The idea that the requirement on shippers after June 30 to provide the weight of their loaded containers to ocean carriers will lead to greater safety was thrown into question Tuesday during a discussion at the TPM 2016 conference in Long Beach.
The International Maritime Organization passed the requirement to provide container weights as part of its Safety of Life at Sea (SOLAS) convention because of numerous accidents and other problems involving containers
with misdeclared container weights, said Chris Koch,the former chief
executive officer of the World Shipping Council and now a senior advisor
to that group,
Rear Admiral Paul Thomas of the United States Coast Guard, however, told shippers who are nervous about how they will comply with the requirement to provide the verified gross mass (VGM) of loaded containers that they will have considerable flexibility in how to actually meet that requirement.
“I think we can agree that we want to ensure that we can continue to bring U.S. exports to market safely, productively and competitively as we have,” said Thomas. When the new law comes into effect, “there should be no reason why we can’t continue to do exactly that.”
“If there is a disruption on July ,1 it’s not one that’s caused by or can be prevented by any regulator either here in the U.S. or anywhere in the world. So this really is an issue in my view for you to solve,” he told participants at the conference.
According to Thomas, SOLAS is a “treaty that applies to ships” and Congress has given the Coast Guard two functions to perform under the SOLAS treaty.
“The first is we’re the designated flag state authority, which means we’re responsible to ensure that ships that fly the U.S.-flag are in compliance with SOLAS.” He added that SOLAS does not apply to ships engaged in purely domestic shipping — the so-called Jones Act trades — leaving only the small number of U.S.-flagged ships carrying containers in foreign trades as targets for flag state enforcement by the Coast Guard.
“The second is we are the port state authority, which means that we’re responsible to verify ships that fly foreign-flags in U.S. waters are substantially in compliance with SOLAS as verified or certified by their flag states,” he said.
“The interesting thing there is that none of that has anything to do with shippers or terminal operators,” said Thomas, adding that the Coast Guard does not have the authority to “regulate or require under SOLAS anything from domestic terminal operators or shippers.”
“So does that mean that the shippers are off the hook? No, not really. Because domestic shippers are part of a global supply chain, they have international partners and, in this case, through the international partners the ships that carry foreign flags they are required by their nations to meet the SOLAS requirements.
“So to the extent that carriers feel like they need to change their current business practices in order to meet the SOLAS requirements in the eyes of their flag states, there may be a need for some change in business practices but it is not a need forced by any domestic regulation,” he added.
Thomas said the Coast Guard will continue to do port state control examinations, but “on July 1 in terms of our enforcement actions, nothing will change.”
“We will continue to ensure that foreign governments have certified vessels flying their flag are in compliance with SOLAS, and we’ll continue to verify that through our observations,” he said, explaining that the Coast Guard regularly conducts container inspections in ports, primarily looking at import containers loaded with hazardous material to ensure they are safe before they are loaded on to trucks, but also some export containers as well.
But no regulations have been passed empowering the Coast Guard to perform inspections to see if shippers have complied with the new SOLAS requirement to provide verified gross mass of loaded containers, said Thomas.
For his part, Koch called Thomas’s comments, similar to those container in a Feb. 22 entry on the Coast Guard's Maritime Commons
, “a bit of a stunning revelation”
“I think there is an important distinction that needs to be drawn in the conversation between commercial practice and regulatory compliance,” said Koch. “I think every ocean carrier, every terminal operator, every shipper is looking for the question of: we see the SOLAS regulation, what are we required to do?”
“With all due respect, the decision about what I’m required to do is not a matter for business discussions, it’s not a business practice issue," he added. "It’s ‘okay, do I have to do this or is this a commercial matter and am I not legally required to do something?'”
“If I understand the Coast Guard’s position, at least in the U.S., the SOLAS regulation does not apply to shippers, so SOLAS does not require them to provide a signed VGM pursuant to method one or method two,” he said. Under the SOLAS VGM requirements shippers were given the option of providing container weights by weighing the loaded container, which is called method one, or weighing the contents of the container, including pallets and dunnage materials and adding it to the tare weight of the container.
“What they’re saying is that U.S. terminal operators are not entities that they’re going to enforce what the SOLAS regulation says, which leaves the question of why would an ocean carrier ever require a signed VGM if that is the case?”
“Is this the view that other governments around the world are going to take," he asked, "that SOLAS does not apply to the shippers?”
Thomas said “whether or not nations around the world take the same view is really a function of their legal and regulatory structure. In the U.S. we cannot simply take an international requirement and apply it domestically. Maybe in other nations they can.”
Having spoken to authorities in other countries, Thomas said “a lot of them are struggling with this as well because they are starting to recognize that what the World Shipping Council set out to achieve at IMO, which was admirable based on the need to improve the quality of the information that they get so that they can improve the safety of their ships, is not something that you can actually achieve through IMO.”
In a series of comments that produced a great deal of laughter from the audience, Thomas said, “When I talk to the UK, for example, they won’t give me details, but they said ‘oh our carriers, our shippers have worked it out.’ There is a message there. So when I talk to the Brazilians, they have worked it out as well.
"I don’t know if we’ve worked it out, I’m trying to help you work it out.”
“In the U.S., if we were to take an international requirement and apply it domestically, we need to go through a regulatory process that includes full disclosure and public comments for the Administrative Procedures Act,” said Thomas. The Coast Guard did not do that because it did not have the authority to do so under Congress and because “we don’t have the data to say that this a big enough problem in the U.S. to change,” he explained.
Asked if shippers could comply with the regulation by having containers weighed by the existing weigh scales at terminals and what is the certification requirement under the SOLAS amendment for scales, Thomas said there is a lot of flexibility in how the treaty can be interpreted and he did not want to set policy, both because he has authority only over U.S. flag ships and also because he did not want to “limit flexibility with regard to your business practices.”
Koch said that a large group of governments and industry organization worked for several years at the IMO to develop the VGM amendments to SOLAS to draw up the regulation.
“If the admiral is correct, and this view is shared by other governments, the question is for what? I think that the admiral would probably agree that it would be far better if the U.S. Coast Guard had said this was their view at the time we were all working on this,” said Koch.
“It’s very good to talk about how we are reforming business practices. Reforming business practices on this issue is something that people have been trying to do for decades without success, which is why we went to the IMO to come up with a regulatory reform."
"Container safety is a shared responsibility," argued Koch. "It is inescapably by its very nature. The shipper is involved, the terminal is involved, the carrier is involved. The regulation tried to go off that predicate — it is a three legged stool."