SOLAS Verified Gross Mass (“VGM”) Countdown: Will You Be Ready On July 1, 2016?

Jeanne M. Grasso, Dana S. Merkel, and Jonathan K. Waldron

Action Item: With less than 30 days remaining before the July 1, 2016, effective date of the new International Convention for the Safety of Life at Sea (“SOLAS”) Regulation VI/2 amendments, the International Maritime Organization (“IMO”), Administrations, and industry continue to tackle unanswered compliance questions and concerns.

Below, we discuss the most recent guidance and developments from the U.S. Coast Guard, IMO, and industry organizations, as well as our assessment and views on enforcement, to assist stakeholders in preparing for the July 1 deadline, while taking into account the unique characteristics of various operations and ports.

Background

As outlined in our March 2016 (No. 2) Advisory, IMO adopted amendments to SOLAS Regulation VI/2 in November 2014. See this Advisory here.

Under the amendments, the shipper must verify the gross mass of a packed container by one of two methods: (1) the packed and sealed container may be weighed using calibrated and certified equipment; or (2) each package and cargo item loaded into the container, including any pallets or other packing and securing material, may be weighed, and the tare mass of the container added to the sum of the single masses in the container using a certified method approved by the port State’s competent authority in which the packing of the container was completed. The resulting VGM must be stated in the shipping document, signed by the shipper, and provided to the vessel master and terminal in advance of loading the container on the vessel. In the event the VGM is not provided to the vessel master, the container may not be loaded on the ship.

U.S. Coast Guard Equivalency Declaration

In its recent Marine Safety Information Bulletin (MSIB Number: 009/16), published on April 28, 2016, the U.S. Coast Guard declared that existing U.S. laws and regulations for providing verified container weights are “equivalent” to the requirements under SOLAS Regulation VI/2. The U.S. Coast Guard also submitted a letter to the IMO setting forth its determination, specifically noting that the current national regime provides the needed flexibility for all entities in the business to ensure that correct verified container weights are provided to the vessel master to facilitate safe loading operations. In support of its determination, the U.S. Coast Guard noted that various U.S. industry stakeholders have demonstrated multiple acceptable methods for providing VGMs. See MSIB Number: 009/16 available at this link.

IMO Guidance

On May 23, 2016, the IMO issued MSC.1/Circ.1548, Advice to Administrations, Port State Control Authorities, Companies, Port Terminals and Masters Regarding the SOLAS Requirements for Verified Gross Mass of Packed Containers, to address concerns raised by various Administrations regarding practical aspects of compliance with the SOLAS amendments. The IMO recommended that Administrations and port State control authorities adopt a “practical and pragmatic approach” when verifying compliance with the SOLAS amendments for a period of three months following the July 1, 2016, effective date.

Emphasizing that the stability and safe operation of ships, including transport of containers, is addressed in other SOLAS regulations, the IMO advised that until October 1, 2016, Administrations and port State control authorities should consider:

  1. allowing packed containers that are loaded on a vessel before July 1, 2016, and subsequently transshipped on or after July 1, 2016, to be shipped to their final port of discharge without the VGM specified as required by the SOLAS amendments; and
  2. allowing flexibility to all the stakeholders in containerized transport to refine, if necessary, procedures for documenting, communicating, and sharing VGM information.

See MSC.1/Circ.1548 available at this link.

Carrier and Terminal Operations

U.S. shipping interests and stakeholders have taken differing approaches to implement the Regulation VI/2 amendments due to varying concerns, including liability, port congestion, lack of necessary infrastructure to support container weighing services, and terminal disruptions and delays. Although the U.S. Coast Guard’s recent guidance has prompted terminal operators to take more defined positions on compliance, it is becoming increasingly evident that there is no “one-size-fits-all” solution and U.S. shipping interests must conduct the necessary due diligence on a port-by-port basis to determine how containers will be handled at each terminal.

