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Ship Via Containers? New Weight Verification Regulation Warrants Attention
April 29, 2016
On its face the regulation seems logical and straightforward: Starting 1 July 2016, shippers* are required to provide verified information on container weights, and port operators and container shipping companies are prohibited from loading any container lacking verified weight information.
The implications of this global regulation, however, are not straightforward. And a few months before it goes into effect, many questions remain about how compliance will be achieved.
Addressing an Enduring Problem
Misdeclared cargo is a problem that has long bedeviled the shipping industry. While shippers have an obligation to provide all relevant information to carriers with “the utmost good faith,” only a handful of countries currently require verified information on container weights. And since weight is an important component in freight rates, shippers are sometimes inclined to understate the weight of their containers. (Click here to read more about the role of the ubiquitous shipping container in facilitating globalization.)
The consequences are not trivial. There are numerous examples of equipment being damaged and personnel being injured when lifting an overweight container. And once onboard, overweight containers can create stability issues, and perhaps threaten the structural integrity of the vessel.
In one example, a ship was deliberately grounded off the coast of England after experiencing structural damage. An official inquiry found that 20 percent of the containers stowed on deck weighed considerably more than was declared, and concluded that overweight containers were one of the factors that caused the ship to break up.
In response to this ongoing threat, the International Maritime Organization (IMO) approved an amendment in 2014 to the International Convention for the Safety of Life at Sea (SOLAS) requiring 100 percent verification of container weights prior to loading. Since SOLAS has been ratified by 159 countries which flag about 99 percent of merchant ships in terms of gross tonnage, the scope of this amendment is effectively global.
The amendment doesn’t create a “new” requirement; it merely reinstates an existing rule requiring shippers to provide correct container weights. What is new is the stipulation that a container cannot be loaded onto a ship without a verified weight.
The amendment provides two methods for verifying container weights:
Method 1: weigh the packed container with equipment that meets national certification and calibration requirements; or
Method 2: weigh the contents – including packing materials, pallets, etc. – and add the container’s tare weight.
Whichever method is used, the weight verification must be “signed” by someone representing the shipper or acting on its behalf (electronic signatures are permitted). In the event a container is later found to weigh more than indicated in the verification and causes damage, the signature would be used to establish liability.
Several Questions, Few Answers
The IMO leaves implementation to member states, industry groups and individual companies, and enforcement is entrusted to local authorities.
And with the amendment taking effect on 1st July, a number of questions remain about how it will be implemented and enforced.
No one really knows what percentage of shippers, including freight forwarders and NVOCCs, is currently able to comply with this regulation. For those that aren’t, one option would be to buy some scales and handle this requirement directly. Another would be to contract with a third-party service provider. Port operators could also weigh containers, perhaps as they pass through the stacking yard. While that option has some merit and would generate new revenue for port operators, they would have to come up with solutions that don’t disrupt work flows, and develop administrative systems for managing the data.
For shippers sending goods from small regional ports, especially those in Africa and Latin America, compliance could be especially challenging. In many of these countries the infrastructure to accurately weigh containers is limited (if non-existent), and enforcement by the local authorities may not be a priority. Moreover, the regulation specifies that containers have to be weighed at the outset of the journey. So what happens when an unverified container coming from a feeder port in Africa arrives for trans-shipment at a global mega-port? How does the shipper get the container back on its way? Who pays the costs of storing the container in the interim?
In addition, will the container ship companies now require verified weight data on the entire shipload before developing the stowage plan? If so, that implies longer lead times; that could have implications for shippers sending perishable goods as well as port operators that have to house containers for longer periods. So far the major container ship companies have offered limited guidance on how they might change their operational processes to comply with the amendment.
It appears increasingly likely that shippers will not be able to achieve 100 percent compliance on 1st July.
As a result, companies sending goods via containers should assess their specific transport networks to determine the potential implications associated with this requirement. Companies that ship directly bear sole responsibility for verifying container weights, and will need to develop solutions for ensuring compliance, especially if “Method 1” is used.
Many companies, however, rely on freight forwarders and/or NVOCCs. In that case, risk managers should review their freight forwarders’ / NVOCCs’ specific plans for verifying container weights including:
- How is scheduling likely to be affected?
- What are the cost implications, if any?
- What guidance have they received from the container ship companies?
- Will contract terms per the Incoterms 2010 rules need to be modified?
- What are their contingency plans in the event something goes amiss?
Hopefully the answers will be reassuring. But if not, it’s certainly better to start investigating alternatives before 1st July, instead of scrambling for solutions after a link in the chain breaks.
Marine risk engineers can help companies evaluate their supply chains in light of this requirement, especially in cases where the supply chain is far-flung and complex.
In addition, this requirement could have some implications to a shipper’s liability exposures. Marine insurance brokers and underwriters can help determine if any changes to liability programs are needed.
This change should lessen the risks to port facilities and container ships posed by overweight containers. It appears likely, however, that it could take some time before compliance approaches 100 percent, with unpredictable impacts on the global supply chain.A version of this article originally appeared in the April 26 edition of Post Magazine.
* Inthis article, “shippers” refers to the entity named in the bill of lading orsea waybill. This could be a manufacturer / commodity producer shippingdirectly, or a freight forwarder / non-vessel operating common carriers(NVOCCs) acting on behalf of a manufacturer or commodity producer.