Insights

Weighing SOLAS Pros and Cons

via flickr

via flickr

Back in May 2014, The IMO’s Maritime Safety Committee (MSC) approved changes to the Safety of Life at Sea (SOLAS) convention that will require the verification of all container weights before they can be loaded onto ships. This rule comes into effect on on 1st July 2016.

Many shippers are arguing that the convention will place an undue burden  – mainly cost – on them. On the other hand, many consider the new regulation past due. So, which argument stacks up?

The new regulations are meant to improve the safety of container ships, crews, ports and roads and reduce risk.The new regulations are meant to improve the safety and reduce risk. Click To Tweet According to the World Shipping Council, it is not uncommon for the actual total cargo weight on a loaded vessel to be 3-7 percent greater than the declared weight. Many shippers, whether out of sloppiness, negligence or willful intent, wrongly declare cargo on their bill of loading, so they end up shipping more cargo than is allowed.

Incorrect weights lead to safety issues. Overweight containers can cause cranes to tip over during loading and off-loading, vessels to capsize when containers shift during voyage, damage to trucks and roads, as well as unstable stacks that could collapse within ports and yards. Nobody will argue against increasing safety.

The SOLAS amendment will also have some fiscal benefits. It could mean a new revenue stream for freight forwarders, according to a report by Cowen & Co., a financial services firm. Ports, with proper equipment, can offer to weigh containers on behalf of the shippers as well. The Port of Charlestown is offering the service for $25 per container.

The argument against the SOLAS container weight limits is, not surprisingly, added cost for shippers. Additional costs would present another challenge for shippers operating on thin margins. On top of fiscal costs, the additional step will likely cause more congestion and delays at ports.

SOLAS will mean more costs for shippers and more congestion at ports Click To Tweet

But shippers probably won’t be the ones who suffer, consumers will pay the additional costs. Paul Bingham of EDR Group believes the cost of weighing is much more manageable. “Weighing containers may add to costs faced by exporters but not very significantly in competitive markets. The available valid weighing methods provide enough flexibility that shippers should be able to find ongoing weighing solutions that are not that expensive.”

Weighing as much on shippers’ minds as the cost is how the rules are implemented and who is ultimately responsible. At the moment, these rules are vague, at best. Under the SOLAS amendments, there are two permissible methods for weighing: The first is to weigh the loaded container as a whole with all the cargo inside. The second is to weigh each piece of cargo individually, along with packaging, pallets and other material and add it to the weight of the container itself. The United States Coast Guard has also approved  additional options to meet the requirements. They explain “any equipment currently being used to comply with Federal or State laws, including the Intermodal Safe Container Transportation Act and the container weight requirements in 29 CFR 1918.85(b), are acceptable for the purpose of complying with SOLAS.” Shippers have already argued they should not be liable for the weight of containers because they do not own, lease or operate them.

The logistics of implementation

via flickr

via flickr

While the weighing process may all sound simple in theory, the practical considerations are numerous. Who is considered to be the shipper? While the shipper has the responsibility to comply, it may be difficult to identify the shipper of a non-compliant container. Many parties are involved in the supply chain – from the customer who packs the container to the logistics company or freight forwarder.

Ultimately, shippers must weigh containers “prior to shipping,” but when exactly is this? While it makes sense to weigh containers before loading, shippers and transportation companies have little guidance as to when this should be. New, robust record-keeping and data sharing measures need to be implemented in order to demonstrate that each container complies with the new regulation.

When a container does not meet the SOLAS standards, or if marine management agencies have doubts, the shipper will have to verify the weight of the container at the terminal. The amendment is unclear about what happens when containers are found to be overweight.

Of 160 participating nations, Only 10 countries to date have had their guidelines and regulations published to the website of the World Shipping Council, stating compliance. At the same time, the U.S. Coast Guard has stated that it will not be penalizing shippers for non-compliance. The agency has even gone so far as to say that compliance with the new rule should be handled as a ‘business practice’ rather than through regulatory enforcement.Compliance with SOLAS should be handled as a 'business practice' Click To Tweet

As of now, there are only two things that are certain –  the regulation will come into effect on July 1st, and from this date nobody really knows what either compliance or non-compliance will bring. The most important thing is to prepare as best as you can – and assume you still won’t be prepared enough!