House lawmakers brushed aside calls at a hearing to slow implementation of the Verified Gross Mass rule, while other shippers said compliance should be straightforward.
Groups representing U.S. agricultural exporters and large freight consolidators at a congressional hearing Thursday insisted on federal intervention if ocean carriers refuse to compromise in implementing a pending international requirement for shippers to declare the weight of tendered containers before they are loaded on the ship, and attest to their accuracy, to prevent maritime accidents.
But lawmakers indicated that they were not inclined to take any action.
“I don’t think this is a congressional issue. There’s not going to be legislation,” Duncan Hunter, chairman of the House Transportation & Infrastructure subcommittee on Coast Guard and maritime transportation, said. “I think this is a deal that needs to be worked out between the shippers and the cargo owners.”
And comments made to American Shipper by an official from another trade association indicate the shipper community is split over the potential impact of recent changes to International Maritime Organization rules.
“I haven’t heard any concerns from NIT League members,” Bruce Carlton, who retired as the organization’s president on April 1, but continues to work for it as a consultant on policy and government matters, said. Exporters either have scales in house or a third party weighing outbound shipments, he said.
The National Industrial Transportation League is the largest trade association in the United States that purely focuses on shipper transportation issues. Many of its members are in the industrial sector.
“Most people are saying they’ll figure out how to do it,” Carlton said after the testimony. “It seems to be a group of American ag exporters who are struggling with how to get it done.”
The container weight rules were promulgated two years ago by the IMO, part of the United Nations, in reaction to carrier concerns about mis-declared container weights and overstuffed containers contributing to accidents at sea and on shore. Since 1994, regulations under the Safety of Life at Sea (SOLAS) treaty and U.S. law have required shippers to provide the ship masters with the gross weight of the cargo prior to loading. The SOLAS amendment essentially removes the ability of cargo owners to estimate the weight of ocean shipments on shipping documents.
There are two allowable methods by which shippers can determine a container’s weight – weighing the container after it is packed or weighing all contents of the container, including packing materials, and adding that weight to the weight of the empty container. The weight is considered certified when someone at the company signs the shipping documents.
The issue has become increasingly contentious in recent weeks as the July 1 deadline approaches, with some shippers accusing container lines of forging ahead with an implementation scheme while uncertainty remains over how to define the proper container weight and transmit the data to carriers. Shippers also complain about a lack of harmonization among nations regarding enforcement protocols, while carriers and marine terminals are free to set their own rules for transmission methods, timeframes and consequences for incomplete or untimely data. Furthermore, they also say it is unfair to hold the shipper accountable for the accuracy of the container’s tare weight when the equipment belongs to the carrier or third-party leasing companies.
Opponents argue that moving ahead with the “verified gross mass” (VGM) rule as scheduled will lead to red tape that causes massive backlogs and imposes heavy costs on exporters. They cite public comments by Coast Guard officials that the existing regulatory structure is acceptable to ensure compliance and that no further rulemaking or policy guidance is necessary. Their proposed alternative would hold shippers responsible for certifying the gross weight of the contents and carriers responsible for providing the weight of the equipment they control. The steamship lines would then combine the two weights to create a VGM to be submitted to the terminal operator before loading.
Donna Lemm, vice president of global sales for Mallory Alexander International Logistics, told the subcommittee that member companies of the Agriculture Transportation Coalition (AgTC) want Congress to exercise its authority to review international treaties or pass legislation codifying the Coast Guard’s position that current methods of cargo weight disclosure are compliant, if liner carriers are unwilling to accept their alternative. The AgTC also called on the Coast Guard to issue a full rulemaking, complete with a public comment period, saying that the changes are too significant to simply let carriers be the de facto enforcing mechanism, with the sea service only getting involved if it notices a problem during regular vessel inspections. The House T&I subcommittee should also pressure the Coast Guard to issue written, public guidelines on the acceptable methods for reporting weight, including the “rational” one of carriers certifying the weight of the container itself, the AgTC said.
The group also called on the Federal Maritime Commission to get involved and decide whether the collective efforts of ocean carriers to enforce the VGM rule, and to refuse to accept cargo from shippers and NVOs that don’t provide the VGM according to carrier guidelines, are consistent with the Ocean Shipping Act, which allowed ocean carriers to enter confidential service contracts with shippers.
FMC Commissioners this week have made comments sympathetic to VGM opponents and questioned the motives of the liner industry.
