For companies in the e-commerce retail market, coordinating consumer returns of hazardous materials—otherwise known as reverse logistics—can be a challenging part of business. Hazardous materials or dangerous goods make up an increasing number of manufactured items and include batteries and battery-powered devices, electronics, paints and coatings, perfumes, aerosols, cleaning solutions, smoke detectors and even cosmetics.
Returned products complicate logistical planning because they are subject to the same hazmat shipping regulations as other outgoing shipments. Plus, a majority of customers don't know how to ship hazmat compliantly, and often don't even know they are shipping hazmat.
The problem has been exponentially exacerbated with the surging use of lithium batteries (e.g., Samsung's recent recall of 2.5 million smartphones due to a flaw in the lithium battery that caused some to catch fire).
How big of a deal are returns in the U.S. economy? Almost 9% of total U.S. purchases are returned every year, amounting to $284 billion annually. If your products include dangerous goods, it only complicates returns.
In addition to customer returns, there also are employee store returns that must remain compliant. For example, a large technology company may have employees in retail locations returning a large number of products back to a distribution center. Any violations or penalties in this case would directly affect the company involved.
The Reverse Logistics Rule
To make the process of returning shipments easier for retailers, the U.S. Department of Transportation's (USDOT) Pipeline & Hazardous Materials Safety Administration (PHMSA) recently published a final rule that sets forth specific rules to regulate the transport of materials under the so-called "reverse logistics" principle. This ruling makes some return shipments easier for retailers with brick-and-mortar stores.
PHMSA HM-253 defines reverse logistics as the "process of offering for transport or transporting by motor vehicle goods from a retail store for return to their manufacturer, supplier, or distribution facility for the purpose of capturing value (e.g., to receive manufacturer's credit), recall, replacement, recycling or similar reason."
The new regulation provides the appropriate procedures for retail outlets returning unused, damaged, or defective hazardous materials products to their sources. Previously, such products were shipped in accordance with the Limited Quantity and ORM-D exceptions. Very often, such goods were not even recognized by their shippers as being regulated in transportation. This has caused shippers to occasionally run afoul of regulations that in many cases they were not even aware existed.
It is important to note that, under the new rule, HM-253 applies only to highway transport, limited quantity shipments and private carriers. It does not apply to air shipments, rail shipments and marine shipments.
Per HM-253, for retailers shipping returns with their own vehicles, most hazmat packages do not have to be labeled or marked to reflect their specific contents. They can be shipped with a new marking. If shipping returns through non-private carriers—such as FedEx, UPS or USPS—all the full labeling and marking rules still apply.
To meet these new DOT guidelines, retailers will benefit from streamlined training requirements that include:
- Identifying the hazardous materials in the shipment and verify compliance.
- Providing clear handling and shipping instructions.
- Ensuring that the instructions are known and accessible to employees when they prepare the shipment.
- Documenting that employees are familiar with the requirements.
The Customer Conundrum
Unfortunately, HM-253 does not apply to returns that come directly from customers. Still, it's the shipper's responsibility to comply with hazmat transportation regulations and, in the customer return scenario, the customer is the shipper.
Should a customer have a return shipment rejected, who are they going to blame? A business, as a recipient of non-compliant hazmat shipments, is not necessarily liable for mistakes made by customers returning shipments. However, the company's name and address are likely to be on the package. If a customer has a return shipment rejected, they are going to blame the business who shipped them the product.
If an incident in transport should occur, ultimately the package is going to have the company name on it. If that business was not providing instructions or guidelines on how to return dangerous goods, it can have a significant negative impact on the company's reputation.
Additionally, regulatory inspectors will care more about the commercial aspect of the non-compliant shipment and will likely follow up with either the carrier or the company involved based on the number of customer violations. And, the inspector may recommend that the company provide better guidance on shipping methods.
Thus, it's important that a business takes whatever steps possible to help customers ship packages in accordance with regulatory requirements.
Helping Customers Meet Shipping Requirements
Easy returns are an essential part of overall customer care. Retailers can help consumers ship returns compliantly by developing a returns process that includes the following components:
- Train customer service representatives on the basics of hazmat shipping so they can assist customers.
- Notify customers that rules exist, and give them guidance on the shipping requirements for the products being returned.
- Insist that all return shipments be made via ground shipping, since air transport is exponentially more complex.
- Consider sending customers packing materials and instructions.
- Consider sending customers replacement items and skipping the return process altogether. In this case, provide the customer with information on the proper disposal of the items.
In addition to the training aspect, sticking to ground shipping is an important component. Employees won't know what happened to that battery or that device from the time it got to the customer to the time they are returning it; if it's damaged, then it's an even greater risk. And there's no need to receive it overnight, so there's no reason to have an untrained person package a battery for air shipment. It just doesn't pay.
Reverse logistics is a growing issue—especially with the increased use of lithium batteries in technology. Businesses should consider partnering with a dangerous goods consultant who can establish logistical processes to ensure compliant shipping, including appropriate hazmat labels and packaging, and provide optimal customer service training and resources.
Mike Pagel is senior consultant for Labelmaster (www.labelmaster.com), providing dangerous goods and product regulatory support to companies worldwide through his experience and knowledge of hazardous materials regulations and his network of dangerous goods professionals.