The regulation, known as the verified gross mass amendment to the International Maritime Organization’s Safety of Life at Sea (SOLAS) convention, is due to come into effect July 1. It requires all container weights be verified prior to arrival at container terminals. Those containers that are overweight, or lacking the verification document, could be denied boarding.
Many of the details surrounding the regulation are unclear at the moment – the IMO has left enforcement specifics up to each individual nation, while the U.S. Coast Guard has said it plans no special enforcement of the rule and will leave that up to individual ports to decide.
The FMC hearing is intended to bring clarity to the debate, with several shipping lines, shippers, and the U.S. Coast Guard expected to be in attendance.
In the meantime, it’s clear the industry is hungry for information and uniformity regarding key issues, including where container weights can be verified, how the verification document will be transmitted to terminals, how long before the container arrives at a terminal the verification document needs to be transmitted, and any threshold for overweight containers that may be allowable for boarding.
“We think that many suppliers will opt for the method of weighing all of the goods going into the container, all blocking, bracing, pallets, etc, and then adding the tare weight of the container rather than weighing the load on a scale en route to the port,” said Angela Czajkowski, director of supply chain at the customs broker, freight forwarder and logistics services provider Shapiro.
“I think one of our biggest concerns is lost bookings or rolled shipments due to shipper non-compliance. It remains to be seen how terminals will handle containers that arrive without VGM documented. We want to understand if terminals will turn this into a revenue-generating service offering or if containers are to be refused altogether.
“Shippers’ level of preparedness will vary greatly, so of course we are concerned on behalf of our customers,” she said. “If a booking is secured with the carrier but rolled at the terminal, the labor associated with re-booking could affect our processes. Additionally, even if shippers believe themselves to be prepared, we hope that a reasonable tolerance level for variation will be set by the community to allow for slight differences between documented weight and actual.”
Michael Troy, chief executive officer of the non-vessel-operating carrier Troy Container Lines, said the most likely place the verification will take place is at the terminals.
“I don’t know a terminal in the country where the container isn’t weighed,” said Troy. “Is this a confirmation of what we’re doing already? It seems like Christmas for terminals – a service they were already providing they’ll get to charge for. I don’t see a shipper taking 200 boxes a day to a weight station.”
But there’s not uniformity from terminals in terms of their role in the weight verification process either.
“We’ve talked to a few terminals,” said Lionel Louie, chief commercial officer for the shipment management software provider CargoSmart. “Some more modern terminals already have equipment and capabilities before gate-in to weigh containers. Some are ready to at least supplement the weight data if they don’t see the VGM. Some of them told me they’re talking to their forwarders and carriers about how that data can be supplemented. But that’s just a proposal.”
Louie added that “none of the carriers want to be the first to be seen rejecting cargo.”
Drewry Supply Chain Advisors said in January briefing there are a few categories that are particularly vulnerable to the pending mandate:
• “Inbound supply chains from more exotic origin countries, due to the lack of process, IT, infrastructure and weighing machinery.”
• “Shipments of smaller exporters and exporters shipping various combinations of packaged products with various securing equipment or loose products in containers
• “Companies importing under FCA or FOB terms who rely on smaller Asian or African suppliers to provide accurate container packing weights (the onus of declaring verified weights will be on the importer shown as the shipper on the bill of lading, not on the suppliers, in these cases).”
• Shipments from already congested ports, where any container rolls and delays will make a bad situation worse.
As for the hearing Thursday, the Agriculture Transportation Coalition, a group of U.S. agricultural shippers that has vociferously highlighted the ramifications of the mandate on low-margin exporters, will have five representatives, including Donna Lemm, vice president of global sales, Mallory Alexander; Perry Bourne, director, international transportation and rail operations, Tyson Foods; Sean Healy, supply chain manager, The Scoular Co.; Cathy Nagin, general manager, NOCS Transport/New Orleans Cold Storage; and Mike Symonanis, director, North America logistics for the Global Container Logistics Group, Louis Dreyfus Commodities.
“Our position is that the shipper can only be responsible for certifying the weight of the cargo,” AgTC said in a statement. “A shipper should not be required to certify the weight of equipment (the container) which is owned or leased by the steamship line. The SOLAS Amendment, as issued, will require a costly and unnecessary redesign of the supply chain.”
The container weight issue has garnered so much attention that the ratings agency Fitch warned last week the requirements could have significant consequences on the shipping industry.
“Fitch-rated ports have neither designated facilities for weighing containers nor the systems for the verification of container weights,” the agency said. “This could raise already chronic congestion at the ports that are slowed by chassis management issues, higher cargo loads from larger vessels and inadequate inland or intermodal links.
“While the shipper on the bill of lading will bear responsibility for verifying the weight, the apportionment of logistics and costs of verification among shippers, forwarders, terminals and carriers remains to be seen. U.S. port terminals will almost certainly face containers at their gates that lack the required verification as the SOLAS amendment goes into effect. This may lead to delays and increased congestion for facilities that are already strained by longer turn times and heightened volumes generated by ever larger container ships.”
Fitch said a slowdown seems “likely” in the early days of SOLAS VGM enforcement, but that the risk posed to Fitch-rated U.S. ports will decline in the long-term.
“Several U.S. terminals, including the Maher terminal at Port of New York/New Jersey, have stated they will require prior receipt of electronic documentation before allowing containers through their terminal gates. Some ports may choose to offer weighing services at their facilities, though higher volume terminals operators have indicated this is not likely to be a practical solution.”