One large AgTC member that specializes in refrigerated cargo estimates that its export costs will rise 20 to 40 percent, or $4 million, if using container scales becomes necessary, Lemm said in written remarks. Other costs will come from lost overseas sales, she added, because carriers may seek earlier cut-off times for submitting shipping documents in order to process the weight data in time for loading, which will result in deferred shipments. The agriculture shipper moves 10,000 containers per year and believes it will only be able to ship half that number after July. And delivery windows could be pushed back day too because the trade association representing marine terminal operators has said members expect to receive the information before the ocean box arrives at the gate because they don’t want to store containers until the weight information can be provided, which is problematic for transload cargo that gets loaded near a port and is often rushed over before the deadline for getting on a vessel.
Under questioning, Lemm said the tare weights on the container are often off by 10 to 12 percent, or about 800 pounds for a 40-foot container weighing 8,000 pounds. She admitted that the primary concern of agricultural exporters is that they will be held liable if the gross weight is not accurate in the event of an accident.
Lemm said using scales at terminals to obtain the total container weight is virtually impossible because few ports have the equipment. Earlier this month, terminal operators at the ports of Los Angeles, Long Beach and Oakland said they didn’t have the infrastructure to supply the VGM information. When scales are available, it costs shippers $200 to $250 to weigh a container a, she said.
Her cost example is in line with new tariffs issued by DP World at the Canadian ports of Prince Rupert and Vancouver. The terminal operator said it would charge a fee equal to about U.S $190 to weigh containers at arrive at its terminals, with the VGM data electronically transmitted to the carrier and the VGM certificate transmitted to the shipper for recordkeeping.
Meanwhile, the South Carolina Ports Authority has said it already weighs all export containers entering terminal gates for its own needs and that it would consider providing the data to shippers if requested.
In a statement issued to coincide with the hearing, the AgTC said demanding that a farmer or food processing employee at a U.S. exporting company be personally liable to certify the weight of the ocean carrier’s own container and send that certification to the same ocean carrier is akin to a scene from Alice in Wonderland.
“This scheme will impose unnecessary costs, additional EDI communications, and delay in shipments at a time U.S. farmers, and all exporters are struggling in global markets due to the high value of the dollar. It will create congestion at the ports, missed sailings, spoiled cargo, and angry foreign customers,” the AgTC said.
Not mentioned in the AgTC’s testimony were previous requests for the U.S. government to delay implementation of the rule until its top 15 trading partners also begin enforcement and allow shippers to provide approximate weights.
The Global Consolidator Working Group, which includes major NVOs such as CaroTrans International, Ecu-Line, Shipco Transport and Vanguard Logistics Services (USA), submitted written testimony requesting that the U.S. government delay the effective date of the VGM changes for one year, as permitted under the SOLAS convention, or at least grant a 12-month exemption for consolidators. Freight forwarders that co-load multiple shipments in each container face a much steeper compliance path because so many verifications must be obtained: The master loader has to get weights and signatures from potentially dozens of freight forwarders that tendered the cargo and those companies, in turn, have to reach back to their clients, the cargo owners, for the verified weight.
Additionally, the Global Consolidator Working Group, said responsibility for weight containers should be placed on marine terminal operators because they are best positioned to capture the information upon entry to a port and give it to the ship’s master. It compared the practice to the way air carriers determine the weight of each airfreight container and motor carriers are responsible for verifying the weight of the truckload.
“We support equipping terminals, if they are not already equipped, with the necessary scales to determine the actual weight of each container, prior to lading,” the less-than-containerload intermediaries said.
Rear Admiral Paul Thomas reiterated the Coast Guard’s position that existing U.S. regulations “already ensures that the weight of a container is known before it is shipped over road or rail, if lifted at a terminal or is loaded on a ship. It’s is precisely because of this underlying regulatory framework that additional regulations are not needed in the U.S.” The information to be in compliance is already being generated to meet various U.S. laws, he explained.
He said the SOLAS amendments offer flexible approaches for achieving compliance and “there is no reason the amendments should cause any delays in our supply chain.”
Shippers and carriers need to determine together which of those methods they are going to use, Thomas added. “If it’s disrupted it’s because the shippers and the carriers haven’t been able to figure out which of those many methods that meet the SOLAS requirements they are going to employ.”
Canada, for comparison, has issued guidelines laying out penalties for shippers that don’t comply with the VGM, something the Coast Guard has chosen not to do.
The Global Shippers Forum, an umbrella organization for shippers engaged in international trade, worked at the IMO to get the second measurement methodology – adding up the contents, dunnage and tare weight – included in the rule. The NIT League is the U.S. representative to the Global Shippers Forum.
Carlton said exporter concerns the tare weight provided by carriers might not be accurate, and could subject them to liability, are unfounded.
“The IMO, and the carriers and OCEMA, a subgroup of the carriers, have all said you can use the stenciled weight on the container. Add it to your cargo weight and you’re good,” he said. “ And that’s why, I think, our members just don’t have that problem.”
