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The deadline is round the corner, and the maritime industry worldwide is gearing up towards meeting it. Indeed, the shipping sector is abuzz to implement the amendment to the International Convention for the Safety of Life at Sea (SOLAS) from July 1, 2016. Some time back, the Maritime Safety Committee of the International Maritime Organization (IMO) adopted an amendment to the convention for SOLAS, leading to a requirement for shippers to declare the verified gross mass (VGM) of a packed container and to communicate the same to the carrier. This move was made as misdeclared container weights have been historically a problem for the industry and present problems such as serious ship instability, which can be a hazard for crews and cargo. Port and terminal personnel are also at risk when moving the containers. The SOLAS amendment intends to ensure the safety of the ship, workers, cargo at the sea. According to the amendments, shippers and forwarders (when they are named as the shipper on the bill of lading) need to verify and provide their container\’s VGM to the carrier and terminal prior to it being loaded onto a ship. All containers (including transhipped ones) shall not be loaded aboard ships (excluding ro-ro ships engaged on short international voyages) if the shipper has not verified its gross mass, expressed it in the documents, and communicated it sufficiently in advance so that the ship\’s stowage plan can be prepared.
The requirement requires the shippers to verify VGM by the following methods: Using certified and calibrated equipment to weigh a packed container with cargo. The shipper may also use a third party to perform the weighing of the container; or Weighing all cargo contained in packages, which includes the mass of pallets, dunnage and other cargo securement materials to be packed in the container and adding the tare mass of the container to the sum of the single masses. This method can be used by using a certified method which has been approved by the competent authority of the state in which packing of the container was completed. Any third party entity that has conducted some or all of the packing of the container should notify the shipper of the mass of the cargo items and packing and securing material that the party has packed into the container in order to properly facilitate the shipper’s verification of the gross mass of the packed container under this method.
Cargo weight information between third parties and shippers needs to be effectively communicated under an agreed systematic form of communication. The IMO has agreed to a practical and pragmatic approach for the three months after the July 1, as concerns had been raised about how to manage containers loaded before July 1 which would reach their final port on or after that date, as well as any possible teething problems with necessary software updates, data sharing, and communication systems. The IMO decision was also made after a survey by Drewry found that many shippers and forwarders are still not sure how they should comply with the new rules across their global networks.
As reported in Lloyd’s Loading List, many liners, forwarders and shippers remain confused or are unprepared for the new rules, prompting fears of ocean supply chain disruption and port congestion. The Drewry survey concluded that confusion continues to surround the new VGM rules, and most stakeholders expect some delays when they enter into force. “As the
countdown continues, it is clear that many shippers and forwarders still do not know how to comply,” said a Drewry analyst. “Better information on compliance requirements and options is starting to be communicated but there is still a lack of standardisation and coordination.” The Drewry survey covered 180 respondents – 88 were either shippers or forwarders, 31 identified themselves as ocean carriers, and 61 as ‘others’. While virtually all of the respondents were aware of the new container weighing rules, 45 per cent of shippers said that their service providers had not given sufficient information on the new VGM rules. Some 55 per cent of shippers said that they expect some delays to container shipments and/or cargo rolls as a direct result of the VGM rule. The ratio of forwarders and ocean carriers expecting delays was even higher. Drewry concluded that with just over a month to go before implementation, some progress was being made but it was clear that not all shippers would be ready to comply with the IMO rules. “We urge any shipper or forwarder to talk to their carriers as a matter of urgency to clarify and finalise their compliance processes and to plan for likely port and logistics delays from July1,” said Drewry.
Indeed, still a number of grey areas exist worldwide. Incomplete implementation of VGM would unquestionably result in issues such as increase in risk exposure due to disturbances in the supply chain; unweighed/misdeclared containers being refused on board with delays for perishables or time-sensitive cargoes and the consequent accumulation risk associated with more containers languishing in ports. Additionally, liability underwriters will have short term issues with clients in the logistics sector as their exposure increases.
What is happening in India?
In India things are no different, with the industry honchos being skeptical about how SOLAS amendments will be implemented. During May 2016, following several rounds of consultations with stakeholders, the Directorate General of Shipping (DGS), finally fixed the tolerance level of variation between the VGM of a container declared by a shipper and its actual weight obtained from a terminal operator at plus or minus of 1,000 kilogrammes, from a previously recommended threshold of 500 kilogrammes. The authority said provisions under the Indian Legal Metrology Act will apply if parties in the supply chain disagree with a VGM for whatever reason. It also categorically stated that containers that show up at terminal gates without the VGM having been provided by the shipper or their authorised representative will not be accepted for loading on to ships.
