Container weight compliance to boost costs for shippers - April 14, 2016

Shippers will have to pay more to ship their products around the world when the International Maritime Organization’s new container weight verification requirements take effect on July 1. Under an amendment to the IMO’s Safety of Life at Sea convention approved in 2014, the shipper on the bill of lading has two options to certify the verified gross mass of their containers, but both will incur additional expense.

Someone in a shipper’s global supply chain will have to provide to an ocean carrier a verified gross mass for every container in advance of sailing or it won’t get loaded. Whether a shipper chooses to have a container and its contents weighed as a single unit under Method 1 or weighs every item and packaging in the container and adds it to the tare weight of the box stenciled on the door, under Method 2, there will be additional cost, although Method 2 will probably cost less than under Method 1.

With implementation less than three months away, shippers are scrambling to figure out how to comply with the new requirements and looking to their freight forwarders for solutions.

The new IMO requirements are designed to protect container ships against overloaded containers that can create unbalanced stowage and endanger vessels, a result cited as possible causes when the MSC Napoli foundered and was beached in the English Channel in 2007 and when the MOL Comfort broke in half in 2013.

Shippers, however, have criticized the rule, saying that while some shippers may be perennially guilty of overstuffing containers, shippers of lighter goods such as electronics or apparel typically “cube out” — that is, use all of the available space in a container — before they “weigh out,” or hit the maximum weight limit.

Still, the SOLAS requirements could increase the costs of ocean freight transportation by more than 10 percent for everyone, according to a report by an investment banking and research firm which said forwarders stand to gain a new revenue stream by weighing their customers’ containers for a fee. It estimated the total cost of shipping a container from Los Angeles to Shanghai would increase by 14 percent.

Implementation of the SOLAS rule may cause disruption that will force some retailers to switch from ocean to air freight, which will add to their immediate cost of SOLAS.

If the rule causes any disruption in the U.S. retail import supply chain, it could exacerbate the overhang of excess inventory just as retailers prepare for back-to-school deliveries and fall sales of branded apparel and footwear, according to the report.

Some of the  U.S. importers are waiting for China to issue regulations on how it will implement the SOLAS requirements, but are leaving it up to their Chinese suppliers to fulfill those requirements. One U.S. importer of household furnishings from China likened the implementation of the SOLAS requirements to the process U.S. importers had to go through in 2009 when U.S. Customs and Border Protection required importers to file documents about the contents of their shipments no later than 24 hours before the cargo is loaded aboard a vessel. “Like 10 + 2, it will probably be a matter of trial and error,” he said. “If one way works very well, that will become the standard, and that’s how we’ll know.”

 

Full article can be read on joc.com.