The new VGM Regulations come into effect 1 July 2016, here’s the top ten things to know.
The IMO SOLAS Chapter VI amendment, requiring a container to have a verified gross mass (VGM) before it can be loaded to a vessel, comes into effect 1 July. This means that after 30 June, it will be illegal for lo-lo shipping lines to take containers onboard without a Verified Gross Mass (VGM) being available in advance of loading the vessel. Boarding on ro-ro ships will also be declined if the shipment is a feeder move to a lo-lo ship.
With the help of literature available here we try and answer some of the top FAQs.
Q: What do Method 1 and Method 2 mean?
A: Arriving at a container’s VGM (Verified Gross Mass) can be done via one of two methods. Many shippers of unitised, uniform cargoes will be comfortable with “method 2”, where the weight of cargo and all packaging is calculated and added to the weight of the container. For others, “method 1”, requiring the container be physically weighed, will be the best (or only) option. From an overall supply chain safety perspective, the best solution is for containers to be weighed before they are brought to port, but such a requirement is beyond the ambit of this regulation, at least at this point.
Q: Clearly responsibilities start with the shipper. But who is ‘the shipper’ in the context of this new procedure?
A: This is an International issue. There are also Commercial implications.
Under the SOLAS requirements, the shipper named on the ocean bill of lading is the party responsible for providing the maritime (ocean) carrier (‘master’) and the terminal operator (‘terminal representative’) with the verified gross mass of a packed container. The carrier and the terminal operator must not load a packed container aboard a ship unless they have the verified gross mass for that container.
MSC 1/ Circ. 1475 defines ‘the shipper’ as “a legal entity or person named on the bill of lading or sea waybill or equivalent multimodal transport document as shipper, and/or who (or in whose name or on whose behalf) a contract of carriage has been concluded with a shipping company.”
Due to the complexity of the international supply chain, the entity identified as the ‘shipper’ on the bill of lading may not have direct or physical control over key elements of the process by which verified gross mass is determined. A ‘shipper’ in such circumstances should be aware of their responsibilities and ensure that arrangements are in place to obtain and provide a verified gross mass in compliance with these international and national regulations.
It should be noted that the SOLAS requirements are distinct from INCOTERMS, which govern the sale of the goods, not the transport of the goods. The parties to the sales contract/contract of sale under INCOTERMS need to determine how verified gross mass will be obtained, i.e. whether by Method 1 or Method 2 (as permitted by the CA of the State in which the packing of the container is completed) and how this information can be provided to the carrier by the shipper as identified in the bill of lading.
If in doubt about which entity is ‘the shipper’, contact one of the organisations identified at the end of this document.
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Q: Is there an agreed format to communicate verified gross mass?
A: SOLAS does not mandate any particular form of communication between the parties exchanging the verified gross mass information.
Subject to any additional national requirements, the information to be provided by the shipper is the same under Method 1 and Method 2, being the verified gross mass of the packed container, conspicuously identified as such, signed and dated by the shipper or a person duly authorised by the shipper.
The information and signature may be transmitted electronically, and the signature may consist of the last name of the responsible person in capital letters.
Several existing EDI messages have been amended by SMDG (Ship-planning Message Design Group) and a new EDI message ‘VERMAS’ specifically in relation to verified gross mass has been developed. Further information is available from SMDG (http://www.smdg.org).
As a Commercial issue, the form of exchange and precise substance should be agreed between the commercial parties.
Q: Is the terminal operator required to obtain the VGM directly from the shipper, or can the carrier transmit the VGM to the terminal operator after the carrier receives it from the shipper?
A: The terminal operator is not required to receive the VGM directly from the shipper. The IMO guidelines make clear that the requirement is that both the carrier and the terminal operator use the VGM in preparing the stow plan, but how the information flows and is shared among the parties is left to the operational and commercial discretion of the parties in order to allow for the most efficient processes to be used. The relevant IMO Guidelines read as follows:
6.3.1 Because the contract of carriage is between the shipper and the shipping company, not between the shipper and the port terminal facility, the shipper may meet its obligation under the SOLAS regulations by submitting the verified gross mass to the shipping company. It is then the responsibility of the shipping company to provide information regarding the verified gross mass of the packed container to the terminal representative in advance of ship loading. Similarly, the shipper may also submit the verified gross mass to the port terminal facility representative upon delivery of the container to the port facility in advance of loading.
126.96.36.199 The master or his representative and the terminal representative should enter into arrangements to ensure the prompt sharing of verified container gross mass information provided by shippers. Existing communication systems may be used for the transmission and sharing of such verified container gross mass information.