“Verification of gross mass of the container shall be carried out at a location away from the port/terminal to avoid congestion at the port/terminal area. DGM, however, unlike its counterparts in several other countries, did not specify the penalties that shippers could face for non-compliance. “The name of the shippers defaulting in the declaration of the verified gross mass of containers may be displayed on the website of the Directorate General of Shipping,” the ordinance states. According to the guidelines, the container should preferably be weighted at the container stuffing point/container freight station/inland container depot or en-route to the port/terminal. The weighbridge/weighing appliances participating in the programme shall be electronic type and shall be calibrated and be in possession of a valid certificate from the department of legal metrology. The VGM..shall be provided …in a tamper proof document to the shipper. It shall be the responsibility of the shipper to upload the relevant information…on a dedicated secure website that can be accessed by all concerned including the master of the ship, or his representative, said the guidelines.
According to some industry players, what is missing in these rules is the fact that the terminals can be the second check point for VGM. Terminals like the ones at the Jawaharlal Nehru Port Trust (JNPT) had lobbied hard for the inclusion of a clause that would allow them to sell their on-site container weighing services. “What is the difference between the previous system and the new one? There is no check point for the VGM figures declared by the shipper, as per the Indian guidelines. Ideally, the terminals should have been made as the second point of check,” says Ashok Kumar Bhattacharjee, Secretary General, Indian Private Ports and Terminals Association. GTI, which accounts for roughly 40 percent of JNPT’s total throughput, said it won’t be offering weighing services at the terminal as the shipper or shipping line will be responsible for declaring the VGM in cargo gate-in documents (Form-13/Form-11) filed electronically with the terminal. “We will record the weights of containers received at the yard for exports. If there is a variation, then a charge for change in weights will be levied as per our scale of rates,” the company was quoted as saying by the media. Other terminals such as APM Terminals operated Gateway Terminals India and DP World’s Nhava Sheva International Container Terminal say that they too are fully geared up to comply with the IMO regulation. The terminals may be prepared but the industry seems not very optimistic about the smooth implementation of the SOLAS amendment. “The industry is gearing up for the change but the preparations still need to be much more. There is a lot of confusion among the various players as regards to how it will be implemented. The government needs to spread awareness among the shippers,” says Vivek S Anand, President, Mumbai And Nhava-Sheva Ship-Agents Association. “Till now much awareness has not been spread and we would be facing some teething problems initially and we will try to face them at best. shippers need to be proactive and various organisations are conducting seminars for disseminating information,” said L K Panda, nautical advisor to the government of India, and additional director general shipping, Ministry of Shipping.
A survey done by Maritime Gateway of the major exporters in the textile industry showed the sensitisation level of the SOLAS regulation hasn’t percolated to the hinterlands as most exporters interviewed had not even heard of the new regulation. “I am not aware of the new regulation. Where do I get to know about this? We declare weight during the booking done by the CHA but we do not know a thing about the new regulation or the VGM. Nobody from the port or terminal and neither the freight forwarder has informed us about it,” said Nachi Muthu, managing director, Apex Exporters, who exports as many as 50 to 60 containers of garments to Europe via Tuticorin Port. “The implementation of the new rules in India may take some time because it is just the nascent stage and at every level of implementation there seems to be lack of clarity,” says Shailesh Bhatia, managing director at Bhatia Shipping Pvt Ltd.
According to him, one of the biggest problem will concern the fact that the guidelines state that weighbridge/weighing appliances participating in the programme shall be electronic type and shall be calibrated and be in possession of a valid certificate from the department of legal metrology. “It may not be possible for all shippers to comply with this,” says Bhatia, adding: “Another problem will pertain to the LCL cargo, as in this case VGM will be declared by forwarder, who may again not be able to calculate the same in the most appropriate manner.” There seems to be no dearth of the teething issues and confusion is galore as regards to most aspects of the rules. “All the terminals and ports have come up with different SOPs to handle the new rules. How can shippers comply to different set of SOPs?,” avers Ashok Janakiram, president, Association of Shipping Interests in Calcutta. Indeed, amidst this confusion, a lot of preparation is needed by the shippers. “The new rules will create some kind of a burden on the shipper with the separate process where in we have to declare the VGM. The process would be time taking and there is going to be an extra cost. We are expecting about Rs.200 to Rs.300 for the charges of weighing a container. Though modalities have been listed out by the DGS, there needs to be proper communication between all the stakeholders but that is not the case as of now. Till date only Maersk Line has come out with a detailed process note; no terminal or port has contacted us regarding this,” says Ramana Murthy, GM, Logistics, ITC. Furthermore, international liners like Mearsk and all have their own software for booking a cargo but Indian liners mostly use INTRA for the booking and industry players aver that they will not have the customised option to declare weight of individual containers if they are booking more than one container.
