July 1 looms ever more ominously over shippers and NVOCCs. Uncertainties about the requirement to report the weight of a container prior to tendering it to ocean carriers are prompting worries of units being rejected and possible backlogs piling up at ocean terminals.
What is certain is that the new regime, which was adopted by the International Maritime Organization (IMO) to enhance maritime safety, will come into force on July 1 this year. It has become national law in each of the 170 IMO member countries and three associate states. And it requires all shipping containers to have a verified gross mass (VGM) before they can be loaded on a ship. Ocean carriers will be barred from loading containers for which a signed VGM figure has not been provided by the shipper. Shippers under the rule have the legal responsibility to provide a signed VGM for every container.
The mandate itself may be clear, but the definition is not. “There is nothing that says exactly what they mean by ‘certified weight’,” remarks Bob Imbriani, executive vice president, international of US forwarder Team Worldwide. “Who is it certified by – by the shipper? Can a forwarder do it? Or do you need to get it verified by a third party?”
There is no standard format for the VGM declaration. Nor is there a clear-cut definition of accepted methodologies to establish the weight of a container. Does it have to be weighed, or is it sufficient if the weight of the cargo is added to a standard tare weight of a container, one forwarder wondered.
There appears to be a widespread assumption that container terminals will perform the weighing and enter the data prior to handing the boxes over to shipping lines. However, many terminals are not equipped with scales. Of the three container facilities at the port of Miami, only one has scales to perform this, noted Albert Saphir, president of logistics consulting firm ABS Consult.
Some observers have raised doubts if terminals have the space to accommodate such scales. Moreover, it is doubtful whether or not such an investment would be viable for a terminal operator.
In fact, some terminal operators have declared that they will turn away containers that arrive at their facilities without a VGM notice from the shipper. Maher at New York-New Jersey has indicated that it will not accept containers if it has not received the VGM data electronically prior to the arrival of the cargo.
There are also questions as to what is supposed to happen if a spot check at the port shows a different weight than what is stated in the VGM notice.
Some ocean carriers and NVOCCs have expressed worries that many shippers are unprepared for the new regime and will deliver containers without a statement of their weight. China is one of the countries where such concerns have been aired.
“LCL shippers are not concerned about this. Shippers who let their forwarders load the containers are not very concerned either. But shippers who perform the loading themselves are concerned,” said Imbriani.
He added that NVOCCs are also worried. After all, they are deemed shippers on the master bill of loading for a consolidation.
Given the liabilities they face, shipping lines are not likely to go lightly on the regulation and accept containers without proper VGM documentation. As a number of terminals have stressed that they would not show flexibility either, concern is mounting that ports could face backlogs and possibly serious congestion as a result of too many boxes without adequate documentation arriving at container facilities.
This has raised the spectre of a flurry of activity diverting cargo to air freight in order to reach markets in time. Airlines fondly recall the problems at US West Coast ports a year ago that led to a massive shift of cargo to air, producing a flurry of charters as well as full loads at premium rates on flights linking Asian gateways to the US market.
The International Air Transport Association does not anticipate a repeat of that phenomenon, but it is advising its membership to prepare for a possible surge in air cargo volumes in the summer.
Given the recent downward pressure on air freight yields as capacity growth eclipsed demand such a development would be welcomed by airlines, but shippers would face a lot of anxiety, grief and potentially huge costs to bring their goods to market.
By Ian Putzger
Correspondent | Toronto
