Container shipping industry prepares for new VGM rule-Compulsory implementation as of June 1st, 2016
There is a flurry of last-minute reports, instructions, and frequently asked questions (FAQs) on the verified gross mass container weight regulations as the industry gets ready for the rule that will be imposed globally on 1 July.
Most of the communications are from the various parties in the container supply chain, offering guidance and clarity on procedures they will require in complying with the rule, but others reflect the great uncertainty about what exactly to expect when the International Maritime Organization’s amendment to the Safety off Life at Sea convention goes live in less than 24 hours. In response to the many questions that are still being raised by the industry, a document on supplementary FAQs was released this week by global insurer TT Club in collaboration with the World Shipping Council, the International Cargo Handling Coordination Association, and the Global Shippers’ Forum.
It covers various scenarios involved in complying with the new rule, all of which should already be understood by all parties in the supply chain by now. Even with all the industry FAQs and a steady stream of reports and notes from analysts and associations, and clarifying statements from the IMO, it is national governments that will ultimately be the enforcement agents of the VGM rule; it is here where uncertainty rules.
The TT Club said in a statement that while harmony will never reign supreme in any industry, the container business has come together well in preparing for the VGM. However, it was less magnanimous about the maritime agencies the IMO is expecting to police the new arrangement.
The insurer said the competent authorities the IMO is relying to consistently enforce the regulation across the globe have been surprisingly reticent. Despite encouragement from the IMO for governments to communicate fully with industry stakeholders, around 80% of SOLAS signatory states have yet to publish guidance on national implementation. With the less-than-helpful messages TT Club said were coming from governments, it believes clarity and collaboration across the container industry remain the key to successfully complying with the new rule.
Reaction from many quarters of the industry has been positive, the insurer said, with the parties engaging to resolve the complexity and potential difficulties. According to the regulation, the VGM shall be obtained via two methods. Method 1 is by weighing the packed container, while Method 2 by weighing all constituent parts in the load. A substantial number of container terminals around the world have now announced arrangements to assist shippers with Method 1.
Shipping lines are also posting the tare weights of their containers online to assist with the calculation inherent in Method 2, a compromise process that was included in the SOLAS amendment as a result of shipper representation, TT Club said.
Transmitting the VGM data to carriers and terminals in time for carriers to plan their stowage has also resulted in online solutions being developed by solution providers such as Inttra, CargoSmart, and GT Nexus.
But in a note to customers, BB&T Capital Markets was less positive about the 1 July implementation, and said with more questions than answers remaining, the VGM “could result in a chaotic roll out with disruption to supply chains in the second half”.
The investment bank highlighted the lack of clarity on the enforcement of the VGM rule, notwithstanding the IMO’s call for national governments to exercise “regulatory leniency” with “practical and pragmatic” enforcement during the first three months.
“While progress has been made to clarify certain VGM provisions, we believe a lack of consistency and patchwork of global policies could send ripples throughout the global supply chain,” BB&T noted.
Different implementations by various regions can also present problems. For instance, cargo agents in China, who handle a huge amount of containers exported from the country, are being caught between shippers unwilling to pay VGM weighing charges and carriers that will not load boxes without the weight data.
There are so many interconnected parties in the container supply chain that with just a day to go before the new VGM rule is implemented, not one of them can say with complete confidence that they are fully prepared. Asked whether his company was ready, a manufacturer exporting 35,000 teu out of Asia every year could only say “I hope so”.
Contact Greg Knowler at firstname.lastname@example.org and follow him on Twitter: @greg_knowler.