Moreover, many exporters depend on CHAs for their work and this means that the chances of goof-ups from their side regarding filing of VGM are high during the initial phase, aver industry experts. There are other challenges also the port and terminal operator has to chalk out plans as to when the information has to be made available and they need to come out with a process note on this, which has not happened to date. Furthermore, in case a shipper declares the VGM wrongly and this is found out when the container is being loaded on the ship and passes through the weigh bridge of the terminal, then no comprehensive contingency plan has been prepared for this kind of situation. Indeed, it will take some time for the SOLAS guidelines to be understood by the trade, but industry players feel that the teething problems do need some solutions, especially as regards to cross verifying the VGM. “As a second check point, the shipping lines can ask the terminals to do a random check. We know which commodity containers are more liable to be misdeclared. These are the ones which have high export taxation. The cargo that are historically not rightly declared include commodities such as steel, granite and agricultural products. By doing random checks of such commodities we can ensure that shippers do not declare the VGM wrongly,” says Deepak Tewari, Chairman, Container Shipping Lines Association. “As far as the second check point is concerned, terminal operators should make sure that their contracts with shipping lines include a clause which ensures that this information is provided by the shipping line before or by the time that the container is delivered to the terminal.
The terminal contract should also contain a clause stating that any and all consequences of the inaccuracy of the gross mass verification by the shipper will be at the shipper\’s or the shipping line\’s risk, with an indemnity and hold harmless clause included for such events. The consequences of misdeclaring the gross mass of a packed container can be far-reaching. If a discrepancy between the declared gross mass and the actual gross mass of a packed container go unnoticed, it could have an adverse impact on the safety of the ship, seafarers and shoreside workers, by leading to incorrect vessel stowage decisions and potentially collapsed container stacks or loss of containers overboard,” says Harpreet Singh Malhotra, CMD, Tiger Logistics (India) Limited. According to Bhatia, big shippers like Maruti should be allowed to declare VGM on the basis of self certification, as such shippers have the equipment in place to rightly measure the VGM. This will ensure much more smoother implementation of the process. “A good alternative would be that all containers should come via an ICD or CFSs. The DGS should ensure that there is a single regulation that should apply to all the terminals,” says Janakiram.
Indeed, there are still a great deal of unresolved issues surrounding the new VGM rules. The full extent of the implications will only be felt upon their implementation. The potential problem areas highlight the urgency of the situation. In order for these SOLAS changes to work, total transparency from carriers and national authorities is vital. “Authorities need to detail their policies to implement these new rules, and should take an active role in their coordination. In doing so, they will create a level playing field between nations. Shipping lines should also provide their customers with relevant information on their policies for acceptance of VGM from forwarders acting as carriers, as well the means and timelines for transmission,” says Dinesh Gautama, president, Navkar Corporation Ltd. The key takeaway is that forwarders and shippers have a large amount of work to do in order to fully prepare for the SOLAS rules. Greater clarity is needed amongst all parties so that goods can be shipped without undue delay. Though the main players haven\’t yet reached a solution, it\’s evident that steps are being made and will hopefully be put into place in time to ensure that SOLAS amendments benefit the entire Indian maritime industry.
Basics of VGM reporting
Before a packed container can be loaded onto a ship, its weight must be determined through weighing. The shipper named on the ocean carrier bill of lading (or by arrangement of the shipper, a third party) has a responsibility to weigh the packed container or its contents. In the absence of a shipper providing a verified gross mass (VGM) of a packed container, it “shall not be loaded on to the ship.”
The “master” forwarder named on the ocean carrier\’s bill of lading is responsible for the accurate cargo weight verification of all the cargo from all the co-loading forwarders using the container, and may not simply pass on cargo weights that may have been declared by those other forwarders.
The IMO Guidelines also state: “A container packed with packages and cargo items should not be loaded onto a ship to which the SOLAS regulations apply unless the master or his representative and the terminal representative have obtained, in advance of vessel loading, the verified actual gross mass of the container.”
Packed containers for which a verified weight was provided prior to loading in a preceding load port may be loaded in transshipment ports without having to have their weights re-verified if the port terminal in the transshipment port has been advised of this by the operator of the arriving vessel.
Weighing methods: (1) Weighing the container after it has been packed. (2)Weighing all the cargo and contents of the container and adding those weights to the container’s tare weight as indicated on the door end of the container. The weighing equipment used must meet national certification and calibration requirements. Estimating weight is not permitted.
The party packing the container cannot use the weight somebody else has provided, except in one condition: “Individual, original sealed packages that have the accurate mass of the packages and cargo items (including any other material such as packing material and refrigerants inside the packages) clearly and permanently marked on their surfaces, do not need to be weighed again when they are packed into the container.”
A carrier may rely on a shipper’s signed weight verification to be accurate. The carrier does not need to be a “verifier” of the shipper’s weight verification.
For the shipper’s weight verification to be compliant with the SOLAS requirement, the shipping document must be signed by a specific person (representing the shipper) who must verify the accuracy of the weight calculation on behalf of the shipper. The lack of a signed shipper weight verification can be remedied by weighing the packed container at the port.
When a marine terminal receives a packed export container that does not have a signed shipper weight verification, there will need to be processes in place at the terminal for obtaining the weight of such containers. Vessel stow plans should use verified weights for all packed containers loaded on board.
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