The Ocean Carrier Equipment Management Association (OCEMA) is a U.S.-based association of 18 major ocean common carriers focused on operational and safety matters pertaining to the intermodal transportation of ocean freight.
“We’ve talked about this in the League for two years. This thing came out in 2014 and we told League members that it was under discussion years before that. This just didn’t yesterday fall out of the sky,” Carlton said. “And I think some people weren’t paying attention.”
The container weight rules needed to be tightened because overloaded containers, either inadvertently or on purpose, too often are delivered to ports for ocean carriage, John Butler, president of the World Shipping Council, testified.
The World Shipping Council is the voice of international container lines operating in the U.S. market and was one of the driving forces behind the VGM changes at the IMO.
Ocean carriers need to know how much the cargo weighs so they can properly load the vessel to maintain stability and minimize structural stress. When cargo is out of balance, container stacks can collapse, containers are lost overboard and seafarers are at risk of injury or death. Heavy boxes that dislodge from cargo handling equipment can also kill longshoremen on the wharf.
Mis-declared container weights contributed to the breakup of the containership MSC Napoli in 2007, according to U.K. authorities.
The need to address the mis-declared container problem was reinforced in 2012, when Ukrainian Customs authorities weighed containers at their ports and found that 56 percent of them exceeded the shipper-declared weights. Other countries, including India and New Zealand, conducted similar tests and found similar results, according to Butler’s testimony. It did not indicate how much the overages were.
And in an April 7 letter to the subcommittee, Jim Newsome, the CEO of the South Carolina Ports Authority, said that a sample weighing recently conducted at the Port of Charleston also revealed notable discrepancies between the declared weights and the actual weights of the containers.
Currently, container lines get weights for their stow plans a number of different ways: in-gate scales at the terminal, shipper declarations, understanding what certain commodities weigh and if that squares with the declared weight, and devices on cranes and yard equipment that alarm for grossly overweight boxes.
Carriers have overweight rules in their tariffs and if a container is determined to be loaded beyond its capacity, carriers can strip out the contents, load them into the appropriate number of containers and bill the shipper for the extra expense.
The tare weight is a “non-issue,” Butler said. “No one is going to hold a shipper liable for any inaccuracy in the tare weight of the container. That’s our equipment. We put that number there. And if there’s a problem associated with it, that’s for us.”
The AgTC has been aggressive in its criticism of the World Shipping Council for pushing through a rule at the IMO that it considers unnecessary from a safety standpoint and without U.S. exporter input. The shipper group has suggested that individual liners appear willing to compromise on VGM compliance methods, but are being held to the party line by World Shipping Council leadership. In its statement Thursday, the AgTC said that shippers set its policies and that it sent someone (Lemm) to testify who is in the trenches of ocean shipping, while the World Shipping Council sent its lawyers.
“Unfortunately, the World Shipping Council witness will not be an ocean carrier with the requisite expertise in the practical details of ocean shipping practices, but a Washington DC attorney. We need to move past this lawyer-driven adversarial situation,” it snipped.
After the hearing room emptied, Butler and Lemm were seen engaging in a collegial discussion. They agreed on the need to tone done language on both sides and said they would encourage carriers and customers to sit down with each other to work out process and information technology details necessary to exchange the container weight data.
In an interview, Butler said shippers are threatening to take their cargo to carrier’s competitors if they don’t accept the method of filling in the tare weight of the containers themselves.
“There’s been a lot of heated rhetoric, both written and oral, private and public, and I don’t think it’s terribly conducive to reaching a solution,” he said.
The problem with shippers giving the gross weight and carriers providing the tare weight is that carriers built their systems to accept one number and allowing process exceptions will greatly slow cargo productivity at the port, Butler said.
“If you’ve got some shippers giving you the total weight of the loaded container and you’ve got some shippers giving you just the contents, first of all, how do you tell which one you’re getting? And even if you know which one you’re getting, how do you deal with that on a systems basis?”
Receiving partial weights at this point would require carriers to reconfigure their systems to deal with an additional variable, the liner industry official said.
“July 1 is going to be here pretty soon. Carriers have been working on building these systems for up to a year or more. There’s no time to change the systems to deal with that. And the concern that the carriers have – and they’re not just trying to be contrary in resisting that proposal – but if you end up with a manual system like that it’s not going to work for anybody.
“So everybody wants to avoid disruption and congestion. The best way to do that is to have a common process where the inputs to the system are always the same. Down the road, are there ways to build more sophisticated, flexible systems? Maybe,” Butler said.
Carriers also need the VGM data sharing to follow a standard process around the world.
“What they tried to do as much as possible is not reinvent the wheel in country to country. In terms of your documentation system and compliance system, you try and build it so it works everywhere because that makes it more efficient,” Butler said.
Shippers petition U.S. for relief from container weight rule
