SOLAS and VGM: How We Got Here

Brian ConradExecutive Administrator

Transpacific Stabilization AgreementApril 19, 2016

TSA

January 2007: The MSC Napoli Breaks Up Off the British Coast

UK investigators weighed 660 containers stowed on deck, which had remained dry

137 (20%) weighed more than 3 tons over their declared weights; the largest differential for a single container was 20 tons

The aggregate weight of the 137 containers was 312 tons more than shown on the cargo manifest

February 2011: An overloaded container weighing 28 metric tons broke free from a crane at the Port of Darwin, Australia fell 40 feet onto East Arm wharf, narrowly missing two workers; the weight reported on the cargo manifest was 4 metric tons.

June 2011: A ship with 168 containers overturned while at berth in Algeciras. An investigation showed 16 (1 in 10) were overloaded, each weighing 2 to 7 times its declared weight, and together weighing four times the combined weight shown on the load list.

The Problem:• Heavier cargoes max out a container’s rated weight limit before filling it.

• Carriers estimate 3-7% of containers are overloaded; in some trades as many as 10%.

• There is currently no comprehensive data on overloading… and no way to develop it.

• The only sure way to identify an overloaded container is to weigh it after packing.

Results of Overloading:• Incorrect stowage, leading to stability/stress risks, restowage costs and delays when discovered

• Collapsed container stacks

• Containers lost overboard (including adjacent containers not overloaded)

• Chassis, truck, stack train and harbor roadway damage

• Risk of personal injury or death to seafarers or shoreside workers

• Cargo liability claims

• Impaired service schedule integrity for carriers

• Supply chain service delays for shippers of properly declared containers

• Last minute shut-outs of legitimate loads when total cargo weight exceeds vessel/port draft limits.

Who is the International Maritime Organization?United Nations specialized agency responsible for:

• Shipping safety and security• Marine pollution prevention

170 member states participate in the IMOMaritime Safety Committee is the IMO entity charged with ensuring shipping safety

What is SOLAS?International Convention for Safety of Life at Sea

A set of international mandated standards for safety aboard shipStandards extend to safety aboard and around vessels in port

First adopted in 1965; first updated in 1974

Timeline of SOLAS Actions on Overweight Containers

2008 World Shipping Council, International Chamber of Shipping prepare report for Marine Safety Committee on best safety practices after Napoli accident

2010 Marine Research Institute of the Netherlands reports findings to IMO of industry-government study on securing cargo to prevent collapsing container stacks; study recommends weighing containers before loading

WSC and ICS ask IMO for a legal requirement that laden containers be weighed before loading aboard ship, for purposes of load planning and safety

2011 Formal proposal submitted for stronger regulations after industry “self-help efforts” fail to adequately address issue

International Association of Ports and Harbors adds its support

2012 IMO receives proposal from the Netherlands, Denmark, the U.S. and five industry associations for implementing mandatory pre-load verification of container weight. The proposal emphasizes::

“It is not sufficient to say that shippers shouldbe required to provide accurate weights. Thatrequirement already exists. The only way toensure compliance and knowledge of actualweights is for a container to be loaded prior tovessel loading.”

2012 Ukrainian Customs weigh containers at their ports; 56% exceeded their shipper-declared weights. India and New Zealand, conducted similar tests, with similar results.

2013 Global Shippers Forum (which includes NITL as a member) calls on governments to support amended rules with two verification options.

2014 After more than a year of consultations with industry, government and other interests, an IMO working group chaired by the U.S. Coast Guard adopted amendments and issued final rules, with July 1, 2016 effective date

The SOLAS Process Had Shipper Input and Buy-In

“The GSF believes that the compromise proposal which includes two methods for verification, is the best possible outcome for shippers and the Maritime Industry….the GSF is calling on governments to support the compromise proposals….IMO member states’ representatives and industry groups including shippers and carriers , have worked constructively within the IMO Correspondence Group to find a workable solution for verification of container weights prior to shipment”

― Global Shippers’ Forum Press Release, September 2013

Basic SOLAS Principles

1. A packed container should not be loaded onto a ship that is subject to SOLAS regulations unless the Master or his representative and the terminal representative have obtained in advance of loading the Verified Gross Mass (VGM) of the container.

2. Responsibility for obtaining and documenting the VGM of a packed container lies with the shipper.

3. Two permissible methods for weighing: 1) weighing the container after it has been packed; or 2) weighing all cargo and contents of the container, and adding those weights to the container tare weight posted on the container door.

4. Estimating weight is not permitted, and the party packing the container may not use weights provided by others; there is no exception for co-loaded containers.