188.8.131.52 At the time a packed container is delivered to a port terminal facility, the terminal representative should have been informed by the shipping company whether the shipper has provided the verified gross mass of the packed container and what that gross mass is.
Q: Is there a deadline for when the information must be received by the carrier and the terminal operator?
A:This is a Commercial issue.
Verified gross mass is required in order to prepare the stowage plan of the ship prior to loading. Deadlines will differ according to a number of factors; shippers should obtain information on documentary cut-off times from their carriers in advance of shipment. It is recognised that ‘just in time’ shipments will need specific coordination between the shipper and carrier to ensure that the objectives of SOLAS are met and the verified gross mass for such shipments is communicated and used in the ship stowage plan.
Q: The requirement is for accurate gross mass; is there a margin of error defined for this ‘accuracy’?
A: As an International issue, the SOLAS regulations provide that verified gross mass shall be obtained under both Method 1 and 2 by using weighing equipment that meets the applicable accuracy standards and requirements in the State in which the equipment is being used. There is no provision in SOLAS for any margin of error; this is a physical weighing requirement, not a system of estimation. Gross mass derived using compliant equipment and procedures will meet the legal requirements.
Accuracy refers to the precision with which a measurement (in this case mass) is made. Accuracy is the only concept with which the shipper need be concerned. National enforcement agents may exercise discretion or tolerance in deciding when to initiate further investigations or penalty action. However, shippers using compliant weighing devices and processes will obtain values that are well within any tolerances adopted nationally for enforcement purposes. Shippers not using compliant weighing devices and processes may be found in violation even if the gross masses that they provide fall within government enforcement tolerances.
If a shipper is merely estimating the gross mass and hoping to fall within government enforcement tolerances, it is violating the SOLAS requirements and could incur sanctions or delays pursuant to applicable national legislation. There are no exemptions from the requirement to weigh using either Method 1 or Method 2.
Q: Port container handling equipment generally has on-board weighing technology (‘PLCs’) typically accurate to within 5% and designed to prevent overloading of the equipment. If such data are integrated into other relevant systems (including those used for ship stowage planning) is this likely to be acceptable for determining verified gross mass under Method 1?
A: As an International issue, SOLAS only requires that the weighing equipment used to obtain the verified gross mass meets the applicable accuracy standards and requirements of the State in which the equipment is being used.
As a National issue, although accuracy of weighing equipment is a matter for national regulation, it is unlikely that a weighing device with a known margin of error of 5% would meet applicable accuracy standards.
Q: How will this be enforced and what will be the level of penalties imposed by an Administration if a container is delivered by a shipper to a carrier with a mis-declared gross mass or if a shipper does not provide the verified gross mass for a packed container?
A: As a National issue, fines and other penalties will be imposed under national legislation. Enforcement agencies may implement measures to satisfy themselves that compliance is achieved, which might be expected to include documentation checks, auditing or random weighing.
As a Commercial issue, the penalties may involve repacking costs, administration fees for amending documents, demurrage charges, delayed or cancelled shipments etc. It should be noted that SOLAS imposes an obligation on the carrier and the terminal operator not to load a packed container aboard ship for which no verified gross mass has been provided or obtained. Compliance with this obligation by the carrier and terminal operator may result in commercial and operational penalties, such as delayed shipment and additional costs if the shipper has not provided the verified gross mass for the packed container.
[Note: The new SOLAS requirements apply equally to both under and overweight containers].
Q: Our company only ever provides part loads/less than container load (LCL), never a full container load (FCL) so what is our position?
A: This is a Commercial issue
This will depend on your contractual arrangement with the co-loading freight forwarder that enters into the contract of carriage with the carrier and thus becomes the shipper to the carrier (see A1 above). If permitted under the terms of the contract with the ‘master’ forwarder, your company may use Method 2 to verify the actual mass of the goods being shipped and pass that information on to the party completing the packing of the container. However, responsibility for providing the accurate, verified gross mass of a co-loaded container remains with the shipper named on the maritime carrier’s bill of lading, i.e. the ‘master’ freight forwarder.
Q: If Method 2 is chosen and intercompany transactions take place (e.g. the producing / dispatching entity is based in UK while bill of lading is drawn up for export at a consolidation port such as Antwerp (Belgium) and a different legal entity within a group of companies is the exporter of record) which legal entity should comply with any national rules and regulations regarding Method 2, the exporter of record or local UK entity actually packing the container and physically able to determine the relevant mass information?
A: This is an International issue.
The entity that would need to comply with any national rules and regulations regarding Method 2 is the one in the State in which the packing and sealing of the container is completed.