Is the (Developing) World Ready for the New Container Weight Regulations?

A major change in the way containers’ weight is measured and certified, is fast approaching. As of July 1, 2016, all shipping containers will be required to verify their gross mass before they can be loaded onto a vessel. Previously, shippers could accept weight estimates, but now shippers are responsible for weighing cargo, prior to loading. This change is documented in the amended SOLAS Convention Chapter VI, Part A, Regulation 2 – Cargo Information and associated Guidelines MSC.1/Circ. 1475.
 

A large number of accidents occur annually due to incorrectly declared container weights, so this change is expected to improve safety in maritime transport. However, additional costs, potential bureaucratic delays, inconsistent implementation and unclear guidelines make this a challenging transition for many countries.

New Weighing Requirements

The key change introduced is the mandatory condition for the ship master and the terminal representative to obtain from the shipper the verified gross mass (VGM) and to refuse weight estimates, in order to allow a container box to be loaded onto the vessel.

SOLAS offers two recognized weighing methods. The first method allows containers to be weighed after packing and sealing. The second method requires separate weighing of all packages and cargo items (including the mass of pallets, dunnage and other packing and securing material) and adding their weight to the tare mass of the container. In either case, the weighing process and equipment must meet accuracy standards and requirements certified and approved by a state agency or designated recognized organization.

Under the new regulations, shippers must submit the VGM to the terminal operator upon delivery of the container to the port facility and in advance of loading. The terminal operating company is then responsible for passing on this information to the vessel master or his representative for the preparation and implementation of the ship stowage plan.

Lack of Progress

International Maritime Organization (IMO) members are required to introduce the new SOLAS provisions into their national legal and regulatory framework. Despite additional guidelines produced by the World Shipping Council (WSC), as of May 1, 2016, only a small percentage of them have issued some kind of implementation provisions, while others, feel they run out of time. For instance, Russia, has officially requested from the IMO to extend the implementation deadline.

Compliance Implementation Status as of April 2016 Source: “Ready for the new SOLAS requirements? “ Survey, CargoSmart, April 2016

Implementation Challenges

In the US, a number of ports including Long Beach, Los Angeles, and Virginia refuse to install new equipment at their terminals, arguing that existing weighing procedures already comply with SOLAS. That was also the position of the US Coast Guard, as expressed in a U.S. House of Representatives Hearing, in April 2016. Contrary, in a testimony given at a U.S. House of Representatives in April, the Agricultural Transportation Coalition (ATC) claimed that calculated additional costs may be in the range of 20-40%.

The tolerance level of weight variation is another major concern because there is no universally accepted level of discrepancy – different countries have different thresholds. In Japan, the Ministry of Land, Infrastructure, Transport and Tourism (MLIT) has set an acceptable level of discrepancy of ±5 percent, in order to avoid discretionary award of fines. In India, the Directorate General of Shipping, set a tolerance level of weight variation to ± 1 ton, while in China, any discrepancy between the VGM declared by the shipper and the one obtained at the port must be within the range of ±5 percent or ±1 ton.

In Europe, there are growing concerns regarding the impact of SOLAS rules on inter-port competition. According to a Joint Statement issued by the Federation of European Private Port Operators ( FEPORT), the European Association for Forwarding, Logistics and Customs Services ( CLECAT) European Sea Ports Organization ( ESPO) and the European Shippers Council (ESC), supply chain actors and national authorities should work towards commonly accepted guidelines in order to minimize distortion of inter-port competition.

The Way Ahead: Can Developing Countries Deliver?

The fact that several developed countries still struggle to adopt enactment provisions and guidelines, indicates the complexity of compliance and the readiness of the developing world to properly implement SOLAS rules.

There is no doubt that compliance costs and benefits are spread unevenly among different logistics service providers. Maritime shipping lines will certainly benefit from increased levels of seafarer safety. Terminal operators and port management companies will also profit from VGM-related service fees, charges and penalties. In Canada, DP World - the terminal operating company of the Vancouver port - already announced that it will apply an additional tariff of CAN$245 (approx. US$191) to weigh and issue a VGM certificate ( DP World Vancouver Terminal Tariff Schedule).

This leaves freight forwarders and exporters to bear the costs of compliance. In Brazil, there is an ongoing debate whether terminal operators should apply a “submission charge” between 40 BRL ($11.4) and 60 BRL ($17.2) per container, just for inputting VGM declarations in the EDI system. There are also concerns that compliance requirements will create further bureaucracy and additional documentation requirements, leading to time delays due to increased port congestion.

With less than a month to meet the deadline of July 1st, updates both in the developed and the developing world are expected with great anticipation.