Update on New SOLAS

Regulations

Hosted by

United States Fashion Industry Association (USFIA) & OHL

May 4, 2016

2:00 P.M. Eastern/11:00 A.M. Pacific

Today’s Speakers

Edward D. Greenberg, Principal at GKG Law

Represents clients before the Federal Maritime Commission and other transportation agencies

Clients include industrial rail shippers, oil companies, and freight forwarders

USFIA’s Customs Broker Partner for 2016/2017

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Before we turn it over to our speakers…

May 10: Update on Cuba & Iran Sanctions (Click to Register)

A one-hour webinar hosted by Barnes & Thornburg LLP covering the latest developments in U.S.-Cuba and U.S.-Iran relationships, including trade, travel, permissible business activities, and remaining restrictions.

May 17: Customs Reauthorization Legislation (Click to Register)

A one-hour webinar hosted by OHL on the Trade Facilitation & Enforcement Act, including Section 321 and benefits under 9801.00.10.

SAVE THE DATE! We will host Trade Is Fashionable! USFIA Washington Trade Symposium on July 13 at the Capitol Visitor Center in Washington, D.C.

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Email: info@usfashionindustry.com

Twitter: @usfashion

Phone: +1-202-419-0444

Edward D. Greenberg

1055 Thomas Jefferson St., NW

Suite 500

Washington, D.C. 20007

egreenberg@gkglaw.com

(202) 342-5277

Are guidelines established by International Maritime Organization (IMO) as amendments to the International Convention for the Safety of Life at Sea (SOLAS)

• MSC 1/ Circ. 1475 - June 9, 2014

Carriers and terminal operators will require certified gross weight certificates for all cargo prior to loading

Scheduled to go into effect July 1, 2016

Certificates must be signed by the Shipper

Electronic transmission of the certificates to be preferred

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Guidelines published by World Shipping Council

• http:www.worldshipping.org/industry-issues/safety/WSC_Guidelines_for_Implementing_the_SOLAS_Container_Weight_Verification_Requirements.pdf

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

Adopted due to belief that M/V Comfort sinking attributable to lack of accurate information about weight of cargo

To be enforced by carriers and marine terminal operators

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Enforcement likely to take form of a commercial penalty by carriers or MTOs

• Not loaded, returned, reweigh costs, demurrage/detention/storage

Applies to all containerized cargo, whether tendered by exporters, forwarders, NVOCCs or other parties

Applies to international

• Not domestic offshore commerce

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The party tendering the container to the carrier must certify the accuracy of the weight

• The shipper on MB/L has the responsibility to certify

Must be signed

• Scales used must be calibrated and certified in accordance with the requirements of each State

• Any costs incurred due to noncompliance or if carrier has cause to doubt accuracy will likely be for account of named shipper

Commercial matters for parties to decide

Watch rules tariffs

Must always use calibrated weighing equipment that meets the applicable accuracy standards and requirements of the State

Only two methods are approved

• First, weigh the entire container

Preferred by carriers and ports

• Second, separately weigh all packages and add tare weight of container (visible on box)

Need to include all packing material, pallets, dunnage

No estimates of weight are permitted

This method is considered unacceptable to types of cargo, such as scrap metal, unbagged grain and other cargo in bulk that does not easily lend itself to individual weighing

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Can use a weight provided by others if involves “individual, original sealed packages that have the accurate mass of the packages and cargo items clearly and permanently marked on their surfaces” (refrigerators, electronic appliances, etc.)

• Must be: 1) original, sealed package2) been weighed3) weight shown on carton4) add all packing, dunnage

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Three exceptions to the need for weight certificates for containerized cargo

• Containers on chassis or trailer driven onto a RO/RO vessel for short international voyages

• Cargo tendered to the vessel for packing into containers already on-board the ship

• “Offshore containers” to which the IMO guidelines do not apply

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Must be signed by the party listed as the Shipper on Master Bill of Lading

• Would be the actual shipper or NVOCC

• On co-loaded cargo, would be the master loader

Can be provided as a separate document – a weight certificate – or as part of the shipping instructions to the carrier; in both instances, must still be signed by person “duly authorized by shipper”

Can be electronic signature

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• Where exporter is using an NVOCC or some other party to tender the cargo, will need to authorize that party to certify the accuracy of the weight certificate

• Carriers can double-check if they have cause to believe certificate is in error

Again, commercial matters/tariff

No overweight containers will be accepted for loading

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OCEMA Issued Best Practices – 3/21/16*

• Prefer Electronic Transmission of VGM

Some carriers may refuse to accept written certificates

• Alternatives

EDI message (VERMAS, or a 304 message)

Portal service (INTTRA, Nexus, CargoSmart)

Through ocean carrier’s web portal designed to accept VGM

Other alternatives determined by carrier

* www.ocema.org

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What is VGM cutoff?

• For electronic transmission, by noon of cutoff date

• For other methods, as determined by carrier

Likely to be earlier than for electronic transmission

MTOs may have separate, earlier cut-off dates

NY, LA/LB

If late

• Won’t be loaded on planned vessel

• Sidelined until next available sailing

• Possible costs

Demurrage/detention

Drayage costs

Storage off pier

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Next steps

• Carrier transmits VGM to MTO

• MTO plans vessel stow

• MTO transmits VGM and stow plan to vessel

operator

• Vessel operator reviews and approves stow

15 Countries out of 167 SOLAS signatories have taken any action

Actions vary

• Final Rules

UK

Argentina

Japan

India

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• Drafts, discussion pieces, guidelines

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Australia – discussion document

Belgium

Canada – draft guidelines

China – draft

Denmark – preliminary order

Finland

Germany – general information

Hong Kong

Malaysia

New Zealand – seeking comments

S. Africa – guidelines

Countries that have taken no action to implement

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• US

• Mexico

• Brazil

• Peru

• Ecuador

• Chile

• Taiwan

• Singapore

• Vietnam

• Finland

• France

• Greece

• Italy

• Netherland

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Question as to applicability in U.S.

• Coast Guard responsible for implementing SOLAS in U.S. states

• Coast Guard has stated

VGM Rules not mandatory; are guidelines

VGM Rules not self-executing in U.S.; requires legislation or NPRM

E.O. 12234

Existing process of requiring carriers to know VGM is satisfactory

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Coast Guard does not believe are any issues if safety in

U.S. supporting need for application here

Coast Guard has no jurisdiction over shippers

No need for shippers to change any process

• Recent USCG safety bulletin 009/16 4/28/16

Flexibility to determine cargo weights

Terminal weighs

Shipper /carrier agreement

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Carriers unhappy with Coast Guard

At present carriers and MTOs appear to intend to enforce VGM Rules

Congressional concerns about possible congestion and burden

• Agricultural interest (exporters) and other groups (primarily importers)

Possible challenge at Federal Maritime Commission

• Unreasonable practice? 46 U.S.C. 41102(c)

• Collective refusal to deal? 46 U.S.C. 41105(1)

• Unfiled agreement? 46 U.S.C. 41102

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What happens July 1?• Will Ports provide VGM?

Charleston – Yes

Baltimore - Yes

Others?

• Is a compromise in U.S. possible?

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