Basic SOLAS Principles (2)

5. A carrier may assume a shipper’s valid, signed VGM to be accurate.

6. In the absence of a signed VGM, a packed container may be weighed on certified equipment at the port; but may not be loaded aboard ship without a VGM.

7. Terminals and carriers will need to agree on and implement processes for weighing packed containers arriving without a valid VGM and using those weights in the vessel stow plan.

8. If a packed container is weighed at the load port, that weight is to be used for vessel stow planning.

9. Vessel stow plans should use verified weights for all packed containers loaded on board.

Countries that Have Issued or are Actively Preparing SOLAS Guidelines

Argentina Australia Canada

China Denmark Germany

Hong Kong India Japan

New Zealand South Africa UK

Paragraph 5, item 5.1: The responsibility for obtaining the verified gross mass of a packed container lies with the shipper.

Paragraph 6, article 6.2: If a container is packed by multiple parties or contains cargo from multiple parties, the shipper, as defined herein, is responsible for obtaining and documenting the verified gross mass of the packed container

Paragraph 9, article 9.2: Irrespective of its form, the document declaring the verified gross mass of the packed container shall be signed by the shipper or a person duly authorized by the shipper.

Argentina

The tare mass of a container shall be taken as stated on its safety approval plate

Section 104.1 of the Cargo, Fumigation and Tackle regulations: every shipper of cargo to be loaded in Canadian waters shall comply with regulation 2 of Chapter VI of SOLAS

If a container is packed by multiple parties, the shipper of the container is responsible for obtaining from those parties, the documents to verify the final gross mass of the packed container

Upon completion of packing and sealing of a container, the shipper shall ensure that the VGM of the container is stated in the shipping document, and the document is signed by a person duly authorized by the shipper

Canada

Article 4.1: the responsibility for obtaining and documenting the VGM of a packed container lies with the shipper

Article 7.1: The SOLAS text is clear is assigning shippers’ and carriers’ responsibilities and the role of the terminal. The shipper is responsible for providing a VGM to the carrier or their terminal representative, regardless of who actually packs the container. United Kingdom

Challenges Going ForwardWeighing at the port: Some terminals will offer weighing as a service for a fee; others will turn away any container without a VGM. Should the process and options for shippers be standardized?

Carrier Cutoff times: When is receipt of the VGM too late for purposes of stowage planning? Carriers are reviewing this question, which is complicated by the position of the terminals.

Transmission of documents: Shippers want a simple, timely way to submit the VGM without adding a separate document or field to existing documents. Is there an IT solution across multiple platforms?

Tare Weight of containers: Carriers are exploring multiple ways to make container tare weights readily. Shippers are not required to verify posted tare weights, only to gather cargo and equipment weights and add them together in the VGM. SOLAS does not provide for joint certification.

The Devil is in the Details – and That Takes DialogueShippers, carriers and terminals must all get constructively engaged.

“What this international measure is seeking to do, is to change the whole culture about the need for a less cavalier approach to cargo weighing, which has been governed largely by the ability to get the door shut, rather than any pretense at an accurate mass.

It may be unfair to suggest that people don’t care, but they certainly don’t care ENOUGH about the health and welfare of other people down the logistics chain, once they have stuffed the cargo into a container and seen it off their premises…

This is an important safety measure, which will save lives and prevent injury and the destruction of property and nobody should dismiss it as unnecessary…”

― Michael Grey, Lloyds List editorial, April 4, 2016

SOLAS: SAFETY OF LIFE AT SEA

OCEMA VGM Best Practice

Don KassilkeOcean Carrier Equipment Management Association

April 19, 2016

What is OCEMA?•Ocean Carrier Equipment Management Association

•18 international ocean carriers are members

•Lead ocean carrier organization for U.S. intermodal equipment issues

•Encourage coordination with stakeholders, regulators, and among carriers

IMO SOLAS Verified Gross Mass (VGM)• Amendment to IMO Safety of Life at Sea Convention (SOLAS)

by IMO Maritime Safety Committee• Adopted in November 2014 to be legally binding member

states on July 1, 2016.• Requires the shipper obtain the verified gross mass of the

packed container via one of two methods;• Method No.1: Upon the conclusion of packing and sealing a

container, the shipper may weigh the packed container.• Method No.2: The shipper may weigh all packing and cargo items,

and add the tare mass of the container.

