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July 1st SOLAS implementation – practical or patchwork?

Following the loss of the MSC Napoli, the International Maritime Organization (IMO) – of which 171 nations are Members – approved changes to the Safety of Life at Sea Convention (SOLAS) which will require, as of 1 July 2016, that shippers of containerized cargo provide to the carrier a “Verified Gross Mass” (VGM) for each container in advance of loading.

 In other words, beginning 1 July 2016, containers without a VGM statement should not be loaded by carriers at any port or terminal in any of the 171 Member nations.

 July 1st: Sooner than you think!

While the Rules come into effect on July 1st, Forwarders are well-advised to take steps to come into compliance with the requirements beginning on June 1st, which is tomorrow! Cargoes may be delayed, re-routed, or trans-shipped in unexpected ways, and if there is any chance that a container could be en route and subject to loading or transloading on July 1st, it requires a VGM statement.

The Laissez-Faire approach

Many nations, including Canada, appear to be taking a relatively laissez-faire approach to the implementation, encoding the new VGM requirements in the relevant statutes and regulations but leaving industry to determine how it will be implemented. Shippers have always been obligated to accurately declare particulars of cargo, including weight; from that perspective, the new rules specify how the container mass is to be verified but do not impose novel obligations on shippers.

This approach is not without its advantages: certainly we do not expect there to be any significant audit or enforcement efforts on the part of the government, which rightly expects carriers to do their duty in ensuring VGMs are provided for all containerized cargo in a timely fashion prior to loading. It does mean, however, that forwarder will need to navigate a patchwork of different procedures and requirements set by individual carriers, and will need to take steps to manage and minimize those risks.

Certified Equipment

SOLAS requires that the VGM be obtained using properly certified and calibrated equipment; in Canada, these are scales certified accurate by Measurements Canada. Only the most sophisticated shippers will have such equipment available for use, and accordingly Forwarders will have to be able to obtain or provide those services for the bulk of their customers. SOLAS also requires that the authorized party weighing the container be identified in the documentation; by implication, this means that forwarders should confirm in writing their authority (or that of their contractor) to provide the VGM data on the shipper’s good authority.

Carrier Policies: Cut-off

SOLAS requires only that the data be conveyed to carriers in time for them to prepare their loading plan. The cut-off time for providing VGM data will be set by each carrier and at each port of call. While it is hoped that industry will arrive at some consistent and broadly acceptable standards, at the present time it is incumbent on Forwarders to communicate with the carriers who serve their trade lanes and ensure that the relevant cut-off dates and times for VGM compliance are known by and met by your shippers.

Carrier Policies: Transmission

Similarly, there is as yet no standard or neutral form of VGM declaration, and therefore Forwarders will have to be familiar not only with the cut-off policies but the transmission policies of each and every carrier that serves their trade lanes or business. While it is expected that most carriers will provide for avenues of electronic transmission, there may be a transition period where paper declarations are the only practical option. Certainly inconsistencies in transmission or documentation policies have the potential to cause confusion and/or delay at trans-shipment ports. Again, until the transition has largely been completed and standards established, Forwarders will need to be aware of and ensure their shippers comply with the documentary transmission policies of each carrier.

Commercial risks of Delay

While strict enforcement action by governments is not expected here, carriers are expected and required to refuse loading to non-compliant containers, and this will be the main source of commercial risk associated with the implementation of SOLAS VGM requirements. Some terminals and ports are offering VGM weighing services; of these, some are offering them on a commercial basis (and at commercial rates) to shippers of cargo, while others are offering it as a last chance option for non-compliant containers (and pricing services accordingly). Accordingly, in some cases non-compliant containers may be brought into compliance relatively easily if they arrive at the terminal in a timely fashion; in other cases compliance will require shouldering punitive costs of weighing, or simply be declined loading without any option at all for compliance.

Communicating to your Customers

Forwarders should be proactively communicating to their customers about the impact of SOLAS, the requirements for VGM provision, and the commercial risks associated with non-compliance. Customers need to be aware that the rules for transmission and cut-off will vary from carrier to carrier, and you will need to ensure quotations or similar documents now include reference to these cut-offs. Importantly, forwarders should obtain the agreement from their shippers that they, the shippers, shall be responsible for costs, charges, and delays resulting from incorrect VGM reporting – unless of course the Forwarder is providing those services.

Remember, while SOLAS imposes obligations on shippers of containers, an NVOC or Consolidator is a shipper of a container and liable (perhaps concurrently with the actual shipper) for the VGM statement. Even where customers provide a packed container with a VGM statement, it is sadly the case that unscrupulous merchants may abandon cargo (and the underlying transaction) if compliance or enforcement costs make carrying on with the contract prohibitive, and where a liable shipper is insolvent or otherwise unable to compensate service providers for their compliance measures it is always possible that they will try to hold the forwarder accountable.

Mandatory reporting of VGM for all containerized cargo is only a month away: good communications with shippers and carriers, and of course attention to detail, will help ensure your customers are not tendering non-compliant cargo.

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