on the carrier. Unlike all the other reasons mentioned above, this can be, to an extent, controlled by the exporter.
Damages or accidents due to hazardous nature of cargo on board is something that exporters can minimize by ensuring that they follow all the rules and procedures laid down with respect to packaging, transportation, and declaration of hazardous cargo.
What are Dangerous Goods or Hazardous Cargo?
The United Nations Economic and Social Council (ECOSOC), under the UN Model Regulations has provided UN Recommendations On The Transport of Dangerous Goods. These recommendations provide guidelines for transportation of dangerous goods by all means of transportation apart from bulk tanker.
The Business Dictionary provides a short explanation of how the UN recommendations have defined dangerous goods. According to the definition, dangerous goods cover “articles or materials capable of posing significant risk to people, health, property, or environment when transported in quantity.”
Dangerous or Hazardous goods include various chemical substances, radioactive materials, firearms, fireworks, and ammunition to name a few.
The materials that have been identified as dangerous substances have been further classified into 9 groups/classes and sub classes. The main 9 classes and a few examples of each are given below:
Class 1 – Explosives
Class 2 – Gases
c. Natural Gas
d. Carbon di oxide
Class 3 – Flammable Liquids
Class 4 – Flammable Solids
Class 5 – Oxidising Substances and Organic Peroxides
a. Hydrogen peroxide
c. Lead nitrate
Class 6 – Toxic and infectious substances; Poisons
Class 7 – Radioactive Material
Class 8 – Corrosive Substances
c. Nitric Acid
Class 9 – Miscellaneous Dangerous Substances and Articles, including Environmentally Hazardous Substances
a. Ammonium Nitrate
All the goods listed under each of the above classes are given a UN Number and Name for easy identification that needs to be used while creating the transportation documents.
Although, it is not compulsory for countries to follow/implement this classification or the rules laid down by the UN, these guidelines have come to be accepted globally and are also followed by the authorities governing the various transportation modes internationally.
Who Frames the Rules for Air and Sea Transportation?
The shipping industry has established the International Maritime Dangerous Goods Code or the IMDG Code. These guidelines have been made mandatory for all those who are associated with the shipping industry. They apply to the shipping lines, exporters and importers, and allied service providers. These codes are updated every two years and provide instructions on how the dangerous or hazardous cargo is to be packed, labelled, handled, and stowed on board.
The latest update happened in 2016. It will be put into effect from 1st January, 2018. However, the industry can use the revised codes from 1st January, 2017.
For transportation of dangerous goods by air, International Air Transport Association (IATA) puts together the rules and regulations.
Like the rules laid down for Air and Sea transport, the Container Corporation of India has also laid down rules for handling dangerous goods/containers containing hazardous material. These rules are to be followed by all entities that are using the services of CONCOR.
How Exporters Can Help Minimize Shipping Hazards
While dealing with dangerous goods or hazardous cargo, it is important to follow the guidelines and rules that have been established by the various authorities.
Some Rules that Exporters Must Follow:
1. Packaging: For any cargo, packaging is of utmost importance. Good packaging ensures that the cargo reaches the destination in a good condition and does not lose its saleability. For dangerous cargo, packaging becomes even more important as the safety of the cargo, other shipments on board and the carrier are dependent on it.
While packaging such cargo, exporters must ensure that they follow the guidelines laid down for packaging of the specific substance, the material is of good quality, the weight or volume of the package is in accordance with the guidelines (should not be over packed), and that there are no leakages or openings in the packaging. This check must be done for both the primary packaging and the secondary packaging of the cargo.
2. Marking and Labelling: Again, extremely important. All dangerous or hazardous cargo must be labelled with the correct description of the cargo, the classification and the listed UN number. The package should also be marked with the correct dangerous cargo and handling instruction labels.
3. Documentation: Along with providing the information of the cargo on all regular documents of transportation, there is a separate form called – “Dangerous goods declaration” or “Hazardous cargo declaration”, that needs to be filled when shipping hazardous cargo. Exporters must fill in this form accurately with all required information.
The following examples will give some perspective of why it is important for all service providers and exporters to take precautions while shipping/dealing with hazardous cargo.
Recently, on 5th April, 2016, there was news of a fire breaking out on the containership MSC Daniela near Colombo harbour. The cause of the accident is yet to be ascertained. But according to the update on the accident on Maritime Herald, there is confirmation of presence of hazardous cargo - Hazard A (Major) on board the ship.
Whether the hazardous cargo is responsible for this fire or not is yet to be determined, but given the risks that hazardous cargo presents, there is a remote possibility that the situation may have become more complicated due to the presence of such cargo on board.
The Tianjin Explosions are a devastating example of what can happen if hazardous goods are mismanaged. In 2015 there were a series of explosions in Tianjin, China, at a warehouse where hazardous goods were stored. According to an article published in the New York Times, approximately 165 people were killed, around 800 were injured and the accident resulted in a $1.1 billion loss due to damages. Investigation revealed that the explosions were caused due to mismanagement and illegal storage (over the permissible limit) of hazardous cargo in the warehouse.
To minimise such incidents, it is important for exporters to be aware of the rules and regulations regarding packaging, handling, transportation, and storage of hazardous cargo. They must rigorously follow the rules at their own premises and should also ensure that the service providers that they have engaged with for handling, transportation or storage of the cargo are also following the guidelines and safety practices laid down for hazardous cargo.
If there’s any
confusion regarding the category, documentation, or the precautions that need
to be taken regarding the cargo, then the exporter must get clarification from
the service provider (shipping company, airline or forwarder) before he hands
over the goods for transit.
Similarly, the service providers should inspect the cargo thoroughly and check all documentation before taking charge of such cargo. A complete two-way check can help reduce cases of negligence.