Last year, the International Maritime Organization (IMO) announced its amendments to the Safety of Life at Sea (SOLAS) convention, which requires shippers to provide verified gross mass (VGM) to carriers either through physically weighing a laden container or by adding weight of the cargo (including pallet, dunnage and packaging weight) to the tare weight of the container. The VGM rule, in effect beginning on July 1, requires shippers or LSPs (whoever is named as the master shipper on the bill of lading) to sign off on the VGM data before submitting it to the carriers. However, shippers have voiced concern about this process, as it could create liability issues. In other words, the person able to physically (or digitally) sign the VGM might not be allowed to do so for liability reasons.
As a result, as the July 1 deadline fast approaches, there is much confusion in the shipping industry, so much so that many are calling for a delay in the requirement and/or further clarification.
The lack of preparedness and confusion in the industry was underscored in a recent global survey conducted by provider CargoSmart of 820 customers (about 57% LSPs and 38% shipping). Only 4% had a solution in place to deal with the rule, 36% of respondents had not yet started planning, 20% were not aware of the new requirements, and 20% were in the discussion stage with several parties, according to CargoSmart’s research.
When asked about the best method to submit the VGM data to carriers, 59% of respondents in the survey preferred doing so along with the shipping instructions, while 20% said it should be in the booking request, shipping instructions, or in a separate document, depending on the trade route. Ten percent (10%) preferred to submit the VGM in a separate document. Separate research conducted by American Shipper in March supports how unprepared the industry is, with nearly 60% saying they did not understand how to comply with the VGM rule.
Fitch Ratings Weighs In on New VGM Rule at U.S. Ports
In February, Fitch Ratings, which rates U.S. ports, stated that the ports have neither designated facilities for weighing containers nor the systems for the verification of container weights, putting into question their ability to implement the IMO’s new weight verification requirements. The rating agency, in fact, believes that this could raise already chronic congestion at the ports that are slowed by chassis management issues, higher cargo loads from larger vessels and inadequate inland or intermodal links.
Roanoke Underwriting serves the commercial marine insurance and customs bond needs of property and casualty agents and brokers throughout North America working with global supply chain risks and logistics service providers. We are committed to keeping you current on issues that affect this industry, and will continue to do so regarding the new SOLAS requirement. (You can visit http://www.worldshipping.org/industry-issues/safety/cargo-weight for detailed information on SOLAS container weight requirement including the impact of this new ruling on third-party logistics companies.) To learn more about our insurance products, contact us at 1.855.213.4545.