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VTA seeks alliance for mandatory code of conduct on pallets

Chambers sees underlying issues unresolved by ALC’s Guideline and wants Federal action


The Victorian Transport Association (VTA) will seek Federal Government intervention on pallets, just days after the Australian Logistics Council (ALC) released its ‘Guideline on Pooled Equipment Management (pallets)’.

Any hope that the transport and logistics industry as a whole had settled the issue now appears forlorn, with the VTA to seek the support of other supply chain participants unhappy with the scope and strength of the Guideline for an appeal to Canberra.

“What’s required is for the Federal Government to enforce a mandatory code of conduct governing pooled equipment hire practices and dispute resolution in Australia,” VTA chief executive Neil Chambers.

“The VTA, together with other organisations and parties, will be pursuing that outcome nationally.

“The Federal Government is transforming the Australian Small Business Commissioner into the Federal Small Business and Family Enterprise Ombudsman.

“The VTA believes that it’s time for the Federal Government to enquire into pallet management practices and conditions in Australia, and for a mandatory Code of Conduct to be developed and implemented.”

An ALC search for an industry response to business practices surrounding pallet loss began in mid-2012 at a time when some participants and the Victorian Office of the Small Business Commissioner (VSBC) warned that government intervention would ensue if issues went unresolved.

“I certainly don’t underestimate the magnitude of the task we’ve taken on but, if we didn’t do it, who would?” ALC managing director Michael Kilgariff said at the time.

Two years later, the issue appears back at square one.

Chambers says the Guideline provides a “useful précis of existing pallet hire practices and rules imposed by the pallet hire companies in conjunction with large retailers”.

But an opportunity to work with all supply chain parties to reform Australia’s pallet hire regime, and to pursue workable dispute resolution avenues had been lost.

“It is clear from the ALC Guideline that contractual terms between supply chain parties will over-ride the Guideline. But, it can be argued that some existing contractual arrangements are ‘unconscionable’ and impose significant burdens on certainly parties in the supply chain, particularly road transport operators and small businesses.

“It is these contractual arrangements, imposed and controlled by the large retailers, in collaboration with the pallet hire companies, which need to be reformed. Unfortunately, the ALC Guideline has ended up being a ‘toothless-tiger’ in that regard.”

Chambers highlights the “Receiver Declare” status with the pallet hire companies as a point of risk for suppliers of goods and their road transport carriers.

When receivers of goods on pallets, typically the larger retailers, have “Receiver Declare” accounts, they take responsibility for notifying the pallet hire companies of transfers onto their accounts, he explains. 

“However, if they fail to do so, they stand to benefit at the expense of others.

“Many of these receivers also have “delay days” policies, meaning that the pallets remain on the accounts of the suppliers or their transport companies for several weeks in practice. This results in the receiver getting the benefits of using the pallet without initially paying for having it.”

These contractual arrangements lead to disputes about pallets not being transferred accurately or not at all, he notes. Subsequently, if the supplier of the transport company can’t produce the transfer paperwork, or do have the pallet dockets, but they are more than six months old, then the receiver and the pallet hire company don’t accept the transfer.

“The risk exposure for supplier and transport companies is large, because the pallet liability stays on their account, and they continue to pay the pallet hire companies for pallets they simply don’t have,” Chambers says.

“Eventually, they have to pay out the pallet hire company for the “lost” pallets and on numerous occasions this has had a substantial impact on the financial viability of companies in the supply chain.

“You have to wonder whether these contractual arrangements are ‘unconscionable’, or indeed whether the receivers have been enriched unjustly – that is, they have profited at another’s expense without paying for it.

“The ALC Guideline does not deal with these issues in any meaningful way.”

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