On July 1, a new global shipping rule goes into effect, which has the potential to disrupt your supply chain. The shipper must now validate and declare a container’s weight before the carrier will accept the cargo. Otherwise, your shipment can be rejected – causing delays and costs. Are you ready?
AmCham Shanghai members involved in international trade must be fully prepared in order to avoid shipment delays. The forwarders and ocean carriers play a key role in the education process and should be consulted to ensure the shipper is compliant. My preferred source of information is a special section dedicated to the IMO Container Weight Rule on the Journal of Commerce’s website http://www.joc.com/special-topics/container-weights (While it may be behind a pay wall, keeping aware of the ever-changing rules/implementation may outweigh the small subscription cost plus it’s an excellent international trade journal in its own right.)
Ultimately, the shipper (often defined as the legal exporter of record) is responsible for ensuring that the VGM is accurate. Thus, if you are a U.S. exporter selling product to China, then you are legally responsible for verifying the gross weight of that container. On the contrary, if you are a U.S. importer buying product from China, the seller in China who exports the product is legally responsible. However, bear in mind that if the Chinese factory is lazy or incompetent and declares a false weight, you may pay a steep price, as there could be inordinate delays caused by the port rejecting the container until the container is re-weighed and a new VGM declaration is transmitted. Do you really want to take that risk? I didn’t think so.
IMO SOLAS VGM
Some background: The International Maritime Organization (IMO) is a specialized agency of the United Nations and is responsible for regulating shipping. The IMO develops and maintains a comprehensive regulatory framework for shipping; including safety, environmental concerns, legal matters, technical co-operation, maritime security and the efficiency of shipping. The container weight mandate from the International Maritime Organization under the Safety of Life at Sea (SOLAS) convention comes after mis-declared weights contributed to maritime casualties such as the breakup and subsequent beaching of the MSC Napoli on the southern U.K. coast in 2007 and the partial capsizing of a feeder ship in the Spanish port of Algeciras in June 2015. The IMO’s Maritime Safety Committee (MSC) approved changes to the SOLAS convention regarding a mandatory container weight verification requirement on shippers. It will require verification of container weights, Verified Gross Mass (VGM) before containers may be loaded aboard ships and will become legally binding on July 1, 2016.
Whilst the IMO has the authority to make this rule, the actual implementation and enforcement may not only vary from country to country, but could also potentially be handled differently by different ports within the same country, or even amongst different terminals within the same port. Shippers are nervous, as they still don’t know if they should pay to use the port’s truck scale to weigh their laden container, or if they should buy a “weighbridge” truck scale for their factory and weigh it themselves (referred to as Method 1), or continue with what most factories have been doing, which is weighing each pallet individually, adding them together and then adding to that the tare weight of the sea container (referred to as Method 2). As of this report, any of these methods are deemed acceptable.
After you determine what the VGM you will declare is, you still must find a method to transmit this weight declaration to the ocean carrier. There are many service providers who offer a platform to submit the VGM information. One such provider is called “CargoSmart,” and they report that their platform is fully compliant and several major forwarders have reportedly confirmed their intention to use that platform for submission. Per CargoSmart’s own statement:
“Weighing services, weight accuracy tolerance levels, cutoff times, and penalties for non-compliance vary by country, terminal, and carrier, making it challenging for shippers to prepare their weighing, verification, and processes in time for the implementation date,” CargoSmart noted.
“Each steamship line has its own procedure to receive the VGM,” said Rei Goshima of Nippon Express USA’s ocean cargo division. “CargoSmart has one window to submit the VGM, making it easy and simple to comply by the implementation date. CargoSmart’s solution allows Nippon Express to collect the weight information from its customers and other weighing parties and to have visibility to the status of the required data before submitting the VGM to its carriers.”
Maersk Line, one of the largest container lines in the world, is worried about keeping global supply chains intact during implementation. The Journal of Commerce quoted Maersk Line’s Chief Commercial Officer, Mr. Vincent Clerc, as anticipating a bumpy six months, and there’s a need for global coordination and alignment on how to implement the VGM rule.
Dan Krassenstein is a global supply chain executive with over 30 years of experience in manufacturing, trading and logistics in Asia, Latin America and the U.S. He is Director Asia Operations for Procon Pacific LLC, which is the largest importer of FIBC (Bulk Bags/Industrial Textiles) from China to North America for the chemical, agriculture, mining and food industries.