Two Sets of Dangerous Goods Declarations? Beware of the Pitfalls!

July 6, 2014 by Leave a comment

I recently had a question from a trade association member who was facing a request that worried him.  He was shipping from the United States to a foreign air carrier, and that foreign air carrier uses a freight forwarder so the expectation was that the parts would be sent to the freight forwarder in the United States.  The aircraft parts in question happened to be hazardous materials.  The freight forwarder had asked him to provide two sets of dangerous goods documentation:

  • one Dangerous Goods Declaration from the distributor’s facility to the freight forwarder; and,
  • one Dangerous Goods Declaration from the distributor’s facility to the end user/airline).

For purposes of this article, I will assume that the parts are aircraft parts, are hazardous materials, and that they are destined for an export location.  My answer is that you should investigate your potential liabilities thoroughly, because you generally should not provide two (different) sets of Dangerous Goods Declarations.

Generally, the shipper is responsible for creating the shipping papers (such as the Dangerous Goods Declaration).   49 C.F.R. 171.2(e); IATA DGR 8.0.2.1.

The norm would be that you as a shipper would produce one shipping document from your facility to the ultimate destination. The ICAO and IATA standards anticipate this and specify that the consignee on the Dangerous Goods Declaration does not need to be the same as the consignee on the air waybill (IATA DGR 8.1.6.2 Note). This means that your air waybill can take the goods to the freight forwarder while the Dangerous Goods Declaration takes them all the way to the end customer. When the air waybill takes the goods only as far as the freight forwarder but the Dangerous Goods Declaration and other documents anticipate that the freight forwarder is merely acting as a consolidator, with the ultimate consignee being the different party to whom the goods will be sent, then the freight forwarder should not be treated as a shipper.

In such a situation, the freight forwarder would issue their own air waybill (known as a “house air waybill”) for the consolidated transport from their facility to the ultimate consignee, and the existing Dangerous Goods Declaration would continue to follow the shipment. The freight forwarder may make one or more additional copies of the Dangerous Goods Declaration, because only the first operator was required to receive an original of the Dangerous Goods Declaration (IATA DGR 8.1.2.3.1 Note). There may be a mismatch between the consignor on the Dangerous Goods Declaration (which is you, the original shipper) and the consignor on the air waybill (which may be the freight forwarder); this mismatch is both acceptable and anticipated (IATA DGR 8.1.6.1 Note).

In some rare cases, the ultimate customer asks the shipper to ship only as far as the freight forwarder. This may be done where the ultimate customer knows that it needs the articles but has not yet made a decision about which line station the goods will be sent to (which may be based on scheduling and dispatch issues that are yet to be determined). In such a case the freight forwarder becomes the consignee, and then the freight forwarder becomes the shipper (because you, as the originating shipper, have not been informed of any other final consignee)! In such a case, you should be careful about keeping the responsibilities clear. If the freight forwarder becomes the shipper because of the way that the transaction is structured, this is usually at the request of the ultimate consignee, and you as seller/shipper should be careful not to put yourself in a position where you are creating documents for the freight forwarder, and potentially taking responsibility for the actions of the freight forwarder, in cases where you do not have any control over the freight forwarder’s compliance.

This is an unusual situation that will likely make the freight forwarder uncomfortable.  I have seen this sort of situation arise where the freight forwarder wanted a second Dangerous Goods Declaration completed with a blank consignee.  I recommend that the US-based distributor refuse to provide a Dangerous Goods Declaration with blanks.  One reasons for this refusal is because the consignment could be redirected to a target that would violate U.S. export laws.

I have seen this request for multiple differing copies of the documents arise a number of times in the past. Where the relationship is an ongoing one, and there is a desire to support the wishes of the freight forwarder, one way that our firm has dealt with it is by creating a contract that clearly explains who is responsible for what, and that establishes clear lines of indemnification in case something goes wrong.

Filed under Uncategorized Tagged with , , ,

Required “Consent to Search” Could Result in Danger to Your Shipment

December 10, 2012 by 1 Comment

One of ASA members recently asked questions about the Consent to Screen letter, which is an obligation derived from TSA regulations.

TSA regulations require air carriers and freight forwarders to have security programs. The Consent to Screen letter authorizes an air carrier or freight forwarder to screen cargo as part of their TSA-required security program.

