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Apr.4,2016

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GOVERNMENT WATCH 34 THE JOURNAL OF COMMERCE www.joc.com APRIL 4.2016 By Peter Tirschwell SHIPPERS SEEKING TO avoid supply chain disruption on July 1 when a new container weight rule takes effect must be mindful of one key fact irrespective of whatever guidance they may or may not be hearing from government enforcement agencies: No matter what country a ship is depart- ing from, carriers won't be able to load a container for which it hasn't received a verified gross mass declaration from the shipper. To do so would leave the ship out of compliance with rules of its own flag state and its insurers, leaving it vulnerable to liability in the event of an accident. Thus, shippers must figure out how a VGM will be created for each of their con- tainers and handed or transmitted to the carrier in advance of cutoff time for the infor- mation to be received. This needs to happen whether or not the enforcement agency of the port of origin has published guidance on compliance, or even regardless of its inten- tion to enforce the mandate. Although a few nations have stated what allowed tolerances will be from declared weights, many have not, and may not by July 1. Yet the absence of such guidance shouldn't prevent ship- pers from ensuring they are able to present a VGM to the carrier for every container as of the effective date just a few months away. For example, U.S. Coast Guard officials have said the agency has no power to force compliance from shippers. The Ocean Car- rier Equipment Management Association, a U.S. carrier group, on March 21 said it would specifically not hold shippers legally respon- sible for the tare weight of the container, even if the shipper still must include the tare weight as part of the VGM it provides to the carrier. Some shippers aren't taking chances, knowing that if July 1 comes and they are unable to provide a VGM to the car- rier, they may experience disruption. "The USCG is simply saying that they will focus their enforcement efforts on the vessel owners. And that if the vessel own- ers, in turn, know, as they do, that they can't comply without forcing their customers to comply, then the owners need to have that discussion with their shippers," Bjorn Jensen, vice president for global logistics at consumer products maker Electrolux, told The Journal of Commerce. "And the 'discussion' is obvi- ously going to be, 'Comply or don't get loaded!' It's a non-discussion discussion." In terms of determining how their VGMs will be created, shippers are largely on their own. Carriers will provide avenues for the VGMs to be transmitted, whether through EDI or through tools such as the E-VGM functionality offered by the carrier portal Inttra. But carriers don't plan to ask ques - tions about how the VGMs were created or to verify the figures shippers provide. "I can tell you that on the carrier side there is no focus to investigate/inquire on the origin of the weighing method used by the shipper," an executive at one major carrier told The Journal of Commerce. "As long as we have a certified VGM form, with a signa- ture/name on it, we have covered our portion and will simply transmit to the terminal 'VGM received/not received.' That's all." That's why Electrolux, like other ship- pers, is taking matters into its own hands to ensure it's in compliance for July. They are doing so to ensure the company encounters no supply chain disruption resulting from containers not being loaded because it doesn't have a valid VGM presented to the carrier. "We're in front of the ball, I think," Jen- sen said. "The company takes it seriously, has made the right people available, and everyone understands the enormity of what will happen if we do not comply." JOC Contact Peter Tirschwell at peter.tirschwell@ihs.com and follow him on Twitter: @petertirschwell. tone of every other candidate in the race for the White House, experts said. Trump, after all, isn't the only candidate to propose major trade shakeups. Sen. Bernie Sanders, D-Vt., also has called for repealing NAFTA. Sanders' Democratic challenger and former Secretary of State Hillary Clinton, however, has had a difficult time challenging NAFTA, because her husband championed the treaty while president. Clinton, though, has come out strong against the Trans- Pacific Partnership, a recent, broader and potentially more historic treaty to which the U.S. and Mexico belong and which has become the cornerstone of the Obama trade initiative. "The TPP is the next extension," said Camunez. "Especially as more candidates are talking about repudiating NAFTA, it's becoming a contagion effect." Although anti-NAFTA rhetoric might play well in states such as Ohio, where union workers are a major presence and the manufacturing economy is hurting, in border states — even border states with a strong Republican presence — the treaty is still popular. "NAFTA is not a dirty word in Texas," Sen. John Cornyn, R-Texas, said at the Brookings Institution. Cornyn said he believes Trump's surge in popularity among American voters has less to do with fact-based concerns over cross-border trade and more to do with insecurity fueled by protectionist and nativist zeal. Trump's supporters are, in a word, "insecure," he said — "insecure in their person and their job. They're asking, 'Who can I hold accountable for establish- ing some order in this chaos?' " But U.S. presidential candidates and vot- ers should understand the impact they could have just by discussing a trade war with a neighbor as close as Mexico. "I worry, frankly, that this rhetoric is going to give rise to some- thing domestically in Mexico," Camunez said. "How would Americans feel if in response to this candidate (Trump), a radicalized candi- date rose to power in Mexico?" JOC Contact Reynolds Hutchins at reynolds.hutchins@ihs.com and follow him on Twitter: @Hutchins_JOC. NO VGM, NO LOADING Despite conflicting views, the new SOLAS rule boils down to one fact: Carriers can't accept a box without a VGM

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