Summer might be a time of backyard barbecues and trips to the beach, but participants at every level of the food supply chain – including freight brokers and 3PLs – most likely have other things on their minds thanks to the Sanitary Transportation of Human and Animal Food (STF) rule, a central component of the Food Safety Modernization Act (FSMA).
Representing the most extensive overhaul of food safety requirements in more than 70 years, FSMA packs a significant punch for the transportation sector.
In fact, one of the most notable changes brought forth by the STF rule is the clear assignment of responsibility to the shipper for ensuring sanitary transportation practices. And by “shipper,” the Food and Drug Administration means any individual or business arranging for the transportation of food within the U.S. This includes brokers and 3PLs.
For a community of business professionals who traditionally have had limited visibility to freight and even less control over carrier practices, STF represents a seismic shift in accountability. But for a perhaps smaller but faster growing group of brokers and 3PLs – those who have already embraced the need to adhere to best practices dictated by leading shippers and other customers – STF validates their expertise in a highly specialized and lucrative service category.
In short, some brokers and 3PLs are already viewing STF as an opportunity and are investing in training, technology and best practices to enhance their competitive differentiation. Others, by contrast, will decide that the requirements are too onerous and will shift their attention to other categories. A third group might try to straddle the fence, perhaps catering to smaller shippers
Regardless of strategic approach, brokers and 3PLs who intend to compete for and cover loads falling under the new regulations must protect themselves from the associated financial risks. The following are a few suggested best practices that can help prevent these individuals and businesses from getting burned:
- Study the new requirements and share this information among all employees and carrier partners. A best first step is to enroll in TIA’s updated Temperature Control Transport course, which covers STF requirements as well as heat, trailer conditions, the impact of packaging and loading on perishable products, and inspections
- Amend shipper contracts to include information such as commodity, cooling requirements, etc. to bind the shipper to providing freight in an acceptable manner; this becomes part of the load tender
- Consider adding clauses requiring the shipper to provide evidence of FSMA compliance; otherwise the load would not be accepted. Moreover, the shipper would need to provide a subsequent, acceptable load or pay driver miles, or a portion thereof, or another fee
- Amend load tenders/contracts to share all FSMA-related information from the shipper to the carrier. Clear communication among all parties is key to avoiding potentially expensive surprises
- Require carriers to provide documentation upon acceptance of the load that includes pre-cool temp to validate no temp spikes that could negatively impact the product
- Require carriers to provide documentation upon delivery that they have fulfilled their contract under FSMA rules. This should include wash-out receipts
- Review carriers periodically and receive written confirmation that they are training personnel on and abiding by FSMA rules. No proof in writing means no future loads for that carrier
- Perform periodic audits of brokered loads to ensure all contracts are being fulfilled and that all required documentation remains on file (FSMA requires records to be maintained for 12 months)
- Conduct a business technology assessment to ensure it will enable the business to efficiently and profitably operate under the new regulations. This will require closer relationships with and visibility into carrier operations
FSMA and STF offer yet another example of regulations that present two distinct strategic paths for transportation businesses.Those who view the new requirements as an opportunity to leverage their specialized capabilities for increased competitive advantage will undoubtedly gain market share.
Those who consider the law an undue burden will likely focus on other opportunities and either exit the food category entirely or watch their share of this business gradually decline. In either case, the most important first step is to implement all legal and operational best practices necessary to prevent financial loss.
For information on how TMW software can help you reach your goals, contact us.
(Melina Barreca is a Product Manager for TMW Systems. Her areas of expertise are in 3PL/brokerage solutions and TMW.Suite transportation management software.)