While some port authorities and terminal operators, such as those in the Ports of Long Beach, Los Angeles, and Oakland, have maintained that they will not or cannot offer container weighing services, others such as the Georgia Ports Authority have stated that they will provide container weighing services free of charge. Certain terminal operators in the Port of New York/New Jersey and the Port of Baltimore have also confirmed they will offer container weighing services, but for a fee. Meanwhile other ports and terminal operators, such as the Port of Houston, have announced that they will not accept containers at the terminal unless the VGM has been submitted electronically. Finally, in response to the U.S. Coast Guard’s equivalency determination, some port authorities and terminal operators are changing their previously stated procedures. For example, the Virginia Port Authority originally stated it would refuse all containers that did not have VGMs prior to arrival at the terminal, but has since stated that containers without a VGM will be accepted if arriving via gate or rail.

In addition, shippers must be aware of how ocean common carriers and non-vessel owning common carriers (“NVOCC”) will implement procedures for VGM compliance. On May 12, 2016, the Ocean Carrier Equipment Management Association (“OCEMA”) announced the decision by its membership to issue an OCEMA Tariff Rule that would confirm that shippers would have no liability for damages resulting from use of inaccurate carrier-provided tare weight to calculate VGMs. While this decision by the OCEMA membership provides further clarification and flexibility for shippers, it is important to note that it is only applicable to the 19 U.S. and foreign flag international ocean common carriers that make up the OCEMA membership. As such, it is imperative that shippers working with non-OCEMA members, or NVOCCs, ensure liability provisions are included in applicable tariffs and/or service contracts. See the OCEMA announcement at this link.

Compliance and Enforcement

SOLAS, including the Regulation VI/2 amendments, applies to ships engaged in international trade, and the obligations and responsibilities for compliance with SOLAS requirements fall primarily on owners/operators of ships, which may be enforced by a vessel’s flag State or various port States. In this regard, the U.S. Coast Guard has stated that it will not take action against a shipper because it does not believe it has the authority absent a statutory amendment to current domestic U.S. law. Rather, any enforcement actions will be against the vessel owner/operator and master in the event a container is loaded without a VGM. However, the shipper will face various adverse commercial and business impacts of any failure to provide a VGM, such as the terminal or vessel refusing to load containers and the resulting delays and customer service issues.

Because SOLAS applies only to ships engaged in international trade, vessels engaged in solely domestic trade, which are not subject to SOLAS, will not be required to obtain VGMs from the shipper prior to loading containers for any domestic voyage, regardless of the ultimate destination of the containers. However, as a practical matter, containers bound for international ports will likely have VGMs because the vessel that will load those containers for transport to a foreign port will be subject to SOLAS and will require VGMs prior to loading. Thus, although the U.S. Coast Guard has given the green light for U.S. shippers to use alternative means to comply with the SOLAS amendments, coordination between the shipper, marine terminal operator, and vessel owner/operator, and development of best management practices, will be essential to ensuring that a container without a VGM, that is ultimately bound for a foreign port, is not loaded on a vessel.

Conclusions and Recommendations

The recent guidance discussed above should provide sufficient flexibility to enable industry to develop and implement procedures best suited to individual operations to meet the amended SOLAS Regulation VI/2 requirements. However, such flexibility could also result in varied approaches between ocean carriers, NVOCCs, ports, and even between individual terminals within a port. Although the U.S. Coast Guard will not be enforcing the VGM requirement directly against U.S. shippers, the procedures implemented by ports and terminals to comply with the Regulation VI/2 amendments will directly impact shippers.

And now, time is of the essence, with the clock ticking to the implementation date. Accordingly, stakeholders such as ports, terminals, NVOCCs, and vessel owners/operators and shippers should complete their VGM action plan now, including review of contractual arrangements and implementation of procedures on a port-by-port basis, as soon as possible, in order to prepare for the July 1 effective date. Action plans should include contingency planning to provide for alternatives if things go wrong on and after July 1.