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Starting July 1, 2016, the International Maritime Organization’s Maritime Safety Committee approved amendments to The International Convention for the Safety of Life at Seas’ (SOLAS), will require that shippers verify gross container weight prior to shipping.
Mis-declaration of a container’s weight occurs when a shipper reduces the weight in its shipping document, sometimes in an attempt to lower shipping costs. But it may also occur when shippers merely estimate a container’s weight or fail to include the tare weight or dunnage in their calculations. Industry experts believe that approximately 20% of containers at any given time are mis-declared, and that upwards of 2/3 of all cargo claims may be attributed to mis-declaration and poor container packing. From 2006 to 2011 alone, an estimated $12.8 million dollars in losses stemmed from mis-declaration of cargo weight.
Masters, relying on shipping documents alone, may inadvertently trim their containers improperly, resulting in serious accidents. Mis-declaration was blamed for the sinking of the MSC Napoli in 2007, may have caused a fire onboard the MSC Flaminia in 2012, and the 2013 Maersk Kampala fire. Unstable loads may also lead to truck accidents and train derailments. Improperly balanced containers increase costs by decreasing efficiency, creating unnecessary delays, and causing supply chain interruptions.
To reduce operational issues and promote safety, the International Maritime Organization’s Maritime Safety Committee approved amendments to SOLAS, mandating the verification of container weight prior to shipping. Starting July 1, 2016, SOLAS will require the mandatory verification of the gross mass of containers pursuant to The International Convention for the Safety of Life at Sea 1974, Chapter VI. To comport with this new directive, the cargo must either: (1) be weighed at the loading container at an approved weighing station; or (2) all items in the container weighed and then included in the overall container’s weight calculation. Guidelines regarding the verified gross mass of a container carrying cargo, MSC.1/Circ.1475, Annex at 4, Sec. 5 et. seq. (June 9, 2014).
The shipper (see below) ultimately bears the responsibility for weight verification. Id. at 3, Sec. 4.1. The shipper must communicate the verified weight in advance, to allow the ship’s master and the terminal representative to prepare the ship stowage plan accordingly. Id. at 5, Sec. 6.3. The container should not be loaded onto the vessel if the shipper did not provide the packed container’s verified weight prior to shipping, unless the master or the terminal can obtain the verified weight through other means. Id. at 3, Sec. 4.2.
While this may all sound simple in theory, the practical considerations are numerous. For example:
• Who is the “shipper”? – While the burden to comply is rightfully placed on the shipper, it may be difficult to ascertain who the shipper of a non-compliant container may be. Numerous parties are likely involved in intermodal supply chains, from the customer who packs the container to a logistics company or freight forwarder. Thus, it may be difficult to trace the shipper of a non-compliant container. This is especially true when time is of the essence, when the container must be loaded timely to ensure the vessel stays on schedule.
• “Prior to shipping” – Ultimately, shippers must weigh their containers “prior to shipping,” but the guidelines do not govern when that may be. While it makes logical sense to have the containers weighed before loading to avoid repacking problems, the vague verbiage leaves little guidance for shippers and transportation companies as to when the weighing of the containers should occur.
• Duty of Care – If a shipper knows the regulation has been violated, but failed to act accordingly, will the shipper bear partial (or full) responsibility for any subsequent accident that may result? Just like a master relying on the mis-declared shipping forms to trim the vessel, a driver may also rely on mis-declared documents when relaying the container to the terminal. How do those in the latter part of the supply chain ensure that the shipper complies with the regulation in the first place? Record-keeping measures may need to change in order to preserve evidence to demonstrate that the container was found to comply with the new regulation before an accident occur.
• Technological Concerns – Shippers may not have the easy access to technology that terminal operators and trucking companies may already have in place. Technology like twist locks or head block sensors may weigh the containers. Alternatively, spreaders used to lift the containers onto the vessel can weigh these containers.
• Cost Transfer – Shippers may need to invest in new technology and retrofits, which may come at a high cost. Ultimately, shippers will need to bear these costs, or shift them to consumers, in order to successfully implement these new measures.
• Non-Compliant Containers – How should a terminal or transportation company deal with a non-complaint container? As noted above, it may be difficult to trace the shipper if a container is found too heavy upon arrival at the terminal. If the shipper is far away geographically, who should be responsible for the re-packaging of the container to ensure compliance? If so, who pays for the storage costs in preparation for re-packaging? Where should it be stored? If the shipper does not pay these incidental costs immediately, who should bear the initial cost of re-packaging before the cost is transferred to the shipper? From a terminal/port/vessel owner’s perspective, it may be prudent to clearly set forth these terms before a non-compliant container reaches its door.
• Implementation – What type of training and which stakeholders must be involved in order to promote implementation of this new regulation?
• Enforcement – What sort of fines should be imposed to ensure compliance with these new rules? What enforcement mechanism should be adopted if a container is found to be mid-declared? Should the containers be banned if a shipper is found to be a habitual violator of this new regulations?
The United States already mandates the compulsory weighing of all export containers. See 29 CFR 1917.71(b)(3). This new regulation is merely the next logical step towards transparency in the supply chain and reduction in operational risks. However, these issues should be discussed and considered well before the new regulations take effect in July 2016.
The shipper is defined as a legal entity or person named on the bill of lading or sea waybill or equivalent multimodal transport document (e.g. “through” bill of lading) as shipper and/or who (or in whose name or on whose behalf) a contract of carriage has been concluded with a shipping company. Guidelines regarding the verified gross mass of a container carrying cargo, MSC.1/Circ.1475, Annex at 3, Sec. 2.1.12 (June 9, 2014).