Presented to Harbor Transportation Club

May 12, 2016Presented by Cameron Roberts, Roberts & Kehagiaras LLP

According to the JOC:

MSC Napoli; 660 containers off loaded without water; +25% or 137 containers varied from the manifest

by more than 3M tons; 1container was 20M tons heavier than manifested.

JOC Article, IMO Container Weight Proposal Pits Carriers Against Shippers, October 8, 2013

In May 2014, the Maritime Safety Committee of the International Maritime Organization approved certain Guidelines Regarding the Verified Gross Mass of a Container Carrying Cargo (the IMO Guidelines).

Agriculture and forest products; Causes significant competitive disadvantage

to US exporters; Shipper knows weight of cargo. Shipper does

not know container weight. The rule imposes on shipper liability to certify

equipment which is owned/leased/controlled by the carrier.

Tare Weights printed on the back of the container typically not accurate;

Does not account for container or weight variance;

The unique US supply chain means that the SOLAS documentation requirements will disrupt the flow of cargo through the ports;

No means currently exist to facilitate transmission of essential Verified Gross Mass (VGM) data;

Cost of implementation imposes significant new costs on all participants in US export supply chain.

The responsibility for obtaining and documenting the verified gross mass of a packed container lies with the shipper.

Under the IMO Guidelines, [s]hipper means a legal entity or person named on the bill of lading or sea waybill or equivalent multimodal transport document (e.g. through bill of lading) as shipper and/or who (or in whose name or on whose behalf) a contract of carriage has been concluded with a shipping company.

The "shipper" is the party that appears in the Shipper/Consignor field on the Master Bill of Lading or an equivalent document issued by the VOCC and may be any of the following people/entities:

The Beneficial Cargo Owner (i.e. the owner of the goods or the exporter);

NVOCC; or For consolidated cargo, the entity that

consolidates the cargo (i.e. the "Master Loader").

Shippers or third-parties can: Weigh a loaded container, or add the weight of the cargo and

the container's tare weight. For certain commodities, such

as scrap metal, unbagged grain and other bulk cargo the loaded container must be weighed.

Use of the second method may be subject to certification by the IMO Member State in which the packing and weighing took place.

The requirements of the State in which the equipment is being used, i.e. weighing equipment used must meet national certification and calibration requirements.

29 CFR 1918.85(b)(8) Any scale used within the United States to weigh

containers for the requirements of this section shall meet the accuracy standards of the state or local public authority in which the scale is found.

UK - Coast Guard variation of +/- 5% of the loaded container weight.

JP authorities a variation between +/- 2 and 5%. http://agtrans.org/wp-

content/uploads/2016/02/AgTC-SOLAS-position-paper.pdf

NZ Maritime variation of +/- 60kg (0.1%). http://www.maritimenz.govt.nz/Consultation/Cont

ainer-verification/Container-Weight-Verification.pdf

http://agtrans.org/wp-content/uploads/2016/02/AgTC-SOLAS-position-paper.pdfhttp://www.maritimenz.govt.nz/Consultation/Container-verification/Container-Weight-Verification.pdf

Individual, original sealed packages that have the accurate mass of the packages and cargo items clearly and permanently marked on their surfaces, do not need to be weighed again when they are packed into the container. IMO Guidelines, paragraph 5.1.2.1.

Example: Original sealed packages (e.g., flat screen TVs that have their weight (e.g. X kg.) marked by the manufacturer on the box containing the TV).

The IMO Guidelines are clear that the shipper named on the ocean carrier bill of lading is the party responsible for providing the containers verified gross mass. IMO Guidelines, paragraph 5.1.3. Thus, the master forwarder named on the ocean carriers bill of lading is responsible for the accurate cargo weight verification of all the cargo from all the co-loading forwarders using the container. NO PASS ON WEIGHTS.

As a National issue, fines and other penalties will be imposed under national legislation.

As a Commercial issue, the penalties may involve repacking costs, administration fees for amending documents, demurrage charges, delayed or cancelled shipments etc.

The new SOLAS requirements apply equally to both under and overweight containers.

This is a National issue, and each State will determine who is the appropriate regulator.

At a meeting hosted by the Federal MaritimeCommission, the Coast Guard said it was up toshipping lines to enforce the new requirement.Carriers could then call on the Coast Guard toblock or remove containers from ships if theyarent certified, but the shippers wouldnt bepenalized by law enforcement, said Adm. PaulThomas, who oversees inspections and compli-ance.

http://www.wsj.com/articles/container-weight-rule-wont-carry-penalties-in-us-coast-guard-1455835575

http://www.wsj.com/articles/container-weight-rule-wont-carry-penalties-in-us-coast-guard-1455835575

US Coast Guard issued a Marine Safety Information Bulletin, April 28, 2016;

Acceptable VGM methods are: (1) the terminal weighsthe container, and when duly authorized, verifies theVGM on behalf of the shipper, and (2) the shipper andcarrier reach agreement whereby the shipper verifiesthe weight of the cargo, dunnage, and other securingmaterial, and the containers tare weight is providedand verified by the carrier.

https://www.uscg.mil/msib/docs/009_16_4-28-2016.pdf

US Coast Guard issued a Marine Safety Information Bulletin, April 28, 2016;

For the purposes of determining the VGM of acontainer, any equipment currently being used tocomply with Federal or State laws, including theIntermodal Safe Container Transportation Act andthe container weight requirements in 29 CFR1918.85(b), are acceptable for the purpose ofcomplying with SOLAS.

https://www.uscg.mil/msib/docs/009_16_4-28-2016.pdf

Intermodal Safe Container Act 1992 Reimbursement of costs Liens on cargo Impounds of trailer State law enforcement fine or penaltyOverweight container penalties - CA Vehicle Code 42030(a)

1918.85(b) Container weight. No container shall be hoisted by anylifting appliance unless the following conditions have been met:

(1) The employer shall determine from the carrier whether acontainer to be hoisted is loaded or empty.

