There is a common phrase embedded into insurance law that the party presenting the risk must act with “utmost good faith” when communicating information pertaining to a business transaction.
The container supply chain has evolved through its 50-plus years’ history into a complex range of business transactions between multiple entities involving the movement of cargo internationally. The variety of the stakeholders through the entire supply chain process is matched by the plethora of legal and regulatory obligations required to smooth the cargo’s passage. While much of the data concerned are necessarily received in good faith, critical elements are not known accurately.
Indeed, those not involved in container transport would be aghast that in the 21st century the accurate gross mass of cargo being packed into containers and carried through the supply chain is not known. Indeed, the fathers of containerisation would be almost as surprised that a culture and practice of tolerance and accommodation has developed over the last half century.
Few shipping incidents can be attributed in any great measure to weight alone. MSC Napoli is often cited in this context, although the UK Marine Accident Investigation Board was careful to conclude: “The effect of the discrepancies in the declared weights of the containers would not have been sufficient to cause hull failure, but it would have contributed to the reduction of the safety margin between the total bending moment experienced and the strength of the hull”.
That investigation is crucial in this story, since it was one of the few occasions where a systematic attempt was made to establish the weight of cargo carried in containers. Most of the 700 containers stowed on deck were weighed during discharge and the report states that 20% of those weighed were found to be “more than 3 tonnes different [that is both over and under] from their declared weights”. The largest discrepancy was 20 tonnes and the total weight on deck found to be 312 tonnes heavier than on the cargo manifest. This is sobering, as is the report’s estimate that the deadload — the difference between the observed draft and loaded deadweight calculated from weights declared for the ship’s manifest — was 1,250 tonnes.
Added impetus was given to a growing groundswell of opinion in favour of regulation with the publication in 2010 of the findings from the Lashing@Sea research project produced by the Dutch Maritime Research Institute. Among a number of important recommendations was that the unknown variables concerning accurate declaration of container weight could also compromise the stowage of containers on board ships, potentially leading to failure of lashings and stack collapses. The International Maritime Organization set about careful industry consultation, culminating in the adoption in November 2014 of a requirement for the shipper to provide a Verified Gross Mass of each and every container as a pre-condition of it being loaded on board a ship, with an enforcement date of July 1, 2016.
So now we are counting down, with about 300 days or so, by the time you read this, to go. Is the industry ready? Are the responsible individuals, companies and organisations aware of their future obligations? How will shippers comply? Will carriers and load ports shut out non-verified containers? Will VGM disrupt the supply chain by slowing its flow and/or bring extra costs? Will the Solas regulation be equally enforced globally?
While we will not be able to answer some of these questions until after July 1 next year, and in some cases sometime after that, TT Club is determined to bring the regulation and its potential implications to the attention of those concerned throughout the supply chain, in order to support as thorough preparation as possible. In essence a safety initiative, its importance grows as the future brings more varied cargoes, developing markets and bigger ships.
Who are those that should be concerned throughout the supply chain? The amendment to Solas mandating VGM specifically names the shipper, the master and the terminal representative, and — by implication — the competent authorities in the various jurisdictions around the world who will be enforcing the regulation. The shipper is required to present a signed certification of VGM for his container; the master (representing the carrier) and the terminal representative, who will receive and handle the container, are obliged to ensure they have the verification before it is loaded onto a ship.
As those involved in utilising, handling and transporting containers know only too well these definitions can encompass a vast array of companies and individuals. The shipper named in the ocean bill of lading may not be the originator or the packer of the cargo, certainly not when a freight forwarder is involved. The master as the representative of the ship operator may not be a direct employee of the carrier as the ship might be chartered and will very likely be sailing on a service for an alliance comprising several carriers.
The complexity of these relationships that link the global supply chain will be explored in next month’s edition of Containerisation International, together with an explanation of the exact responsibilities of the parties involved under the terms of the Solas amendment. For now, let us return to the specifics of the amendment and a discussion as to how the regulation may be administered in different regions around the world.
The precise wording of the amendment can be summarised as follows:
The shipper shall:
verify the gross mass by
(a) either weighing the packed container [‘Method 1’]
(b) or weighing all constituent parts in the load [‘Method 2’]
ensure that the verified gross mass is:
stated on the (signed) shipping document; and
submitted sufficiently in advance to be used in the ship stowage plan
If a verified gross mass is not available, the master and terminal representative shall not load on to the ship.
It is striking how effective this change to Solas might be. It immediately became law in all jurisdictions that are signatory to the convention, with no further enactment required. It could also benefit inland transportation and other infrastructure, in that it provides greater certainty of weight for any modal restrictions, since the vast majority of containers remain undisturbed through their entire journey.
Equal implementation and enforcement of the regulation globally – vital for trade facilitation – remains a challenge. Recognising that the precise competent authority (usually a department of national government) tasked with enforcement may differ in each jurisdiction, the IMO published guidelines. The simple objective of this change was to ensure that accurate weight information is available and used. However, government bodies can be notorious for operating in silos, which may make consultation with industry stakeholders more difficult and protracted.
A number of countries are advanced in identifying processes by which the revised legislation can be implemented; a leader among them being the UK, which has produced a Marine Guidance Note (MGN 534 is published by the Maritime & Coastguard Agency) following a period of consultation among the freight industry. The UK is utilising existing auditable accreditation systems (such as Authorised Economic Operator, ISO 9000 and Enterprise Resource Planning systems) to manage certification of the Method 2 process, whereas calibration and certification for straight weighing (Method 1) is accommodated by existing weights and measures regulations.
The UK model may form a useful base for other jurisdictions. A number of authorities in the European region are understood by TT Club to have an appetite to operate the Solas amendment to the same standard and see the UK model as a possible solution. Much work remains to be done, particularly in many Asian jurisdictions, where of course a large majority of packed containers are loaded.
There remains a divergence of opinion around the world as to whether most shippers will choose the calculation route (Method 2), subject to appropriate national certification, or simply have the box weighed at the end of the packing process. Discussion of the challenges facing the industry as to “How to Weigh” will be presented in Part Three of this article to be published in two months’ time.
Meanwhile, there can be little doubt that the accuracy derived from verification will deliver numerous benefits — not least safety and security throughout the supply chain.
Please visit Lloyd’s List at http://www.lloydslist.com/ll/ for the original article.
* Peregrine Storrs-Fox is the TT Club Risk Management Director at Thomas Miller & Co Ltd
All credit to Lloyds List & TT Club