The member raised two sets of concerns about the unintended impact on aviation safety of these letters. First, a search of some aviation materials could result in damage that might airworthiness of the part, and the shipper could be held responsible despite the fact that the freight forwarder had actually occasioned the damage. The second concern is whether a shipper can impose burdens on the freight forwarder (like a duty to warn that cargo has been subject to search so we can warn our customer to inspect for damage) or whether the freight forwarder can impose burdens on a shipper (like freight forwarder language that seeks indemnification from the shipper or otherwise seeks to shift any legal burden or liability).  Under the current law, there are no clear answers to respond to either of these issues.

From TSA’s perspective, the form of the Consent to Screen letter appears to be a matter of commercial practice. They do not appear to have any specific instructions in the regulations for what must be included in the consent letter, only a requirement that consent (to the searches covered by the regulations) is required.

The regulations state that an aircraft operator “must refuse to transport any cargo if the shipper does not consent to a search or inspection of that cargo” in accordance with the security system established under the regulations. 49 C.F.R. § 1544.205(d); see also 49 C.F.R. § 1546.205(b); 49 C.F.R. § 1548.9(b). The regulations also provide that any certified cargo screening facility (this is the category in which many freight forwarders fall) must refuse to offer to another certified cargo screening facility or aircraft operator any cargo if the shipper does not consent to a search or inspection of that cargo. 49 C.F.R. § 1549.101(c).

The regulations do not specifically state what form the consent to screen must take. However, the Certified Cargo Screening Program records keeping provision does provide that “[e]ach certified cargo screening facility must maintain records demonstrating compliance with all statutes, regulations, directives, orders, and security programs that apply to operation as a certified cargo screening facility.” 49 CFR 1549.105(a). Additionally, the Preamble to the Air Cargo Security Requirements Final Rule states that:

“While TSA does not state in which manner the shipper’s consent to search or inspect cargo be obtained, it does require that the consent be explicit and in writing. TSA allows aircraft operators, foreign air carriers, and IACs to manage the collection of consent to search in a manner consistent with individual operational needs.”

71 Fed. Reg. 30477, 30486 (May 26, 2006) (emphasis added).

So the requirement for a written consent comes from the preamble to the rule (not from the actual regulations).  Written consent is further implied (but not required) by TSA regulations that require the freight forwarder to retain records (thus implying that such records must be in a format that may be retained).

Any record keeping requirement that the government wants to enforce has to be first approved by OMB.  The OMB approval referenced in the TSA rule was limited only to creation of security programs and imposed no burden on shippers. This means that TSA may be precluded from bringing an enforcement action against a shipper for non-compliance with the record-keeping requirement; but this does not stop a freight forwarder from refusing to do business with a shipper who does not complete the consent form that the freight forwarder insists upon.

In the preamble to the rule that established the obligation for the consent letters, TSA notes that “[t]he regulations allow a shipper to provide a blanket authorization, as proposed by IBM.” IBM’s proposal was simply “We suggest that the best alternative would be to permit the shipper to give a blanket authorization to the IAC as part of their contract or other supporting document or instruction to the IAC.”  [‘IAC’ is an Indirect Air Carrier]  This TSA response sheds little light on the question of whether the freight forwarder or the shipper can impose commercial obligations on the other party through the blanket consent.

There is a very real danger of damage to the parts as a consequence of a search by TSA or by the freight forwarder. For example, avionics and other electronic equipment can be very sensitive to electro-static discharge. Most distributors of ESD-sensitive equipment have special workstations and infrastructure designed to protect ESD-sensitive equipment from ESD-related damage. It is likely that a freight forwarder lacks this ESD-protection infrastructure. Thus, a freight forwarder performing a search could damage ESD-sensitive equipment (and might not even know it).

This raises a strong argument in favor of the proposition that distributors should be able to seek notification when TSA or a freight forwarder performs an inspection of freight.  Such notification would afford the shipper an opportunity to ask the recieving party to confirm that the inspection has not resulted in damage that could adversely affect airworthiness.  But at present there is no means to obtain such notification short of making a part of the contract with the freight forwarder.

Unfortunately, some freight forwarders actually include, as part of their standard consent to search form, a commitment from the shipper to indemnify and hold harmless the freight forwarder from damages, including in situations where the fright forwarder itself damages the shipment during the inspection.  In some cases, these clauses may be unenforceable if there is no additional value provided in exchange for this indemnification, but in many cases the freight forwarders primary duties may serve as consideration to support enforcement of the indemnification clause.

Distributors should be vigilant about such clauses and should consider whether they should reasonably be part of the consent to search form that the distributor provides to the freight forwarder.

Filed under Uncategorized Tagged with , , , , , ,