OCEMA VGM Best Practice• OCEMA formed a Container Weight Committee

— Held discussions with multiple industry stakeholderso Shipperso MTOso USCGo WSC

— Participated in USCG/FMC hosted discussion on February 18, 2016

— Developed VGM Process Map— Published OCEMA VGM Best Practice on March 21, 2016

OCEMA VGM Best Practice• OCEMA VGM process map and Best Practice:

– How the container operator in the US will receive VGM/certification from the shipper

– Preferred method is electronic but the process allows for manual submission and modes that are in use today

– Framework considers coordination and transfer of VGM data to vessel planners (MTO and vessel operator) for use in stowage planning and onboard record keeping

• As much as possible, processes should be consistent with current practices

• Carriers will need to coordinate with US MTOs as to process timing

MTO Processes VGM into System

OC EDIs VGM to MTO

Ocean Carrier Processes VGM

Certification into OC System

Shipper Provides VGM Certification to OC By

OC’s Cutoff

Shipper Determines VGM For Loaded Container (SOLAS

Method 1 or 2)

Standard VGM Cert Varies By OC•EDI (VERMAS or other i.e. 304)•Portal Services (INTTRA, Nexus, CargoSmart…)•Ocean Carrier Web Portal•Electronic Methods Preferred Alternative Methods TBD by OC

VGM Cutoff Provision by OCs•For Close of Business (COB) Receiving Cutoff, VGM Cutoff Same Day Noon•For non-COB Receiving Cutoff or Alternative VGM Communication Methods, VGM Cutoff TBD by OC•Concept Similar to “No Docs No Load”

Shipper Ocean Carrier(OC)

Marine Terminal (MTO)

MTO Uses VGM to Plan Vessel Stow

VGM Flow OC to MTO•EDI Standard 301, 315 or COPRAR TBD•VGM Value Only Transmitted, not VGM Certification•Transmission to MTO by Time of Load List Cutoff

VO Reviews & Approves Stow

Vessel Operator(VO)

VO Retains VGM for Transit

MTO EDIs VGM to VO In Bay Plan

VGM Flow MTO to VO•EDI Standard BAPLIE

Loading To Vessel•If No VGM is Received MTO Will Not Load Unit to Vessel

* OCEMA VGM Process Map

IMO SOLAS Verified Gross Mass (VGM)• Export shipper concerns

– Do not want to “certify” the container tare weight– Do not want to add the container tare weight to cargo weight

• Marine Terminal concerns– Absence of VGM could result in on-terminal congestion

• Why shippers must “Do the Math”– Shipper is in best position to know the tare weight (especially with

use of shipper pools)– Process for receiving VGM must be standardized (difficult to

determine complete VGM vs partial weight calculation)– Most efficient for the shipper to provide VGM

INTTRA eVGMInsight & Overview

Shipper Preparedness Impacted by Varying Country Regulations and Desire for Carrier Guidance

• At least 4 countries will levy penalties for non-compliance• Denmark, South Africa, United Kingdom, Japan

• Governing authorities not yet identified for all countries

• Inconsistent standards and guidelines• Many still in draft or in comment phases

• Weighing tolerances vary in amount and type • Percentage vs. absolute weight variance (e.g. 5% vs. 200kg)

• Varying requirements for Method 2 submissions• Certificates, authorization numbers, etc.

• OCEMA Best Practices statement and individual carrier statements starting to add clarity

Meeting Industry Requirements for Flexibility

▪ Shipper / BCO▪ Weigher▪ Trucker▪ Loader▪ Terminal

▪ Shipper / BCO▪ Forwarder▪ NVOCC▪ Consolidator ▪ etc....

▪ Gate in

3rd PartyWeigher

1Weight Carrier

3VGMSubmitter Terminal

42

“Upstream” use case(s)Implication: Need for submission capability by third parties for shipper verification

Operational Use CaseImplication: VGM information is collected and entered by the Submitter

Terminal AccessImplication: Terminals may require VGM for Gate in and therefore may require direct access to VGM declarations

Our Approach: Rationalize VGM information into a VERMAS (VGM) Message

eVGM Product Capability – Submitter

Submissions

▪ EDI Submission (VGM or SI)

▪ SaaS Web online form-based workflow

▪ Delivery to submitter defined recipient

▪ Mobile App submission to eVGM repository (planned future offering)

Reporting

▪ Online dashboard with visibility to the VGM submissions and status

▪ Generate and print reports based on historical data for internal audit purposes

Search

▪ Online access to eVGMs, enabling query and retrieval

▪ Example Query fields: Container Number, CBN, BL#, Date Range , Approval Signature/Date

Notifications

▪ Multiple acknowledgments

- INTTRA Receipt- Carrier Receipt

▪ Error notifications for failed eVGM submissions

INTTRA eVGM offers a simple interface for VGM submission

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