By Keith Norbury
Shippers have long been required to provide accurate weights of container shipments to ocean carriers before those containers are loaded on board. However, investigations into several incidents in recent years discovered that the actual weight of containers often did not come close to matching the declared weight. So, effective this July 1, under a 2014 amendment to the International Maritime Organization’s Safety of Life at Sea Convention, shippers will have to provide additional documentation to verify that the weight, or mass, of containers is correct.
That makes freight forwarders responsible for certifying the verified gross mass, or VGM for short, in cases where freight forwarders act as the shipper, such as for consolidated container loads carrying goods from multiple customers, according to industry insiders. Members of the Canadian Association of International Freight Forwarders also have a duty to inform their customers of the new requirements, noted Karl-Heinz Legler, CIFFA’s official delegate for SOLAS, as the safety convention is known.
In early June with the deadline for VGM compliance just three weeks away, Mr. Legler said Canada is ready to implement the rule requirements, becoming among the first of the 162 SOLAS signatory nations to do so. “We are ready for SOLAS,” said Mr. Legler, who is the Montreal-based General Manager for eastern Canada of Rutherford Global Logistics, a division of W.L. Rutherford Ltd., a family-owned business with 22 locations across the country. The majority of shippers, particularly large-volume ones, are prepared. However, some shippers are still not aware,” Mr. Legler said.
Freight forwarders have duty to inform clients
“For the most part, it’s a matter of providing additional documentation from the shipper to certify that the weight of a container is correct. Transport Canada, which in mid-May posted information about VGM, doesn’t have a prescribed form for certifying the weight. Instead the agency requires that the shipper state the VGM “in a shipping document” signed by a person “duly authorized by the shipper.” The VGM declaration can be part of the instructions to the shipping company or “a separate communication,” such as a certificate from a weigh station “utilizing properly calibrated and certified equipment” en route to the terminal. The VGM document, which can be transmitted electronically, must be “submitted to the ship master or his representative and to the terminal representative sufficiently in advance of loading onto a vessel so that it could be used in the preparation of the ship’s stowage plan,” the May 12 Transport Canada advisory said.
While the July 1 deadline is still in place, the IMO’s Maritime Safety Committee issued an advisory in late May calling for “some leeway” in enforcing the requirements “in order for any problems resulting from software updates, required for the electronic collection and transmittal of verified gross mass data, to be rectified without causing delays to containers being loaded.” Transport Canada also supports that pragmatic approach, said Naim Nazha, Executive Director of Navigation Safety and Environmental Programs at Transport Canada’s Safety & Security Branch.
Maritime Safety Committee recommends “leeway”
Mr. Nazha, who led a Canadian delegation to the Maritime Safety Committee in London that discussed VGM this May, said in an interview that another reason for delaying enforcement is the thousands of containers already in transshipment when the new rules kick in. “We want to make sure that those containers continue to their destinations without having any problems,” Mr. Nazha said.
Transport Canada is also part of the IMO’s Port State Control regime, which decided at a subsequent meeting to also take a pragmatic approach to enforcement. That regime, which authorizes Transport Canada to inspect foreign ships in Canadian ports, will now include ensuring that a vessel’s master has procedures in place to ensure compliance with the VGM requirement. “We won’t be checking every single container,” Mr. Nazha said. However, Transport Canada inspectors already engaged in the agency’s dangerous goods inspection program will now conduct random checks for VGM compliance as part of their duties, he said.
Penalties for non-compliance range from $600 to $12,000 under the Canada Shipping Act. Canada allows five per cent variance, up to 500 kilograms, of a loaded container. However, the U.S. is reportedly taking a zero-tolerance approach while the U.K. allows a five per cent variance regardless of weight.
Responsibility of terminal operators
Michael Broad, President of the Shipping Federation of Canada, questioned whether terminal operators have any responsibility regarding VGM at all. “I’ve heard (of) some terminal operators saying they’re not going to accept a container without a VGM certificate,” Mr. Broad said. “Well, it’s not up to them to accept it or not. They’re working for a carrier and a carrier will decide that and instruct the terminal operator accordingly.” Speaking more broadly about VGM, he said there’s been a lot of hype about what he considers to be something that’s fairly straightforward. “Carriers are not going to go out there snooping around looking for overweight containers,” Mr. Broad said. “It’s simply a documentary thing whereby the container lines wants to feel assured that the weight declared by the shipper is correct. And the shipper declares it. And all they (carriers) want is the shipper to say here’s the weight of my container. And we’ll accept that.”
The vast majority of Canadian shippers were already providing accurate weights anyway, Mr. Legler said. “Unfortunately, it appears based on some incidents that some shippers actually misdeclared weights for whatever self-serving purposes,” Mr. Legler said. “And now shippers across the world have to suffer because of this.”
