New FSMA rule affects shipping
A greater challenge for trucks and railroads alike that carry bulk food products such as flour is the food sanitary transportation rules developed as part of the U.S. Food and Drug Administration’s Food Safety and Modernization Act (FSMA). Increased requirements for cleaning truck trailers or rail cars between loads are adding costs as well as time to grain product shipping. The final rule placed principal responsibility for compliance on the shippers, receivers and loaders of rail cars and trucks rather than on the carriers, the N.G.F.A. said, and the new rules do not apply to barges.
“I’m told by major carriers that freight costs will increase 3% to 5% because of the new requirements,” said Ken Bisping, director of logistics at Grain Craft, Chattanooga, Tenn. “I believe that is conservative. It’s going to cost a lot of money.
“In the past, Grain Craft only used trailers that were dedicated to flour service. With the new rules and regulations, trailers are not dedicated only to flour service, but are dedicated strictly to individual shippers.”
Mr. Bisping said most carriers are upgrading wash facilities, but separate wash stations aren’t always open, which complicates shipments under the new FSMA rules. More inventory is moving by rail as a result, he said. Grain Craft has increased the number of dedicated trucks and adjusted wash cycles. There are stricter audits at the mill level, and previous content has to be checked among other added requirements.
Both trucks and railroads are affected because there is a lot of rail-truck transfer, Mr. Bisping said. “Grain Craft has, and will, continue to utilize newer cars to avoid risk of contamination.”
“This is all good,” Mr. Bisping said, “but eventually it will drive costs up. It’s not an insurmountable change. We just have to adjust to it.”
The new rule went into effect April 6 for large companies, and not all the details have been worked out by the F.D.A., which leads to uncertainty for carriers and shippers.
The National Grain and Feed Association, along with the National Oilseed Processors Association and the North American Millers’ Association and other members of the industry, including rail and trucking companies, met April 5 with the F.D.A. on the issue. The industry delegation expressed concerns that there was no requirement for rail or truck carriers to provide information on the last load hauled or the previous clean-out unless the carriers signed a written agreement with the shipper or receiver requiring them to provide such information.
During the meeting the A.A.R. said Class I rail carriers were working to develop a portal through which shippers could access information on the last three loads hauled in the cars being used, and said it would engage further with the grain industry on implementation and costs.
“Both A.A.R. and A.T.A. conceded that industry standards currently do not exist regarding what constitutes various types of conveyance cleanout, nor are records kept of when those conveyance cleanouts occur,” the N.G.F.A. said.
The rail and trucking industries agreed to join a new industry working group to develop best practices needed to comply with the new FSMA rules. At the same time, F.D.A. inspections and enforcement still are months away, the N.G.F.A. said, with training of inspectors yet to be completed, although “such inspector training has been delayed and currently there is no timetable for doing so.”
Finally, all modes of transportation are facing higher fuel costs as crude oil prices have been hovering a couple dollars on either side of $50 a barrel in 2017, compared with about $40 a barrel at the same time last year, although prices took a jump to the mid to upper $40s in May 2016.
The U.S. average on-highway diesel fuel price was $2.60 a gallon the week of April 24, up 18% from a year earlier, according to the Energy Information Administration of the U.S. Department of Energy. The average price is used by both trucking companies and railroads in setting fuel surcharges.