TT Talk - Don’t wait – are you prepared?

TT Talk - Don’t wait – are you prepared?

Despite publicity about the amendment to SOLAS (International Convention for the Safety of Life at Sea) requiring that all packed containers have verified gross mass (VGM) stretching back at least five years, many parts of the industry have waited to the eleventh hour before putting individual and collaborative minds to the issue of implementation. With less than five months to mandatory global enforcement on 1 July 2016, it is critical for all stakeholders to engage now.

Recent weeks have – perhaps inevitably – seen a surge in interest and comment on the forthcoming mandatory requirements for container shippers to obtain and communicate VGM as a precondition of every packed container being loaded on board a ship. It is somewhat galling that this fundamental step-change, which has been regularly discussed over at least five years, is now often giving rise to more ‘heat’ than ‘light’.

Clarity for stakeholders
TT Club participated in preparing an Industry FAQ document and, together with the other sponsors, remains committed to assist any stakeholder in the supply chain globally to achieve timely and effective compliance. At their heart, the revised requirements appear logical and straight-forward. However, they undeniably carry complexity in implementation and require thorough evaluation of the precise local operational circumstances for each stakeholder, as well as proactive engagement between counter-parties.

Nobody can deny that identification of accurate gross mass for freight has always been necessary. The crystal clarity now set out in this regulation as to what comprises gross mass for SOLAS purposes – the mass of everything put into the container and the tare mass of the unit itself – presents little logical challenge. The historic, current and future challenge may well be more to do with processes by which such gross mass is obtained, signed for, communicated and used accurately throughout the transaction.

“The historic, current and future challenge may well be more to do with processes by which such gross mass is obtained, signed for, communicated and used accurately throughout the transaction”

Determine methodology
Shippers – as often as not consolidators and freight forwarders – need to evaluate the requirements in the context of their operations and the types of cargo being consigned through the container supply chain. ‘Method 2’ (paragraph 4.2) was specifically crafted to facilitate compliance by those who are able to determine weight by reference to regular and systemised processes. Shippers of homogenous full load cargoes are the direct beneficiaries; all other types of shipment may prove too complex, costly or time-consuming to process following an actual weighing for all freight, dunnage and securing that is being packed into the container. Nevertheless, many packing forklifts or handling devices facilitate the capture of mass information – they simply need to be calibrated and certified… However, MSC.1/Circ.1475 (paragraph specifically mentions that bulk (which necessarily includes liquids in flexitanks and ISO tankcontainers) and unstructured cargoes need to follow ‘Method 1’.

“Safety in all modes should drive packers towards creating the ability to obtain VGM before the journey commences”

Thus, the evaluation of the operational circumstances may lead to the conclusion that Method 1 is more accessible. Safety in all modes should drive packers towards creating the ability to obtain VGM before the journey commences. Traditional weighbridges offer a solution, but are expensive to install and require careful procedural control (see MSC.1/Circ.1475 paragraph 11.1) to ensure sufficient accuracy – subtracting everything extraneous to the glorified packing case, the packed container itself. Amongst the emerging alternatives to fixed weighbridges are the landed and trailer jack solutions being developed by Bison in New Zealand.

Liability & contracts
Having determined how gross mass will be obtained, shippers/consolidators/forwarders need to ensure that any other party involved will provide the level of service required. At its most basic, this means due diligence that the service complies with national calibration and certification requirements for the equipment used. However, those providing such services – for which the shipper signing the document will take legal responsibility – will need to be persuaded to accept terms and conditions that dovetail appropriately with the transport contract regimes and these SOLAS requirements.

Furthermore, streamlined and timely communication of VGM to the carrier and terminal, whether from a third party weigher or simply from the shipper, needs to be managed. INTTRA suggests that roughly half of the estimated 300,000 container exports per day are currently non-digital, which presents both challenge and opportunity for the industry to smarten dramatically the speed, consistency and accuracy of data flows. Yet again, this may not be quite so simple, since the standard EDI messages both need adaptation (which is in hand) and are often not quite so standard.

Ideally, VGM is provided well before the container is presented at the marine terminal. Processes between the carriers and terminals will need to be slick for this to be fool-proof, but more than anything these parties must agree how the in-gate process will work and how any form of exception will be handled. Some terminals have definitely decided to refuse containers that do not have VGM, others are working out the implications of investing in weighing equipment and additional space requirements. Bottom line, it is a binary process, for which both carrier and terminal are legally exposed – VGM load, no VGM no load. The spectres of land or water side congestion, or disruption to port throughput are extremely unattractive for all commercial and political stakeholders.

“Bottom line, it is a binary process, for which both carrier and terminal are legally exposed – VGM load, no VGM no load”

Pass on the message – be prepared
There has been massive international investment in this legislation that precludes delay or avoidance at national level. It will not go away, however harsh the trade environment may be, so preparation is key. At the very least, ensure your counter-parties, whether customers, partners, trade contacts or even competitors, are aware of the requirements and are taking steps to comply in their respective situations. There is no need for containerised world trade to fall apart this year; make sure that nobody has an excuse.

We hope that you have found the above interesting. If you would like further information, or have any comments, please email us, or take this opportunity to forward to any colleagues who you may feel would be interested.
We look forward to hearing from you.

Peregrine Storrs-Fox
Risk Management Director, TT Club

Through Transport Mutual Insurance Association Limited and TT Club Mutual Insurance Limited, trading as the TT Club. TT Club Mutual Insurance Limited, registered in the UK (Company number: 02657093) is authorised by the Prudential Regulation Authority and regulated in the UK by the Financial Conduct Authority and Prudential Regulation Authority. In Hong Kong, TT Club Mutual Insurance Limited is authorised and regulated by the Hong Kong Insurance Authority, in Singapore by the Monetary Authority of Singapore and in Australia by the Australian Prudential Regulation Authority. In the United States, TT Club Mutual Insurance Limited is approved as a surplus lines insurer in all states and is accessible through properly licensed surplus lines brokers. The registered offices are: 90 Fenchurch Street, London, EC3M 4ST.

Through Transport Mutual Insurance Association Limited, registered in Bermuda (Company number: 1750) is authorised and regulated in Bermuda by the Bermuda Monetary Authority. 

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