The U.S. Coast Guard Thursday said it will not consider delaying the International Maritime Organization’s controversial new container weight rule and the agency cannot, and will not, hold shippers responsible for not providing container weight documentation to carriers.
Carriers, however, will be required by their flag state to hold shippers responsible, and no container without Verified Gross Mass documentation will be allowed to board a vessel. How carriers enforce this is a “business practice solution” not under the jurisdiction of the Coast Guard, agency officials said.
“Delayed implementation is not an option,” the Coast Guard’s Rear Adm. Paul Thomas said at a public listening session Thursday on the Safety of Life at Sea, or SOLAS, amendment, which goes into effect July 1.
Moreover, Thomas said, despite shippers’ concerns over how the Coast Guard will go about enforcing the new regulation, the U.S. agency will not be holding shippers accountable. Only carriers and vessels are party to the SOLAS amendment, not shippers, he said.
“There is not authority under SOLAS that requires shippers to do anything,” said Thomas. “I cannot require shippers to do anything.”
Thomas listed two mechanisms of enforcement at Thursday’s hearing. If a container arrives at a terminal without a VGM after July 1, the Coast Guard will declare the box “manifestly unsafe” and the agency would put a hold on the container until a gross mass is known and documented. If, for whatever reason, a container is weighed at a terminal and the VGM does not match the container weight, Thomas said the container would need to be reweighed and a new VGM registered.
“There would be no action taken against the shipper because, again, we have no authority,” Thomas said.
According to the SOLAS amendment, the gross mass of the container “shall be verified by the shipper,” either using one of two methods. Acccording to the Coast Guard, because it’s the carrier that will be the target of enforcement, then it’s up to the carrier to “enforce” the rule on its customers by somehow ensuring that the VGM submitted by the shipper is accurate.
As far as the Coast Guard is concerned, Thomas said, the agency will not be enacting fees or fines on shippers. Any fiscal punishment for failing to provide a VGM or providing an inaccurate VGM will be in the carriers’ hands, he said. That’s different than Canada’s take, which will level fines on shippers without VGMs.
The Coast Guard’s confirmation that it won’t seek to delay SOLAS is a blow to U.S. exporters that have been pressing the agency to defer the SOLAS mandate’s July 1 deadline until it can be amended and determined that they won’t face a competitive disadvantage against foreign exporters. The regulation may not mean fees or fines, they say, but it will mean added costs in the form of longer wait times at terminals, expensive weighing equipment and still-unknown carrier enforcement policies.
U.S. exporters want to see the issue handled in much the same way the Secretary of Homeland Security delayed implementation of the 100 percent scanning requirement for all inbound containers as mandated under the 2006 Safe Ports Act. Congress repeatedly has given the department the go-ahead to delay the scanning mandate.
“There is absolutely no industry standard that is available for this information flow for VGM,” Donna Lemm, director of business development at Mallory Alexander International Logistics, said at Thursday’s session. “The U.S. is simply just not ready.”
The Agriculture Transportation Coalition, which represents agriculture exporters, has called for a congressional inquiry into the matter.
The AgTc and other shippers contend that the verification requirement is a dramatic change from current practice and there is a lack of details on implementation, from the sending of verification to shippers to the acceptable weight variance, despite the rule taking force in less than five months. Ultimately, the transportation costs of U.S. exports will rise, the AgTc argues.
Perry Bourne, director international transportation and rail operations at Tyson Fresh Meats, said his company “guesstimates” it could add $250 per box in extra non-value added services that Tyson won’t be able to recover from its customers.
The new regulation is a major commercial risk for the agriculture trade, Lemm said. “Our margins are thin. We’ve just added hundreds of dollars of cost to the U.S. export supply chain.”
It’s more than a financial cost, she added. It’s time.
“It is complicated enough with VSAs, vessel-sharing agreements, to get those trains to arrive on time for loading,” Lemm said. “The addition of one more variable could cause us to miss a vessel.”
Truck drivers are already waiting in hours-long lines at terminal gates due to other documentation requirements and general congestion, added Cathy Nagin, general manager of New Orleans Cold Storage Transport. It sometimes takes up to three hours for some drivers to wait on terminal operators to resolve discrepancies.
“It would be the same if VGMs were not updated in the terminal systems,” she said. “This could discourage drivers from remaining in the transportation industry, adding to the driver shortage.”
But, delaying implementation is not an option, Thomas repeated multiple times Thursday.
“The thing about SOLAS is it applies to ships,” he said. “Those ships, for the most part, are foreign-flag ships. Those flag states are going to implement this requirement.”
Even if the U.S. were to delay implementation, other states would still be enforcing the mandate on U.S. goods. Rather than deferring enforcement, delaying implementation stateside would ultimately send a message — the wrong message — to the world, Thomas said. “Delayed implementation sends the word around the world that you cannot load U.S. cargo safely.”