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July27, 2015

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TRADING PLACES 54 THE JOURNAL OF COMMERCE www.joc.com Peter Tirschwell JULY 27.2015 UNTIL THE INTRODUCTION of the container in the late 1950s, a ship captain largely knew what cargo was on his ship. All he had to do was watch the cargo being loaded, because it was there in plain sight being slung over the gunwale and into the hold. The container fundamentally changed that. With the container loaded and sealed often far away from the port, the captain only knows what he is told on a piece of paper, because opening every con- tainer to see what's actually inside is impossible. As a result, the vast economic efficiencies achieved by container shipping also created a safety chal- lenge. If there were no discrepancies between what appears on the docu- mentation and what's actually in the container, there would be no issue of safety for the crew, the ship or other shippers' cargoes. But misdeclara- tion of cargo and weight by shippers whether unintentional or otherwise has been part of container shipping since its beginning. And the problem is only growing because containers carry a greater percentage of global trade, ships are getting much bigger, and com- petitive pressures throughout the system often lead players to turn a blind eye to safety. The two fundamental chal- lenges are ensuring the weight and the description of cargo are accu- rate. How the cargo is described determines the duty paid, and inac- curacies will run afoul of customs. Thus, there is a built-in enforcement mechanism that surely isn't perfect but will be taken seriously as vio- lations of national law, given that government revenue is at stake. Weights are a different matter, because the downside of misdeclared weight is mainly a safety issue. With no serious consequences, shippers on their own aren't getting better. "Inaccurate container weights have been a safety problem dogging the industry for a long period of time, and they weren't getting better," Chris Koch, president of the World Shipping Council, the container line trade group, told The Journal of Commerce. Incidents such as the 2007 partial hull collapse of the MSC Napoli in the English Channel began to awaken authorities to the severity of misde- clared container weights as a safety issue. The crew of 26 survived after abandoning ship in a lifeboat, and the ship was intentionally beached to prevent it from breaking up. In its inquiry, U.K. maritime authori - ties weighed each of the containers and found a large percentage were grossly over their declared weights. "Container shipping is the only sector of the industry in which the weight of a cargo is not known," the report said. "If the stresses acting on container ships are to be accurately controlled, it is essential that contain- ers are weighed before embarkation." But if weighing conta iners before being loaded onto the ship is the solution, the question becomes how? Should shippers be required to weigh containers at the point of loading? Should weighing occur at marine terminals, or somewhere in between? A multiyear debate within the International Maritime Organiza- tion led to a decision last year that puts the responsibility on shippers. The IMO's Maritime Safety Commit- tee in May 2014 approved changes to the Safety of Life at Sea conven- tion, putting a mandatory container weight verification requirement on shippers. The requirement making container weight verification a con- dition for vessel loading will become legally binding on July 1, 2016. Like new data transmission requirements put on shippers after the September 11 attacks, this rule will affect shippers on a day-to-day, operational basis. While shippers have always had to provide a weight on the bill of lading, now the signa- ture of an authorized individual must certify that the contents have been weighed prior to stuffing of the container or that the full packed container has been weighed. The World Shipping Council had pressed for weighing to take place at the terminal, but, ironi - cally, it was shipper groups, from Germany and the Netherlands, that opposed this, leading to what turned out to be a compromise solution that puts responsibility for compliance squarely on shippers' shoulders. There will need to be procedures, equipment and vendor compliance, and it won't be easy to get all this in place during the next 11 months. Few in the industry are likely aware of the rule, but expect a lot more to come out over the coming year. There will certainly be a panel on the topic at the TPM Conference in Long Beach next March. Unclear are certain issues such as what hap- pens when no authorized signature is on the paperwork when the con- tainer shows up at the terminal. Because the container under the IMO rule can't be loaded, will the terminal weigh it? Will they have the equipment on hand to do this? If so, who will get the bill? What is important is that the container weight issue is getting addressed. Descriptions should be next on the agenda. As Koch said, "Incorrect descriptions of what is contained within a container con - tinues to be an issue that troubles the industry." It shouldn't be this way. JOC Contact Peter Tirschwell at peter.tirschwell@ihs.com and follow him on Twitter: @petertirschwell. CRACKING DOWN ON CONTAINER WEIGHTS

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