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Mar.21, 2016

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US COAST GUARD'S SOLAS COMMENTS ELECTRIFY INDUSTRY COM M E NTS FROM TH E U.S. Coast Guard relating to the SOLAS container weight mandate at the JOC's 16th Annual TPM Conference this month triggered only more confusion within the industry on how to meet the rule set to take effect July 1. Rear Adm. Paul Thomas's statement that the rule was a commercial, not reg ulatory, matter unnerved the World Shipping Council, the world's largest group of container carriers. "It is disingenuous and factually incorrect for the Coast Guard to suggest that relieving shippers of their regulatory obligation will not fundamentally undermine the effectiveness of the SOLAS container weight verification requirements. It is not possible to have it both ways," WSC President and CEO John Butler wrote to Thomas's boss, Adm. Paul Zukunft. The WSC, whose members control about 90 percent of global container capac- ity, was a major contributor in the creation of the rule aimed at improving maritime safety by requiring shippers to provide the verified gross mass of their containers before they can be loaded onto a ship. After the WSC urged the Coast Guard to clarify the rule, the agency said it was in communication with the group. At the heart of the issue are Thomas's statements that shippers were in compliance and no changes or enhanced regulation was needed to meet the amendment to the Safety of Life at Sea rule. The WSC took issue with Thomas's comments that the IMO wasn't the right place to address container weight accu- racy rules, nor was SOLAS the right tool to do so. Thomas's comments that the Coast Guard wouldn't apply SOLAS regulations to marine terminal operators further frustrated the WSC. Not everyone was upset with Thomas's comments. The Agriculture Transportation Coalition endorsed his view, saying the rule should be handled as a "business practice" instead of through regulatory enforcement. AgTC said Thomas essentially said that the Coast Guard won't require exporters to pro- vide carriers with container tare or loaded weights. Shippers shouldn't be required to "tell the ocean carrier how much the carri- er's own equipment weighs," AgTC said. "The admiral's position is reasonable and consis- tent with safety and competitiveness of U.S. maritime export commerce." SHIPPERS COULD SEE CHINA PORT OPTIONS NARROW INCREASING DEPLOYMENT OF mega-ships to Chinese ports, together with consolidation of services, may leave shippers with less choice for their China-related transportation needs. The increase in vessel size with higher carry - ing capacity per service is resulting in carriers reducing the number of east-west strings. At the same time, consolidation of carriers through mergers and acquisitions and greater opera- tional collaboration is further reducing port calls, according to Henry Pringle, a vice presi- dent with consulting and business advisory firm AlixPartners. Pringle spoke this month at JOC's 16th Annual TPM Conference in Long Beach, California. "Terminals are competing for fewer vessel calls from a reduced number of carrier customers," he said. The result, he said, is that shippers may be faced with fewer options for exporting goods from China. In addition, the reduced number of services calling at each port reduces destinations reached per port and potentially necessitates more transshipments. To deal with these issues, shippers must be more proactive and design supply chains with contingencies to cover terminal issues. This could include rates for alternative ports of load- ing and provision to adjust f.o.b. arrangements; agreements with multiple carriers across mul- tiple alliances; and recognition of reduced ability to deploy just-in-time strategies. "It's a buyers' market and will be for some time. So while, on the one hand, you may arguably have reduced choice, (but) on the other, you will have lower costs to move your freight," Pringle said. Spotlight 6 THE JOURNAL OF COMMERCE www.joc.com MARCH 21.2016 6 THE JOURNAL OF COMMERCE www.joc.com

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