Agriculture shippers are asking Congress to determine whether the U.S government can revise or downright revoke a new international container weight rule, ahead of a congressional hearing on the controversial regulation next week.
“We ask Congress to determine if the Coast Guard, as the U.S. representative to the IMO, (can) revisit the IMO SOLAS amendment and gain revisions, if not revocation,” the Agriculture Transportation Coalition said in a statement Thursday.
The group has been a fierce opponent to the International Maritime Organization’s amendment to the Safety of Life at Sea, or SOLAS, convention that will require all shipping containers be accompanied by documentation detailing their verified gross mass prior to vessel loading effective July 1.
AgTC has said that not only has the new rule left many shippers mired in confusion with less than 100 days before it goes into effect, but the regulation could also handicap U.S. producers that compete against other countries where enforcement may be lax.
The House Committee on Transportation and Infrastructure will hold a hearing next week looking into the impact of the SOLAS rule on U.S. exporters. Congress rarely weighs in on container shipping unless there is concern about export trade — as lawmakers did during the 2014-15 West Coast port congestion crisis.
And, according to AgTC, the SOLAS amendment is “not simply a technical maritime matter, but rather, will have a significant impact on U.S. export competitiveness and the U.S. economy, at a time that the Federal Reserve Board and others are concerned about the health of U.S. exports and the drag on the U.S. economy.”
Due to the strong U.S. dollar and slowing global demand, U.S. containerized exports will only grow 4 percent this year after falling roughly 2.5 percent last year, according to Mario Moreno, senior economist for IHS Maritime & Trade.
AgTC is also questioning the supremacy of IMO regulations over U.S. law.
“We ask Congress to determine how a change in ocean shipping practices of such magnitude as this SOLAS rule, can be imposed on the U.S., without any prior Congressional notice, review or approval,” the group said.
AgTC has been pushing for what the groups calls a “rational” means of implementation ahead of the July 1 SOLAS amendment rollout.
By that, the group means a system in which U.S. exporters certify the weight of their cargo and packing materials, while container lines would certify the weight of the containers that they own, control and manage. The liners would then combine the two weights to create a VGM that is submitted to the terminal operator before loading. The carriers say they need the VGM days in advance to make stowage plans with the marine terminals.
AgTC has argued that other groups, specifically the World Shipping Council and the Ocean Carrier Equipment Management Association, have been pushing an alternative agenda.
“Their approach: demanding that an individual employee in the U.S. exporting company, such as a farmer or food processor, be personally liable to certify the weight of the ocean carrier’s own container and send that certification to that same ocean carrier,” AgTC said.
The shippers group likened that methodology to something out of Lewis Carroll’s book “Alice in Wonderland.”
According to AgTC, the aforementioned “scheme” will impose unnecessary costs and delay shipments. It will also give rise to congestion at U.S. ports, missed sailings, spoiled cargo and angry foreign customers, the group said.
AgTC additionally cited investment bank Cowen & Company that has projected the “overly strict method of compliance” will increase the cost of shipping by container anywhere from $50 to $125 per box and create “massive disruption” at U.S. ports.
What the group means by “personally liable,” however, is unclear. The U.S. Coast Guard has said that it will not be penalizing shippers for noncompliance with the new SOLAS amendment. The federal agency has gone on record to say that compliance with the new rule should be handled as a “business practice” instead of through regulatory enforcement.
Peter Friedmann, AgTC’s executive director, clarified that his group takes issue with OCEMA’s published “best practices.” Those practices state carriers will require the name and a signature of shippers to accompany VGM documentation, Friedmann said.
“To the exporters, that looks like an avenue for the carrier to hold an individual liable, should there be damage, injury, etc.,” he told JOC.com Thursday.
At issue, Friedmann said, is that a shipper’s signature makes him liable for both the weight of his cargo, but also the weight of the carrier’s container.
“Now, I understand the shippers don’t mind signing for and being liable for the weight of their cargo, but they are highly averse to signing for and being liable for the weight of the carrier’s own container,” he said.
WSC responded Thursday that it was surprised that Friedmann’s group, which began asking last fall for more clarification on VGM transmittal methods, now seems upset because carriers have responded to their request. The WSC represents carriers controlling roughly 90 percent of global container capacity and was a major player in the creation of the SOLAS rule.
Both AgTC and WSC will be in attendance at the upcoming congressional hearing.
Although the amendment to SOLAS approved in 2014 has been raised at several congressional hearings, the April 14 hearing is the first time the issue will come front and center on Capitol Hill.
“We look forward to discussing the facts about the important safety issue of having accurate weights for packed containers being loaded on the ships that carry the import and export commerce of the United States,” WSC said.
Those scheduled to testify at the hearing include Donna Lemm, vice president of sales and marketing at logistics provider Mallory Alexander and chairwoman of AgTC’s Container Weight Committee; WSC CEO and President John Butler; John Crowley, executive director of the National Association of Waterfront Employers; and U.S. Coast Guard Rear Adm. Paul Thomas, according to their respective organizations and agency.