NEWSLETTER ARTICLE


 

A Summary of the Safety of Life at Sea (SOLAS) "Verified Gross Weight" Rule

 

by Rick Bridges, Vice President of Roanoke Trade and co-authored by Jacob Fisher, Partner, Scopelitis, Garvin, Light, Hanson & Feary, P.C.


The International Maritime Organization (IMO), some time ago, amended the Safety of Life at Sea (SOLAS) Convention to require shippers to verify container weights. This change was brought about by accidents resulting from overweight containers – both on the road and at sea – as well as studies showing that an unacceptably large percentage of significantly overweight containers are tendered to carriers. Since the new SOLAS container weight rules were released, and as the deadline for implementation rapidly approaches, there have been an increasing amount of questions, few answers and genuine concern among shippers and the industry as to the potentially serious impact of the rule on U.S. trade and competitiveness. Below is a brief guide to the new rule and answers to some of the questions that have been raised. However, the following information is not intended to be legal advice and you should therefore seek out a qualified transportation attorney for specific guidance. Also, keep in mind that this is a rapidly developing matter and further information will be forthcoming in the next few weeks and months.  

 

What is the New Requirement?

 

Effective July 1, 2016, the ‘shipper’ named on an ocean bill of lading will be responsible for providing the verified weight, referred to in SOLAS as the verified gross mass (VGM), of a packed container to the carrier and terminal operator. The container cannot be loaded on board the vessel until the carrier and terminal operator have the VGM. In addition, the carrier must have the information far enough in advance to complete the vessel stow plan.

 

Who is the Shipper?

 

As defined by the IMO, the shipper is “a legal entity or person named on the bill of lading or sea waybill or equivalent multimodal transport document as shipper, and/or who (or in whose name or on whose behalf) a contract of carriage has been concluded with a shipping company.” Under this definition, the forwarder, NVOCC, or other intermediary could be considered the shipper to the extent it appears as ‘shipper’ on the master ocean bill of lading. The ‘shipper’ is responsible for transmitting the VGM (in electronic or other format) to the ocean carrier and therefore must obtain sufficient information from its shipper client(s) and/or their cargo to calculate the VGM.

 

How is the VGM Calculated?

 

Calculating VGM can be accomplished in two ways. Option 1 is to weigh the container itself. If that is not viable, option 2 is to weigh the contents including packing materials and pallets and add the tare weight of the container.  Some terminal operators have already indicated they will not offer weighing services as they do not have the room for scales and the queues that will be created. Just as we saw with air freight screening, the best methods of VGM weighing may be off-port at the shipper, consolidator or other third party location. However, one note of caution: as this is a safety rule, the IMO guidelines state that when there’s a conflict between a VGM determined prior to container delivery and a ‘re-weigh’ performed by the terminal, the terminal’s re-weigh supersedes the earlier VGM.   

 

How is the Weight Certified?

 

Shippers will need to utilize “certified” scales and/or weighing services to obtain the VGM. SOLAS does not define “certified” precisely but suggests the requirement would be satisfied by using a scale or weighing service that is certified and/or inspected as accurate in accordance with local or state law. SOLAS will then require that the shipper provide the VGM in a shipping document and signed by a person duly authorized by the shipper with first and last name (in capitals if on paper), in addition to the company name. Some terminals have already indicated that they will only accept VGM certified containers via EDI. Investment in the electronic ability to transmit the VGM may be costly depending upon the existing level of capability of shippers and intermediaries. However, various software providers are signaling their intent to provide solutions for transmission of the data via digital format and INTTRA has created the eVGM initiative to collaborate with the various stakeholders and work towards global standards. 

 

But Aren’t Containers Already Weighed at the Terminal?

 

Yes, under existing federal Occupational Safety & Health Administration (OSHA) regulations, they should be.  Under 29 CFR 1917.71(b):

(3) Every outbound loaded container which is received at a marine terminal ready to load aboard a vessel without further consolidation or loading shall be weighed to obtain the actual gross weight, either at the terminal or elsewhere, before being hoisted.

(4)(i) When container weighing scales are located at a marine terminal, any outbound container with a load consolidated at that terminal shall be weighed to obtain an actual weight before being hoisted.