(2) For a loaded container: (i) The actual gross weight shall be plainlymarked and visible to the crane ; or (ii) The cargo stowage plan orequivalent permanently recorded display serving the same purpose,containing the actual gross weight and the serial number or otherpositive identification of that specific container, shall be provided tothe crane (3) Every outbound container received at a marineterminal ready to load aboard a vessel without further consolidationor loading shall be weighed to obtain the actual gross weight, eitherat the terminal or elsewhere, before being hoisted.

1903.15 The Area Director shall determine the amount of anyproposed penalty

$200 http://www.oshrc.gov/decisions/html_2009/08-1428.htm

http://www.oshrc.gov/decisions/html_2009/08-1428.htm

The duly authorized contact person of the shipper (by name and signature provided in the statement) hereby certifies, that the above mentioned shipment details have been evaluated carefully and according to the requirements of the International Convention for the Safety of Life at Sea (SOLAS); as they have been published in Chapter VI, Part A, Regulation 2 - Cargo Information.

We understand and confirm that missing, incorrect and/ or belated VGM statements may result in non-acceptance of the shipment by the vessel operating ocean carriers and a delay in the originally planned schedule. Any additional cost caused by delay due to non-acceptance of the shipment by the carrier to be covered by VGM declaring party (as undersigned above).

(c) Customer acknowledges that it is required to provide verifiedweights obtained on calibrated, certified equipment of all cargo thatis to be tendered to steamship lines and represents that Company isentitled to rely on the accuracy of such weights and to counter-signor endorse it as agent of Customer in order to provide the certifiedweight to the steamship lines. The Customer agrees that it shallindemnify and hold the Company harmless from any and all claims,losses, penalties or other costs resulting from any incorrect orquestionable statements of the weight provided by the Customer orits agent or contractor on which the Company relies.

Sign and swear to any document and to perform any act that may benecessary or required by law or regulation in connection with thelading, or endorse or countersign weight certificates or ticketsprovided by grantor or grantors designee, or operation of anyvessel or other means of conveyance.

The shipping document shall be: .1 signed by a person duly authorized by the shipper; and .2 submitted to the master or his representative . SOLAS Chapter VI, Regulation 2, paragraph 1.

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

One major US reefer shipper states: The cost of attempting to

weigh every container at the port would add a minimum of $200-$250 /Container. Annually that would cost our company $4.7 5.7 MM. http://agtrans.org/wp-

content/uploads/2016/02/AgTC-SOLAS-position-paper.pdf

http://agtrans.org/wp-content/uploads/2016/02/AgTC-SOLAS-position-paper.pdf

http://www.imo.org/en/About/Conventions/ListOfConventions/Pages/International-Convention-for-the-Safety-of-Life-at-Sea-(SOLAS),-1974.aspx

http://www.worldshipping.org/industry-issues/safety/SOLAS_CHAPTER_VI_Regulation_2_Paragraphs_4-6.pdf

http://www.worldshipping.org/industry-issues/safety/cargo-weight

http://agtrans.org/wp-content/uploads/2016/02/AgTC-SOLAS-position-paper.pdf

http://www.dbschenkerusa.com/ho-en/products_services/ocean_freight/New_container_weighing_rule_.html

http://www.imo.org/en/About/Conventions/ListOfConventions/Pages/International-Convention-for-the-Safety-of-Life-at-Sea-(SOLAS),-1974.aspxhttp://www.worldshipping.org/industry-issues/safety/SOLAS_CHAPTER_VI_Regulation_2_Paragraphs_4-6.pdfhttp://www.worldshipping.org/industry-issues/safety/cargo-weighthttp://agtrans.org/wp-content/uploads/2016/02/AgTC-SOLAS-position-paper.pdfhttp://www.dbschenkerusa.com/ho-en/products_services/ocean_freight/New_container_weighing_rule_.html

Cameron W. Roberts, Esq. Roberts & Kehagiaras LLP

310-642-9800www.tradeandcargo.com

http://www.tradeandcargo.com/

SOLAS Update MSC Napoli in January 2007Why is the weight important?Loose lips? SOLAS ComplianceUS Exporters Agriculture and Forest ConcernsUS Exporters Agriculture and Forest ConcernsSOLAS ComplianceThe shipper must verify.Verifying the weightWeighing EquipmentWeight variationNo EstimatingNo exceptions for co-loadsPenalties Who will enforce?Container Weight Rule Wont Carry Penalties in US -Coast GuardUS Coast Guards PositionUS Coast Guards PositionFines, Penalties, Reimbursements US Dept. of Labor -Occupational Safety & Health AdministrationVGM Sample VGM CertificateNCBFAA T&C and POASign on the line Deadlines for filingEstimated costsSOLAS sources:Questions