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Feb.8, 2016

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TRADING PLACES 102 THE JOURNAL OF COMMERCE FEBRUARY 8.2016 Peter Tirschwell WITH EACH PASSING day, the dif- f ic u lt ies of i mplement i ng t he SOLAS container weight rule by July 1 become ever more appar - ent. I'm getting the strong feeling that given its potential to disrupt a significant portion of world trade — that which moves via ocean container — it won't be long before this issue hits the headlines of the mainstream business media. That's because there are simply too many questions for which there are no good answers, and as the days and weeks go by, those answers aren't materializing. And to the extent that questions go unanswered, the poten- tial for disruption in the movement of containerized cargo grows, as will the pressure on political authorities to seek a solution. The scope of the issue becomes apparent by starting with one specific requirement of the rule, which is now law in 171 member countries of the International Mar- itime Organization, and working backward. The rule states that it is illegal for a container to be loaded onto a ship without a terminal and carrier receiving a Verified Gross Mass signed by the shipper. Noth- ing I have seen suggests carriers and terminals will ignore the rule, given the huge legal liability they would face if an accident or casualty were to occur and it were discovered that there was no VGM for the container. You, as a carrier, "wouldn't want to be explaining to the authorities that you knowingly ignored the rule to benefit yourself in the market," for- mer APL/NOL CEO Ron Widdows told me in late January. But if a container without a VGM can't be loaded, should it even be allowed into the terminal? Some terminals — 11 of them in the U.S. according to one major carrier — are telling carriers the answer is no. The reason isn't to make life difficult; it's to avoid even worse problems. Any container without the VGM is a potential exception, a container that must be treated differently from others, by being pulled aside and stored and perhaps eventually evicted from the terminal. Such exceptions, which already exist, for example, when letters of credit or required licenses are incomplete, interfere with the high-volume flow of cargo through terminals that today are made even more challenging by surges on and off mega-ships. The idea that terminals would solve t he problem by of fering weighing services, as some termi - nal equipment providers would love for them to do, is gaining little to no momentum because terminals don't have the room, don't see the invest- ment as yielding a new revenue stream, or see it as an operational nightmare that would disrupt its primary responsibility of smoothly moving containers from the gate to the ship or vice versa. The position of some terminals that they won't accept containers through the gate without a VGM — if it holds, which is by no means certain — only pushes the burden for obtaining the VGM onto the carrier and its customer, whether the ben- eficial cargo owner or the forwarder shipping goods under its own bill of lading. If the process of obtaining a VGM to provide to the terminal were a simple matter, carriers would not be pushing back on the terminals, as they evidently are. "Is a terminal going to take the box and then seek to get the infor- mation? Or are they going to reject the box at the gate for the lack of the information? There seem to be different views on how the terminal operators are going to behave in that regard," Widdows said. Indeed, the process of obtain- ing the VGM in the first place is no simple proposition for any number of reasons. Among them is that the VGM ultimately needs to get into digital form, which the terminal, for example, requires to know which containers to load. An estimated half of all shipping documentation, however, is still in non-digital form, according to ocean carrier portal Inttra. Then there are the many unan- swered questions around what party will actually perform the physical weighing to obtain the VGM, whether the contents, which gets added to the weight of the container itself to produce the VGM, or the loaded con- tainer itself, either of which is allowed under the SOLAS rule. Is it the manu- facturer? The forwarder? The shipper itself? What happens when the VGM as determined on a spot check by a coast guard agency at the dock is dif- ferent from the weight the shipper has signed off on? Will variances be allowed and to what degree? The latest can of worms to be opened is the question of enforce- ment. Is it fair for exporters of one country to be subjected to a bona-fide enforcement regime but not their competitors from another country? That last question is a big one. It could be the one that catapults this issue into mainstream headlines. JOC Contact Peter Tirschwell at and follow him on Twitter: @petertirschwell. SOLAS QUESTIONS REMAIN UNANSWERED If a container without a VGM can't be loaded, should it even be allowed into the terminal?

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