However, in practice, the scales operated at the ports may not be capable of weighing containers with the pinpoint accuracy required under SOLAS and/or aren’t certified as required under SOLAS. Some carriers have suggested that scales are off by as much as 7-10% in certain ports, even though under 29 CFR 1917.71(b)(8) those scales are required to be certified for accuracy by the standards of the state in which they are operated. And keep in mind that terminals may simply not have the room or infrastructure to weigh containers in great numbers without impeding the flow of commerce.

 

Who Will Enforce SOLAS in the U.S.?

 

As an international convention, SOLAS does not provide a national regulatory framework, so signatory countries will be on their own to create and implement the new requirements. This could result in regulatory uncertainty around the global for some time in the future, as some countries, like Japan and the U.K., have released guidance.  In the United States, at present, enforcement will be under the control of the Coast Guard. The Coast Guard has already signaled that they intend to enforce the rule beginning on July 1st and they do not expect delayed implementation nor do they expect their policy to include a margin of error between the VGM presented by the shipper and weights as checked at the port. Furthermore, the Coast Guard only has jurisdiction over terminal operators and steamship lines, not the actual shipper of the cargo. This will complicate enforcement in the event of erroneous shipper-supplied VGMs, likely leaving carriers and intermediaries with only contractual rights and remedies to rely upon. From a practical standpoint, SOLAS requirements will be ‘enforced’ by the carrier and if the acceptable VGM documentation is not timely provided by the shipper, that container will not be loaded on board the vessel. 

 

Are there fines or penalties for non-compliance?

 

At this point, little guidance has been issued by the Coast Guard. Fines or penalties may or may not be a possibility for carriers; the Coast Guard has indicated its primary enforcement mechanism is to detain the ship itself until the weight discrepancy is cleared. In this context, it will be important for carriers and intermediaries to consider potential actual and consequential damages for which they could have liability in the absence of contractual protections or where existing contracts have not been updated to reflect SOLAS VGM requirements. From a terminal perspective, many have already noted that no container will be accepted unless the VGM is transmitted electronically to them in advance of the container’s arrival.

 

What is the shipper’s (beneficial cargo owner’s) perspective?

 

Shippers have some very legitimate concerns with the rule beginning with the fact there was never any outreach to US shippers before the rule was created.  It’s also been found that the tare weights printed on the container don’t necessarily match the actual weight of the container with differences of up to 500lbs.  It’s assumed as containers are repaired or even in the process of manufacture, they gain weight and it’s not accounted for and printed tare weight updated.  Another important consideration is the fact that some cargoes can change weight due to changes in temperature and humidity and in some cases by as much as 10%.  Enforcement agencies in other countries are open to a weight variation tolerance and US exporters, especially agricultural and forest products shippers want the same consideration.  

 

 

What are the next steps?

 

Government authorities, carriers, terminal operators and consolidators will be communicating their intentions and expectations in the coming weeks and months. The lines drawn in the sand by US Coast Guard, carriers, and ports plus the growing resistance to the July 1 implementation date by various shipper groups will need to be considered as well. The industry has learned time and again, it is vital that it take action to bring solutions to the table rather than let decisions be made in the absence of meaningful industry input.  In the meantime here are some steps you should consider:

 

  1.        Communicate the new SOLAS container weight rules to your clients, sales and operations staff. Clients in particular should be aware of the start date of July 1, 2016, the no-load provision for non-compliant containers and their responsibilities and potential liabilities for non-compliance.  
  2.        Consider updating legal documents to expand liability limitations and indemnity clauses as well as, as applicable, firmly establishing the responsibility of the shipper in providing an accurate VGM. Master Service Agreements and/or shipper contracts should be amended to identify the party responsible for performing and documenting the VGM. NCBFAA terms and conditions have already been updated to specifically address the SOLAS VGM requirements and indemnify the forwarder or NVO, but be sure those updated terms have been appropriately communicated to clients and/or incorporated into existing contracts.  
  3.        Explore options in your local area (or areas from which significant traffic originates) as to what weighing facilities or methods might be available, particularly where clients don’t have the ability to provide a VGM.
  4.        If your company doesn’t have electronic capability to transmit VGM, accelerate the process of exploring the electronic VGM transmission options. Shippers will be looking for solutions, guidance and support so this may be an opportunity to differentiate your services. 
  5.        Understand how this new rule may affect your own liability and how insurance will respond. Your general liability or third party liability insurance may need to be expanded to cover worldwide exposures and you may want to consider obtaining proof of worldwide general liability or third party liability insurance from your clients. Also consider how your Professional Liability insurance will respond to claims that may come out of this new rule.

 

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