Amazon is growing on-demand services after reporting a 20% sales increase in 2015.
Federal transportation officials, citing safety concerns, want tighter shipping rules. The changes would result in a rise in shipping costs for laptops, digital cameras, power tools and other consumer electronics products.
Shipping costs for laptops, digital cameras, power tools and other consumer electronics products could increase under a rule being considered by federal transportation officials.
In a change that could affect every online retailer selling consumer electronics, the U.S. Department of Transportation’s Pipeline and Hazardous Materials Safety Administration wants to tighten air shipment requirements for lithium-ion batteries, found in a long list of goods that consumers buy online. The department says that since 1991, more than 40 air-transport related “incidents” related to the batteries have been identified. Such incidents include exploding or short-circuiting batteries in a portable DVD player, flashlight and TV news camera, according to newspaper accounts.
The new rule would classify small lithium batteries and cells-generally, those with capacities of no more than 100 watts-as class 9 hazardous materials, which includes asbestos, dry ice and other miscellaneous substances that do not fall into the other categories. That means shippers would have to use stronger packaging materials for products with the batteries and fill out more paperwork prior to shipping. The new rule would require that when products with the batteries are shipped by air they are stored in locations accessible by crew or which have fire-control systems approved by the Federal Aviation Administration.
These and related requirements would add to the headache and cost of shipping consumer electronics by air. And because shippers do not always know if their goods are travelling via airplane or truck, the new rule could drive up expenses for ground shipments, too, as shippers could have to cover all possibilities. That means that the standard rate for air shipments of batteries could become the de-facto standard for all shipments of batteries.
“Certainly any time you put a regulation in regarding the shipment of hazardous materials, that is going to raise the price of the shipment, which is going to raise the price of the products,” says Jim Berard, spokesman for the U.S. House Transportation and Infrastructure Committee. “But that’s the price we pay for safety.”
The committee’s chairman, Minnesota Democrat James Oberstar, has come out in support of the measure. “Under existing regulations, a flight crew may not be made aware of a pallet containing thousands of lithium batteries on board the aircraft, yet a 5-pound package of flammable paint or dry ice would be subject to the full scope of the regulations," he says. His support means the committee is unlikely to resist or later try to overturn the rule change, which the Department of Transportation can enact without Congressional approval.
But lobbying groups that represent battery makers and online retailers are working against the change. Though most online retailers of consumer electronics contacted for this story declined to comment, a spokesperson for HP Home & Home Office Store, the online site for computer maker Hewlett-Packard Co., confirmed HP is working with various trade groups on the issue. HP is No. 16 in the Internet Retailer Top 500 Guide (a PDF version of the company’s financial and operating profile can be ordered by clicking on its name).
“First and foremost, we absolutely support safety,” says J. Craig Shearman, vice president of government affairs public relations for the National Retail Federation, whose Shop.org division focuses on web retailers. “But this will have a very wide impact on retailers and consumers.” He said the Federation is working with the Portable Rechargeable Battery Association, another trade group, on fighting the proposed rule.
George Kerchner, executive director of the battery group, says the 40 incidents since 1991 represent only a small fraction of the lithium batteries that ship every year, including 3.3 billion in 2008. The new rules, he adds, likely will lead to requirements for hazardous-materials training for more workers involved in distribution, another potential cost.
The Department of Transportation will seek comments on the new rule until March 12, Kerchner says. Department officials did not return calls for comment. He is unsure when a new rule would be made final. “I’m not sure it will take effect by year’s end. It’s difficult to say.”