by Virginia Thompson, VP Product Management – Global Trade Management Solutions,
In May of 2014, the International Maritime Organization’s Maritime Safety Committee (MSC) approved changes to the Safety of Life at Sea (SOLAS) treaty to require shippers to verify gross mass a container carrying cargo. This new requirement was officially adopted in November 2014, but the trade community that it impacts remained relatively quiet until the end of last year as the enforcement deadline approached. The requirement goes into effect 1 July, 2016, and it is currently sending waves of distress throughout the carrier, port and trade communities.
Impact of SOLAS
The problem that the amendment is looking to address is one of mis-declared container weights. Some sources estimate that as high as 20 per cent of ocean containers may have inaccurate weights declared. A wide range of serious risks can result from these misdeclarations such as: vessels loaded unevenly, which can lead to instability and capsising vessels; port terminal injuries from container cranes tipping over; and deadly over-the-road accidents due to truckers unable to stop heavy containers fast enough. Due to the severity of the problem, the new requirement is designed to ensure that container weights have been actually verified. Shippers are given two allowable methods for the Verified Gross Mass (VGM) verification. Method 1 requires weighing the packed container (using “calibrated and certified equipment”). Method 2 allows the shipper to weigh the complete contents of the container (including all packaging and dunnage materials) and add that weight to the tare mass of the container itself.
There are two main parties affected by this SOLAS amendment – the responsibility of obtaining the VGM of a packed container before the time of shipment lies with the carrier; however, it is the shipper listed on the Bill of Lading that must initially supply that information to the carrier. As such, this puts a new spin on the relationship between the shipper and the carrier. Since the information must be provided in advance of vessel loading, the most significant obligation really falls on the shipper. The issues come down to – how does the shipper weigh the container and what happens if cargo arrives at the terminal with no VGM? Who is responsible then for the VGM?
Interestingly, the answer to these questions has started to become more than just a matter of negotiations amongst shippers, carriers and ports. The ability to help shippers comply more easily has started to reveal itself as a competitive advantage for the terminal operators and the carriers who call those terminals. Early in 2016, most ports were washing their hands of providing assistance in helping shippers comply. Many ports and terminals stated publicly that they were unable to provide weighing services to the shippers utilising their facilities. But over the past several months, more and more ports are now stating that they do have the ability to offer weighing services. Yantian, China, for example, has publicly stated that a majority of the terminals in its port will be able to offer these services to shippers or carriers.
In the US, over April and May, 2016, one port after another started announcing that they would offer to weigh containers for prices ranging from $15 to $25 per container. Following those announcements came a spate of new statements from some ports declaring that they would offer the service free of charge. Most recently, the 19 members of the Ocean Carrier Equipment Management Association (OCEMA) worked out an agreement with six major East Coast and Gulf ports in the US to roll out a harmonised process of container weighing at the ports. This agreement is finally moving the issue towards the greater consistency of operations that the shipping community has been clamouring for.
Part of what has added to the confusion for shippers and carriers is that understanding what enforcement will feel like has not been easy. Because this is a treaty under the governance of the International Maritime Organization (IMO), all IMO signatory countries (171 Member States) are required to comply with it. However, each individual country has its own type of agencies overseeing maritime activities. In addition, the amendment itself is silent on exactly what kind of penalties, fines or other consequences should be imposed if a shipper does not supply a VGM or if a carrier fails to obtain the information before loading the container on board. In India, as one example, the Directorate General of Shipping has indicated that they may publish names of SOLAS offenders on their website. After months of confusion and frantic calls from the trade for delays in enforcement, the IMO itself has finally approved a circular to be provided to governments and private parties such as carriers and port terminals recommending they take a “practical and pragmatic approach” to rolling out the requirement.
While the carriers and terminals work to get this figured out, here are a few tips that shippers can use to keep their cargo moving once the new SOLAS requirement goes into effect.
1. Stay abreast of the changes. Some industry analysts have predicted that SOLAS will harm international trade by slowing down cargo ships in the ports while each country figures out how to enforce the new requirements. Make sure your cargo does not get caught in the fray by staying up-to-date on how SOLAS will be enforced in countries where you have ocean cargo departing or arriving.
2. Consider how you could determine VGM. There are two approved methods explained in the SOLAS regulation – decide which you will use. You may need to assess if you have a trailer scale at each of your facilities that ships ocean freight. If not, is there one en route from your facility to your port of shipment that could be used, or is your port prepared to offer the weighing service?
3. Allow time for the process to be completed. In other words, allow enough time from when the weight is known to vessel loading to get the information on your shipping documents and passed on to the carrier or forwarder. Consider if you will add the declaration to current documents or create a new VGM Declaration. Will your process need to vary based on carrier, forwarder or customer you ship to – if so, do you have each process documented?
4. Make it clear in all negotiations with customers – who is responsible for any costs incurred in obtaining VGM – seller, buyer or carrier? And how may that vary based on shipment type (LCL vs. FCL)? This will be particularly critical as SOLAS does not outline enforcement and there is concern that the member-states (171 total) could each enforce the regulation differently.
5. Don’t forget about your imports! Especially for those importers who buy goods FOB or EXW, you will want to communicate with your carriers/ forwarders to get clarity on what their approach will be in each region, so that you can inform your shippers accordingly and ensure that your supply chain is not interrupted.
About the Author
Virginia Thompson has over 20 years of experience managing the global transportation and trade compliance operations of a major US retailer. Throughout her career, she has enjoyed identifying and implementing profitable ways to solve supply chain challenges while also maintaining the highest standards of customer service and compliance. She brings this experience to Integration Point in order to ensure that solutions remain focused around bringing value to the importer/exporter. In her role as Vice President – Product Management, Virginia is responsible for the advancement of Import/Export solutions globally.