Trucking May Become Collateral Damage in New Container Rule
This story appears in the June 6 print edition of Transport Topics.
Truckers servicing U.S. seaports already experience delays entering the ports and making pickups or dropping off loads at terminals, but they’ll soon face yet another potential disruption.
Beginning July 1, carriers could find themselves caught in the middle of a new “Safety of Life at Sea” requirement that will force shippers to weigh and certify the precise weight of every container loaded onto an ocean vessel.
Although shippers are the clear target of the new safety amendment, trucking operations could end up as collateral damage.
The potential problem facing drayage operators is what to do when they’re stuck with a load that has not been certified by a shipper.
“The last thing we need after the last year and a half of port congestion is further clogging of the system and not being paid after getting stuck with equipment you can’t get rid of,” said Curtis Whalen, executive director of American Trucking Associations’ Intermodal Motor Carriers Conference. “How is a trucker supposed to know before he gets to the gate or the terminal if all the certification requirements have been met?”
Whalen added, “It’s certainly going to be a mess, come July 1.”
Although the International Maritime Organization is standing pat on its July 1 effective date, its Maritime Safety Committee asked last month that port authorities take a “practical and pragmatic” or soft-enforcement approach for the first three months.
“This would help ensure that any problems related to transshipped containers and the transmittal of electronic verified gross mass data are resolved without impacting the smooth operation of the global logistics chain during the initial phasing-in period of the requirements,” an IMO spokeswoman said.
The IMO is the United Nations’ global standard-setting authority for the safety, security and environmental performance of international shipping.
The new requirement, designed to mitigate the risk of ships tipping over in bad weather or rough seas due to unbalanced loads, is well-intentioned, said William Doyle, a commissioner with the Federal Maritime Commission. Although incidents are rare, a few ocean vessel accidents have resulted in hundreds or even thousands of containers being dumped overboard.
“Containers that are overweight, meaning that they weigh more than the declared weight provided by the shipper, create safety concerns for the ship, its crew, other cargo onboard and the workers in the port facilities handling the cargo,” the World Shipping Council, a group representing the ocean liner industry, said in a statement.
“As a person who’s sailed on ships, I think it’s a proactive approach,” Doyle said in an interview. “It’s not necessarily about what’s happened in the past, it’s the fact that ships have gotten so much larger that you’re going to have so many more containers on deck.”
Doyle said some of the new megaships can carry container stacks as many as 10 levels high.
In a development last month, the chairman of the Senate Commerce Committee asked the Federal Maritime Commission to examine the controversial requirement.
In a May 18 letter to FMC Chairman Mario Cordero, Sen. John Thune (R-S.D.) said that exporters and importers from across the nation continue to raise concerns with the implementation of the SOLAS amendment.
Thune asked the FMC, which has said recently that it does not have full jurisdiction on the issue, to “inform the committee of any appropriate actions to prevent unnecessary disruptions, delays or burdens to our nation’s supply chain.”
“Despite recent discussions and actions, there continues to be uncertainty and concern,” Thune wrote.
Thune asked that the commission respond to his request by May 31.
The new container weight requirement no longer will allow shippers to estimate the weight of a container before it goes on a ship, and ocean vessels will be required to reject any container anywhere in the world without a shipper-verified gross mass — the combined weight of the cargo and the container.
Many shippers are not happy with the new rule. Some say they’re not equipped to do the weighing themselves and will have to outsource the task, adding to their costs.
Many terminal operators have said they will not weigh containers that are not already certified upon arrival.
U.S.-based retailers also have expressed concerns.
Yet, ATA’s Whalen said there have been some encouraging developments in recent weeks.
Last month, six major East Coast and Gulf Coast ports, including the South Carolina Ports Authority, Georgia Ports Authority, North Carolina State Ports Authority, Port of Houston Authority, Port of Virginia and Massachusetts Port Authority committed to develop a common streamlined “terminal weighing approach” to provide verified gross mass at port locations.
However, terminals at Los Angeles and Long Beach, the nation’s two largest ports, which handle 40% of U.S. container traffic, have said so far that they have no plans to intervene on behalf of shippers or motor carriers.
The U.S. Coast Guard said in April that it will not change its current “regulatory regime,” which has been in effect since 1994.
“There is no reason this amendment should cause any delays in our supply chain,” Coast Guard Rear Adm. Paul Thomas said at a congressional committee hearing in April.
“There are conversations being had that need to be had, there’s a lot going on and there’s new information coming out daily that gives one comfort that they are working on it,” Whalen said. “I’d just be more comfortable if it wasn’t triggered on July 1.”
One of the more vocal critics of the amendment has been the Agriculture Transportation Coalition, which has questioned whether the true intent of the amendment is more about shifting liability to shippers and exporters than the safety of ocean vessels.
“This rule was never submitted to Congress, reviewed or approved by a federal agency, nor published in the Federal Register,” the group said.
It will “create major turmoil” at terminals, mostly for exporters, the ag group has argued.
The ports already are congested, and the ag coalition said that delays will cause additional missed cargo cuts and missed sailings, with containers stacked up on and around the terminals. For refrigerated cargo, delay means cargo damage and loss.
“Most of the focus has been on U.S. exporters,” said Jonathan Gold, vice president of supply chain and customs policy for the National Retail Federation, “but the same issues are facing importers as well, including how their vendors are going to handle the issues overseas.”
Gold said that, of more than 160 International Maritime Organization member countries across the globe, only about two dozen have issued guidance or enforcement regulations in response to the SOLAS amendment.
“There’s no harmonization on how it’s being done,” Gold said.
Because ocean carriers have vowed to no longer accept containers without verified weights, Gold said, it’s unclear if U.S. importers will be liable for financial or criminal penalties if foreign shippers fail to verify weights of containers sent to their retail customers in the United States.
However, one thing does seem clear: If contractor containers don’t get on foreign ocean vessels, they won’t reach U.S. retailers on time, Gold added.
“The way it’s written, it’s between the shipper and the ocean carrier,” said John Cushing, president of PierPass Inc. “The terminals will wait to receive the message that the Verified Gross Mass has been filed. Nothing will be loaded to ships unless there’s a VGM.”
Cushing added, “Some terminals are looking at whether they will allow the container onto the terminal and hold it until the VGM, and some terminals are looking at not allowing it onto the terminal at all without the VGM on file. It’s a terminal-by-terminal decision.”
“I’m only concerned about my shippers overseas complying with the regulation,” said Don Pisano, president of American Coffee Corp. “Any delay or any costly delay would be of concern. We’ve told our shippers that they’re going to be required to provide it or contact their carrier and make sure they get any information from the carrier that they need to provide.
“It’s a product-by-product issue,” Pisano said. “Our concerns are that the procedures must be in place and communicated with the shippers well in advance so that there are no surprises and no delays in shipments.”
Donna Lemm, vice president of global sales for Mallory Alexander International Logistics, told the congressional subcommittee that shippers are concerned about the flow of goods out of the ports.
“The extra time needed to send data from shipper to carrier, carrier to terminal, terminal recognition of weights and green light to proceed will cut some export shippers’ volume in half because of the extra time,” Lemm said. “This is lost revenue and sales for the U.S. exporter at a time when our exports are already down significantly.”
Despite ongoing discussions, Whalen said he still has concerns that truckers could get stopped at the terminal gates if their loads have not been weighed.
“There remain a lot more questions than answers,” Whalen said.