Weight requirement in place since 1974
As Transport Canada noted, the accurate weight requirement has been part of SOLAS since it was enacted in 1974. The IMO added the verified gross mass requirement in 2014, to take effect this July, in response to several incidents involving overweight containers. According to a posting on the website of the World Shipping Council, those incidents included the 2007 foundering during a storm of the MSC Napoli. U.K. investigators checked the weights of 660 containers that remained dry on the deck and found that 20 per cent were more than three tonnes heavier than their declared weights. Another example cited in that report was the June 2011 capsizing of Containership Deneb at Algeciras. In that case, 16 of 168 containers had actual weights at least 1.9 times greater than their declared weights, including one container that was 6.7 times heavier. Among other examples cited in that report was an overweight container that tipped over a forklift in Melbourne in 2011, and the February 2011 collapse of a container stack on Limari in Damietta from containers that exceeded their declared weight by up to 400 per cent.
VGM fees a commercial activity
“Services for obtaining VGMs on behalf of shippers and for providing VGM declarations will be charged to shippers,” Mr. Legler said. “There are no set tariffs,” Mr. Legler added. “Each service provider has to set up its individual tariff to avoid collusion.” Transport Canada doesn’t get involved with setting those rates because it is a commercial activity, Mr. Nazha noted.
Getting an answer from carriers on how and when shippers have to submit the VGM documentation in advance of delivering cargo to a terminal hasn’t been so straightforward, Mr. Legler said. “That for us, of course, is an issue,” he said. “We have to be vigilant to get the VGM declaration in time for the uploading to the ocean carrier prior to the cutoff date to avoid a no-load on the intended vessel.”
But Mr. Broad said the standard practice has always been for shippers to provide the container weight to the carrier when booking takes place. So it’s likely that the VGM would also be provided during booking. Mr. Legler’s take on that is slightly different. He said a carrier will confirm its VGM reporting requirements on its booking confirmation which will include a VGM reporting cutoff date.
Importers weigh their concerns as well
It’s not just shippers, carriers, and terminals that have to live with the new VGM rules. They are also a concern for Freight Management Association of Canada, which has a membership of about 100 companies from such industries as manufacturing, retailing, ports, and mining — including such heavyweight firms as Canadian Tire, Hudson’s Bay Company, Nestle Canada, Rio Tinto Alcan, and Loblaws. “A lot of our members are importers, so it’s still important to them, even though they’re on the receiving end because this is a global requirement,” said Association President Bob Ballantyne. “We have a lot of big retailers in our membership. If they order stuff from China, they need to know that this VGM requirement is going to be handled properly in China for the containers they’re importing.”
Because the procedures for applying the VGM requirements are so loose and vary from jurisdiction to jurisdiction, from carrier to carrier, and port to port, Mr. Ballantyne’s association is advising its members that “the most important thing is to start talking directly to your marine carrier and work out these details that the IMO and Transport Canada regulations say you’ve got to work out between yourselves.” Freight Management Association has also been working with a Toronto company, Interweigh Systems Inc., on making a low-cost portable scale available to determine VGM. “And so they’re hoping to see a trial of this portable weighing system probably at the port of Montreal sometime in the next couple of weeks,” Mr. Ballantyne said in early June. Mr. Legler said some terminals such as DP World in Vancouver and Prince Rupert already have container scales. He speculated that VGM requirements might it make it commercially viable for other terminals to provide scaling services in the future.
To weigh or not to weigh
Mr. Broad, though, remained skeptical. “First of all, nobody’s going to weigh a container at a port,” he said, although he later noted that “some terminal operators with weighing stations have already started rubbing their hands saying maybe we’re going to get some more business here.” But most shippers that don’t have their own scales can usually find one, such as a highway scale, on the way to the port, he said.
Weighing those containers and preparing the VGM documentation comes at a price, Mr. Legler said. He estimated that a trucker will charge a fee of about $150 for a container weighed at a highway scale compared to an average of $250 for a container weighed at a port terminal. In the case of less than container load (LCL) cargoes, non-vessel operating common carriers (NVOCCs) and consolidators have already communicated the VGM scenarios and costs to their clients, Mr. Legler said. How those fees are determined varies from company to company with some charging per cubic metre and others charging for the specific services or a flat administrative fee per container.
While the VGM requirements are at turns opaque and bureaucratic, Messrs. Legler, Broad and Ballantyne also noted that they aim to rectify a real problem. “There are a few people in Canada who have expressed concern about the costs related and the fact there may be some delay but for the most part our members don’t seem to have had a problem,” Mr. Ballantyne said.
Best practices for freight forwarders
In the past year, Mr. Legler has participated in the Canadian Shippers’ Stakeholder group to discuss VGM with the Shipping Federation of Canada, B.C. Chamber of Shipping, I.E. Canada (the Canadian Association of Importers and Exporters), and the Freight Management Association. In the wake of that, CIFFA has come up with six best practices or compliance suggestions for freight forwarders regarding VGM:
• Inform shippers, customers, and the trucking drayage companies of the requirements for July 1.
• Provide clients with the new standard trading conditions that reflect additional costs of processes related to VGM.
• Revise tariffs and quotations to reflect the VGM requirements.
• Document procedures for warehouse receiving, ocean export staff, customer service staff, and truckers “ to include the SOLAS weighing scenarios.”
• Internally, “revise general standard operating procedures regarding transmission of data and the maintenance of records with regards to VGM.”
• Ensure, where applicable, that insurers are not going to tack on additional costs for liability coverage.
“These are important items we have to consider as freight forwarders for a successful VGM reporting implementation in Canada,” Mr. Legler said.